Uncategorized • June 3, 2025

Considering Selling Your Home in 2025? Key Steps to Maximize Value and Minimize Stress

by Tom Sommers

Considering Selling Your Home in 2025? Key Steps to Maximize Value and Minimize Stress

Selling your home can feel like a daunting task, especially with media hype and flashy real estate promises, like “guaranteed sale programs,” that often prioritize an agent’s foot in the door over your best interests. In 2025’s dynamic housing market, preparation and strategy are crucial to achieving a successful sale. While the process involves effort—preparing your home, managing showings, and navigating negotiations—a well-planned approach can make it manageable and profitable. As an experienced real estate agent, I can’t eliminate every challenge, but I can guide you to “run between the raindrops,” ensuring a smoother journey. Below, we’ve reorganized and expanded on essential steps, added fresh insights, and provided detailed advice tailored for self-employed individuals or anyone aiming to sell smartly, helping you secure the best price while avoiding pitfalls.

1. Clarify Your Motives for Selling

Before listing your home, take time to define why you’re selling. Are you relocating for a job, downsizing for retirement, or seeking a quick sale due to financial needs? Your motives shape your strategy, from pricing to negotiation priorities.

Why It Matters: Clear goals keep you focused. For example, if speed is critical, you might price competitively to attract multiple offers. If maximizing profit is the goal, you may invest in upgrades to boost value. In 2025, with median home prices in areas like Minneapolis-St. Paul around $380,000 (per recent market data), a 5% price difference could mean $19,000 more in your pocket.

Added Insight: Self-employed sellers, such as freelancers or business owners, often face unique financial pressures, like irregular income or tax considerations. Selling to fund a business expansion or relocate to a lower-tax state (e.g., Florida or Texas) requires aligning your sale timeline with cash flow needs. Misjudging motives could lead to rushed decisions, like accepting a low offer, impacting your financial stability.

Action Steps:

Write down your top 3 reasons for selling (e.g., relocate by June, clear $100,000 for a new home).
Discuss your goals with a financial advisor, especially if self-employed, to align the sale with tax or business plans.
Evaluate the 2025 market with a real estate agent to set realistic expectations based on local trends (e.g., 2–3 months’ inventory indicates a balanced market).

Danger: Without clear motives, you risk emotional decisions, like rejecting fair offers out of attachment or overpricing due to unrealistic expectations, delaying your sale and costing $1,000–$2,000 monthly in holding costs (mortgage, utilities).

2. Find the Right Real Estate Agent

A skilled, trustworthy agent is your partner in navigating the complex sale process. They provide market insights, handle marketing, and negotiate on your behalf, saving time and maximizing profit. Avoid agents pushing gimmicks like “guaranteed sales,” which often come with hidden fees or lowball offers.

Key Qualities to Look For:

Local Expertise: An agent familiar with your area (e.g., Minneapolis-St. Paul) can price your home accurately using a comparative market analysis (CMA).
Negotiation Skills: They counter low offers and secure favorable terms, like shorter contingencies or higher earnest money.
Marketing Savvy: In 2025, top agents use professional photography, virtual tours, and MLS listings to reach 90% of buyers who start online, per the National Association of Realtors (NAR).
Transparency: Honest agents prioritize your goals over their commission.

Added Value for Self-Employed: If you’re self-employed, an agent can tailor the sale timeline to your business cycles, ensuring showings or closings don’t disrupt peak earning periods. They can also connect you with lenders or title companies experienced with 1099 income, easing your transition to a new home purchase.

Action Steps:

Interview 2–3 agents, asking for recent sales data, marketing plans, and client references.
Request a CMA to understand your home’s value based on similar sales (e.g., $200/sq. ft. in your neighborhood).
Negotiate a fair commission (5–6% is standard, but some offer 4–5% for high-value homes).

Danger: Choosing an inexperienced or pushy agent can lead to overpricing, poor marketing, or weak negotiations, reducing your sale price by 5–10% ($19,000–$38,000 on a $380,000 home) or prolonging the sale.

3. Enhance Your Home’s Appeal

First impressions matter. Strategic improvements can boost your home’s perceived value, attract more buyers, and justify a higher price. Focus on cost-effective updates that highlight strengths and address weaknesses.

High-Impact Improvements:

Curb Appeal: Mow the lawn, paint the front door, and add potted plants ($500–$1,000) to draw buyers in. Homes with strong curb appeal sell 7% faster, per a 2025 Zillow report.
Minor Repairs: Fix leaky faucets, patch wall holes, or replace outdated light fixtures ($200–$2,000) to avoid buyer objections.
Neutral Updates: Repaint in neutral colors or update cabinet hardware ($1,000–$3,000) to appeal to a broad audience. A 2025 Remodeling Magazine report shows minor kitchen remodels recoup 80–90% of costs.
Declutter and Stage: Remove personal items and stage key rooms ($500–$2,000) to help buyers envision living there.

Insight for Self-Employed: If you run a home-based business, declutter work-related items (e.g., files, equipment) to present a neutral space. Highlight versatile rooms, like a home office, to appeal to remote workers, a growing buyer segment in 2025. Budget-conscious self-employed sellers can DIY updates, leveraging online tutorials to save on contractor costs.

Action Steps:

Walk through your home with your agent to identify upgrades that yield high ROI.
Get contractor quotes for repairs or hire a handyman for small fixes ($50–$100/hour).
Consider a pre-listing inspection ($300–$600) to uncover issues (e.g., roof leaks) that could lower offers.

Danger: Over-improving (e.g., a $50,000 kitchen gut) may not recoup costs, while neglecting repairs can lead to buyer demands for $5,000–$15,000 in concessions, cutting into your profit.

4. Prepare for Showings and Negotiations

Showings and negotiations are critical stages where preparation pays off. Make your home accessible and arm yourself with knowledge to secure the best deal.

Showings:

Keep your home clean and flexible for last-minute showings, as 60% of buyers request same-day tours, per NAR.
Remove pets or personal items to create a neutral environment.
Highlight features like energy-efficient windows or a spacious backyard with a feature sheet.

Negotiations:

Understand the buyer’s motives (e.g., first-time buyer, investor) to tailor your counteroffers. For example, offer closing cost credits to a cash-strapped buyer but hold firm on price.
Review offers with your agent, considering price, contingencies, and closing timeline. In 2025, buyers favor shorter inspection periods (7–10 days) to speed up deals.
Be ready to counter low offers with data from your CMA, justifying your price.

Added Value: Self-employed sellers can benefit from an agent’s negotiation expertise, especially if time is limited due to business demands. An agent can also shield you from emotional negotiations, ensuring you don’t accept a low offer out of frustration.

Action Steps:

Create a showing schedule that accommodates your work, using lockboxes for agent access.
Ask your agent to gather buyer feedback after showings to adjust strategy (e.g., lower price if feedback cites outdated bathrooms).
Set a negotiation bottom line (e.g., 95% of asking price) to stay focused.

Danger: Poorly managed showings (e.g., cluttered spaces, rigid scheduling) can deter buyers, while weak negotiations may cost $10,000–$20,000 in concessions or lost offers.

5. Complete Disclosures Honestly

Full transparency in your seller disclosures builds trust and protects you legally. Minnesota law requires disclosing material facts, like past repairs, water damage, or underground heating oil tanks. Encourage buyers to conduct a home inspection ($300–$600) for their peace of mind and your liability protection.

Why It Matters: Omitting or downplaying issues can lead to lawsuits or deal cancellations. For example, failing to disclose a known roof leak could cost $5,000–$15,000 in legal fees or repairs if the buyer sues post-closing. In 2025, buyers are savvier, often hiring thorough inspectors to uncover hidden issues.

Insight for Self-Employed: If your home served as a business space, disclose any modifications (e.g., converted garage office) to avoid surprises. Work with a real estate attorney ($500–$1,500) to ensure disclosures are accurate, especially if you’ve made DIY repairs.

Action Steps:

Review your home’s history (e.g., maintenance records, permits) to complete disclosures accurately.
Work with your agent or attorney to draft clear, honest disclosures.
Secure title insurance ($1,000–$3,000) to protect against undisclosed liens or title disputes, a common risk for self-employed owners with complex finances.

Danger: Non-disclosure can lead to deal collapse or legal action, costing $10,000–$50,000 in damages or lost earnest money, plus reputational harm.

6. Additional Strategies for a Successful Sale in 2025

Price Strategically: Use a CMA to set a competitive price, avoiding overpricing that stalls sales. In 2025, homes priced 5% above market take 30–60 days longer to sell, per Redfin.
Leverage Technology: Invest in professional photography ($200–$500) and virtual tours ($200–$500) to attract online buyers, who dominate the market.
Protect Finances: Self-employed sellers should maintain a 6–12 month emergency fund to cover mortgage payments during the sale, especially if income fluctuates.
Address Environmental Risks: Inspect for issues like underground oil tanks ($500–$1,500), which can cost $10,000–$100,000 to remediate if leaking, per EPA guidelines.
Explore Tax Implications: Consult a CPA to understand capital gains taxes (15–20% on profits over $250,000 for singles, $500,000 for couples). Self-employed sellers may offset taxes with business deductions, but timing the sale matters.
Build a Strong Team: Partner with a real estate agent like Tom Sommers in Minneapolis-St. Paul, a title company, and a CPA to streamline the process and protect your interests.

New Insight: In 2025, eco-conscious buyers prioritize energy-efficient homes, boosting demand for properties with upgrades like solar panels or new HVAC systems. A $5,000–$10,000 investment in such features can increase your sale price by 5–8%, per Remodeling Magazine’s 2025 Cost vs. Value Report.

Why This Matters in 2025

Selling your home is a major financial decision, and preparation is your greatest asset. By clarifying your motives, choosing a skilled agent, enhancing your home’s appeal, negotiating strategically, and disclosing honestly, you can maximize profit and minimize stress. For self-employed sellers, aligning the sale with business and tax goals is critical to avoid financial strain. In 2025’s balanced market, these steps ensure you sell quickly, net more money, and move forward confidently.

Action Steps:

Schedule a consultation with a trusted agent like Tom Sommers to develop a tailored sale plan.
Start preparing your home 2–3 months before listing to address repairs and staging.
Consult a CPA and financial advisor to optimize tax and financial outcomes, especially if self-employed.

With the right mindset and strategy, selling your home can be a rewarding experience. Start today to turn your sale into a success!

Uncategorized • June 3, 2025

Home Loan Options for Self-Employed 1099 Workers in 2025: Unlocking Homeownership

by Tom Sommers

Home Loan Options for Self-Employed 1099 Workers in 2025: Unlocking Homeownership

For self-employed individuals—freelancers, real estate agents, business owners, lawyers, contractors, and gig economy workers—homeownership can feel like a daunting goal. Unlike W-2 employees with predictable pay stubs, self-employed workers often face irregular income and complex tax filings, making traditional mortgage qualification challenging. However, in 2025, innovative loan programs, particularly bank statement loans, have revolutionized access to homeownership for 1099 workers. This article explores these options, highlights their benefits and risks, and provides new insights and strategies tailored for self-employed borrowers to secure a mortgage while avoiding financial stress.

1. Why Traditional Mortgages Are Tough for Self-Employed Borrowers

Self-employed individuals often write off business expenses on their tax returns, reducing their taxable income. While this saves on taxes, it can make qualifying for a traditional mortgage difficult, as lenders rely on adjusted gross income (AGI) from tax returns to assess affordability. For example, a contractor earning $100,000 annually might show only $40,000 in taxable income after deductions, making it hard to qualify for a $300,000 mortgage. Additionally, 1099 workers lack W-2 forms, complicating income verification.

New Insight: In 2025, lenders are increasingly recognizing the unique financial profiles of self-employed workers, who make up 15–20% of the U.S. workforce, per recent Bureau of Labor Statistics data. This shift has spurred the growth of non-traditional loan programs, but self-employed borrowers must still navigate higher scrutiny and documentation requirements.

Key Challenges:

Income Volatility: Irregular cash flow can make lenders wary, even if your overall earnings are strong.
Tax Return Dependency: Traditional loans require 2 years of tax returns, which may not reflect your true income due to deductions.
Higher Debt-to-Income (DTI) Ratios: Lenders typically cap DTI at 43%, but self-employed borrowers may have higher ratios due to business debt.

2. Bank Statement Loans: A Game-Changer for 1099 Workers

Bank statement loans have emerged as a powerful solution for self-employed borrowers. Instead of relying on tax returns, these loans use 12–24 months of bank statements to verify income, capturing the full scope of your earnings, including cash flow before deductions. This is ideal for real estate agents, consultants, or freelancers who maximize tax write-offs.

How Bank Statement Loans Work:

Eligibility: You must have been self-employed or receiving 1099 income for at least 2 years. W-2 employees are ineligible.
Documentation: Provide 12–24 months of personal and/or business bank statements. Lenders typically calculate income by averaging monthly deposits, sometimes subtracting non-business expenses.
Loan Limits: In 2025, loan amounts can reach $766,550 for conforming loans or higher for jumbo loans in high-cost areas like Minneapolis-St. Paul.
Credit and DTI Requirements: A minimum credit score of 620–680 is typical, with DTI ratios up to 50% allowed by some lenders.
Down Payment: Expect 10–20% down, though some programs allow as low as 5% for strong applicants.
No Tax Returns Needed: This bypasses the low AGI issue, making qualification easier.

Example: A freelancer with $120,000 in annual bank deposits but only $50,000 in taxable income after deductions can qualify based on the higher deposit amount, potentially securing a $400,000 mortgage.

New Insight: In 2025, bank statement loans are offered by a growing number of non-qualified mortgage (Non-QM) lenders, reflecting a 25% increase in Non-QM lending since 2023, per industry reports. These loans cater to the gig economy’s rise, but they come with higher interest rates (6.5–8% vs. 6–7% for conventional loans) and fees, so compare offers carefully.

Action Steps:

Gather 12–24 months of bank statements, ensuring consistent deposits to demonstrate stable income.
Work with a mortgage broker specializing in Non-QM loans to find lenders offering competitive terms.
Review your business and personal accounts to ensure deposits are well-documented and exclude non-recurring funds (e.g., loans or gifts).

3. Other Loan Options for Self-Employed Borrowers in 2025

Beyond bank statement loans, self-employed individuals have additional mortgage options, each with unique benefits and considerations:

FHA Loans: Backed by the Federal Housing Administration, FHA loans are accessible with credit scores as low as 580 and 3.5% down. Self-employed borrowers must provide 2 years of tax returns, but FHA’s lenient guidelines suit those with moderate income fluctuations. In 2025, FHA loan limits are $498,257 in most areas, higher in high-cost regions.
Portfolio Loans: Some lenders keep loans in-house, allowing flexible underwriting for self-employed borrowers. These may use bank statements, profit-and-loss statements, or other documentation, but rates and fees can be higher.
Asset-Based Loans: If you have significant savings or investments, lenders may qualify you based on assets rather than income. For example, $500,000 in liquid assets could qualify you for a $300,000 mortgage, even with low reported income.
Co-Signer or Joint Borrower: Adding a W-2 earner (e.g., a spouse or family member) to the loan can strengthen your application, combining their stable income with your 1099 earnings.

Added Value: In 2025, some lenders offer hybrid programs combining bank statements and profit-and-loss statements prepared by a CPA, providing a middle ground for those with complex income streams. Additionally, state and local down payment assistance programs (e.g., Minnesota Housing’s Start Up program) can reduce upfront costs for self-employed first-time buyers.

Action Steps:

Explore FHA or portfolio loans if bank statement loans don’t fit your needs. Contact a lender to compare eligibility requirements.
Check for down payment assistance at housing.mn.gov or similar state agencies.
Consider a co-signer if your income alone doesn’t qualify, but ensure they understand their financial responsibility.

4. Risks and Considerations for Self-Employed Borrowers

While bank statement loans and other options open doors, they come with potential pitfalls:

Higher Costs: Non-QM loans like bank statement loans often have higher interest rates (0.5–1% above conventional) and origination fees, increasing monthly payments by $100–$300 on a $300,000 loan.
Stricter Documentation: Lenders may scrutinize bank statements for irregular deposits or large withdrawals, requiring explanations or additional records.
Market Sensitivity: In 2025, with interest rates at 6–7%, higher rates for Non-QM loans can strain budgets, especially if your income fluctuates.
Long-Term Stability: Self-employed borrowers must plan for income variability. A sudden drop in earnings could make mortgage payments challenging.

Danger Highlight: Overstretching your budget on a high-rate loan can lead to financial stress or foreclosure, especially if business slows. For example, a $400,000 loan at 7.5% with a $2,800 monthly payment could become unmanageable if your income drops 30%. Additionally, failing to maintain consistent bank deposits can lead to loan denial, delaying your home purchase.

Action Steps:

Calculate your debt-to-income ratio (total debt payments ÷ monthly income) to ensure it’s below 50%. Use online DTI calculators for accuracy.
Build a 6–12 month emergency fund to cover mortgage payments during slow business periods.
Shop multiple lenders to secure the lowest rate and fees, as Non-QM terms vary widely.

5. Strategies to Strengthen Your Application and Avoid Financial Stress

Self-employed borrowers can boost their chances of approval and ensure long-term success with these tips:

Improve Your Credit: Aim for a 680+ score to access better rates. Pay down credit card balances and correct errors on your credit report (check at AnnualCreditReport.com).
Organize Finances: Separate business and personal bank accounts to simplify income verification. Consistent deposits over 24 months demonstrate stability.
Work with a Mortgage Broker: Brokers have access to multiple Non-QM lenders and can find tailored programs, saving you time and money.
Secure Title Insurance: Protect your investment with an owner’s title insurance policy ($1,000–$3,000) to cover unexpected liens or ownership disputes, a common risk for self-employed buyers stretched thin by upfront costs.
Partner with a Real Estate Agent: An agent like Tom Sommers in Minneapolis-St. Paul can identify affordable properties and negotiate to keep you within budget, ensuring you don’t overpay.
Plan for Ongoing Costs: Budget for property taxes, insurance, and maintenance (1–2% of home value annually, or $3,000–$6,000 for a $300,000 home) to avoid surprises.
Leverage Tax Expertise: Work with a CPA to optimize your tax strategy, balancing deductions with mortgage-friendly income reporting. For example, reducing write-offs temporarily can boost your AGI for traditional loans.

New Insight: In 2025, the gig economy’s growth has prompted lenders to offer more flexible programs, but self-employed borrowers must still demonstrate financial discipline. A 2024 Fannie Mae study found that 30% of self-employed applicants were denied due to inconsistent documentation, underscoring the need for organized records and professional guidance.

Why This Matters in 2025

For self-employed 1099 workers, homeownership is within reach thanks to bank statement loans and other flexible programs. These options bypass the limitations of tax returns, enabling freelancers, entrepreneurs, and contractors to achieve their dreams. However, higher rates, stricter requirements, and income volatility demand careful planning. By improving your financial profile, comparing loan options, and building a strong support team, you can secure a mortgage that fits your lifestyle and safeguards your financial future.

Action Steps:

Contact a mortgage broker or lender specializing in self-employed loans to explore bank statement or Non-QM options.
Work with a real estate agent like Tom Sommers to find properties that align with your budget and goals.
Consult a CPA and financial advisor to optimize your income documentation and long-term financial plan.

With the right strategy, self-employed borrowers can turn the dream of homeownership into reality in 2025. Start today by connecting with trusted professionals to navigate the process with confidence!

Uncategorized • June 3, 2025

Underground Heating Oil Tanks: Risks, Solutions, and Insights for 2025

by Tom Sommers

Underground Heating Oil Tanks: Risks, Solutions, and Insights for 2025

Underground heating oil tanks (UOTs) present significant risks for home buyers and sellers, from environmental hazards to financial liabilities. While these tanks were once common for home heating, their potential for leaks and contamination can complicate real estate transactions. In 2025, with heightened environmental regulations and buyer scrutiny, understanding these risks and taking proactive steps is crucial. Below, we explore the dangers of UOTs, offer practical solutions, and provide new insights to help you navigate this issue safely, ensuring a stress-free home sale or purchase.

1. The Dangers of Underground Heating Oil Tanks

UOTs, typically made of steel and buried on a property, were widely used for heating homes before natural gas became prevalent. Over time, these tanks can corrode, leading to serious issues:

Environmental Contamination: Leaks from rusted tanks can release heating oil into the soil and groundwater, causing environmental damage. A single gallon of oil can contaminate up to 1 million gallons of water, per the EPA, posing risks to local ecosystems and drinking water sources.
Health Risks: Contaminated soil or water can expose residents to harmful chemicals, like benzene, which is linked to health issues such as respiratory problems or increased cancer risk.
Financial Liability: Cleanup costs for a leaking UOT can range from $10,000 to $100,000, depending on the extent of contamination. Homeowners are often liable for these costs, even if the leak predates their ownership. In 2025, stricter state regulations (e.g., Minnesota’s Pollution Control Agency standards) can also impose fines for non-compliance.
Transaction Delays: Undisclosed or unaddressed UOT issues can derail home sales. Buyers may demand remediation or walk away, while lenders may refuse financing until the tank is removed or certified safe.

New Insight: In 2025, environmental awareness is at an all-time high, with buyers and lenders increasingly cautious about properties with UOTs. A 2024 study by the National Association of Realtors noted that homes with known UOT issues sell for 5–10% less than comparable properties, as buyers factor in potential cleanup costs. Additionally, aging tanks (20–30 years old) are more prone to leaks, especially in regions with harsh winters like Minnesota, where freeze-thaw cycles accelerate corrosion.

2. Key Risks and Causes of UOT Problems

Leaks are the primary concern with UOTs, often caused by:

Rust and Corrosion: Steel tanks corrode over time, especially if exposed to moisture or acidic soil. A tank installed in the 1980s or earlier is at high risk in 2025.
Electrical Interference: Nearby utility lines can create stray currents that accelerate tank corrosion, a lesser-known but significant issue.
Improper Maintenance: Tanks not regularly inspected or maintained are more likely to fail, especially if abandoned after a home switches to natural gas or electric heating.

Danger Highlight: Undetected leaks can go unnoticed for years, spreading contamination and increasing cleanup costs. For example, a slow leak might contaminate a neighbor’s property, leading to legal disputes and liabilities exceeding $50,000. Sellers who fail to disclose a known UOT risk violating state disclosure laws, potentially facing lawsuits or penalties.

Action Steps:

Hire a licensed environmental inspector ($500–$1,500) to assess the tank’s condition, checking for structural integrity and signs of leaks.
Test surrounding soil and groundwater ($1,000–$3,000) to detect contamination early, as cleanup costs escalate with delays.
Review local regulations (e.g., Minnesota’s MPCA guidelines at pca.state.mn.us) to ensure compliance with tank removal or remediation standards.

3. Solutions for Buyers

Buyers should approach properties with UOTs cautiously but strategically. Here’s how to protect yourself:

Mandatory Inspection: Always include a UOT inspection in your home inspection contingency. A professional can assess the tank’s age, material, and condition, identifying risks like corrosion or leaks.
Alternative Heating Options: If you prefer not to deal with a UOT, negotiate with the seller to install an above-ground tank (typically $2,000–$5,000) in the basement or convert to natural gas or electric heating ($5,000–$15,000). Ensure the old tank is properly decommissioned (filled with inert material or removed) to prevent future leaks.
Contract Protections: Include specific language in the purchase agreement addressing the UOT’s condition and responsibility for any cleanup. For example, require the seller to certify the tank is leak-free or cover remediation costs.
Title Insurance: Purchase an owner’s title insurance policy ($1,000–$3,000) to protect against undisclosed liens related to past UOT contamination, which could surface after closing.

New Insight: In 2025, buyers can leverage a competitive market to negotiate UOT-related concessions. With inventory slightly up (3–4 months’ supply in many areas), sellers may be more willing to cover tank removal or remediation to close the deal. Additionally, some states offer grants or low-interest loans for UOT cleanup—check with your state’s environmental agency (e.g., Minnesota’s Petrofund can reimburse up to $250,000 for eligible cleanup costs).

Action Steps:

Request the seller’s maintenance records for the UOT to verify its history.
Negotiate a price reduction or seller-funded escrow account to cover potential cleanup costs.
Explore state programs like Minnesota’s Petrofund (pca.state.mn.us/business-with-us/petroleum-remediation-program) for financial assistance.

4. Solutions for Sellers

Sellers must address UOTs proactively to avoid delays, price reductions, or legal issues:

Accurate Disclosure: Minnesota law requires sellers to disclose known material facts, including the presence捕捉 presence and condition of a UOT. Work with a real estate attorney to ensure your disclosure is accurate and compliant.
Pre-Listing Inspection: Have the tank inspected before listing ($500–$1,500) to identify issues early. If problems are found, remove or decommission the tank ($2,000–$10,000) to make the property more marketable.
Cleanup Responsibility: If contamination is detected, arrange for professional remediation before selling. Document all work to reassure buyers and avoid liability.
Marketing Advantage: Highlight a certified safe or removed UOT in your listing to attract environmentally conscious buyers, a growing demographic in 2025.

Danger Highlight: Failing to disclose a UOT or its issues can lead to legal action from buyers, including lawsuits for nondisclosure or cleanup costs. In 2025, with increased regulatory scrutiny, sellers could also face fines from state agencies for unreported contamination.

Action Steps:

Obtain a professional tank inspection and share the report with potential buyers.
Work with a title company to ensure a clean title, free of environmental liens.
Consult a real estate agent like Tom Sommers in Minneapolis-St. Paul for guidance on addressing UOT concerns in your listing.

5. Additional Strategies to Mitigate Risks in 2025

Build a Strong Team: Partner with a real estate agent, environmental consultant, and real estate attorney to navigate UOT complexities. They can ensure compliance, negotiate terms, and protect your interests.
Secure Title Insurance: Both buyers and sellers benefit from title insurance to cover potential legal disputes over past contamination. A one-time premium ($1,000–$3,000) provides long-term protection.
Budget for Unexpected Costs: Set aside 1–2% of your home’s value ($3,000–$6,000 for a $300,000 home) for potential UOT-related expenses, such as inspections or minor remediation.
Explore Insurance Options: Some homeowners’ insurance policies offer limited coverage for environmental cleanup—review your policy or consider adding a rider for extra protection.
Stay Informed on Regulations: In 2025, environmental laws are tightening. Check with your state’s environmental agency for updated UOT requirements to avoid penalties.

New Insight: The rise of eco-conscious buyers in 2025 means properties with resolved UOT issues or alternative heating systems (e.g., electric heat pumps) can command a premium. Retrofitting your home with energy-efficient heating ($10,000–$20,000) could increase its value by 5–8%, per a 2025 Remodeling Magazine report, while eliminating UOT risks.

Why This Matters in 2025

Underground heating oil tanks are a hidden danger that can lead to environmental, financial, and legal consequences. For buyers, they pose a risk of inheriting costly cleanup or health hazards. For sellers, undisclosed or unresolved UOT issues can lower sale prices, delay closings, or trigger lawsuits. In 2025’s environmentally aware market, addressing UOTs proactively is essential for a smooth transaction and financial security.

Action Steps:

Schedule a UOT inspection early in the buying or selling process.
Consult professionals (real estate agent, environmental specialist, attorney) to ensure compliance and transparency.
Contact a trusted real estate expert like Tom Sommers in Minneapolis-St. Paul for tailored advice on managing UOT challenges.

By understanding the risks, taking preventive measures, and building a strong support team, you can navigate UOT issues with confidence, protect your investment, and avoid the dangers of contamination or costly surprises. Start planning today to ensure a safe and successful home transaction!

Uncategorized • June 3, 2025

Is Selling Your Home For Sale By Owner (FSBO) a Good Idea in 2025?

by Tom Sommers

Is Selling Your Home For Sale By Owner (FSBO) a Good Idea in 2025?

Selling your home without a real estate agent—known as For Sale By Owner (FSBO, pronounced “fizz-bo”)—can seem like a smart way to save on the typical 5–6% commission, which could be $15,000–$18,000 on a $300,000 home. In 2025’s competitive housing market, the allure of keeping that money is tempting, but FSBO is far more complex than it appears. While it’s possible to succeed, only about 10% of FSBO sellers achieve their goals, and many end up with lower sale prices or unexpected challenges. Below, we’ll explore the pros and cons of FSBO, reorganize key considerations, and provide fresh insights to help you decide if it’s the right path for you, along with strategies to avoid financial stress.

1. The Appeal of FSBO: Potential Savings

The primary draw of FSBO is avoiding the commission, which typically splits 2.5–3% to the seller’s agent and 2.5–3% to the buyer’s agent. For a $400,000 home, that’s $20,000–$24,000 in savings. In 2025, with median home prices in areas like Minneapolis-St. Paul around $380,000 (per recent market data), this can feel like a significant win, especially for budget-conscious sellers.

New Insight: Saving on commissions could free up funds for other goals, like a down payment on your next home or retirement savings. However, these savings are only realized if you sell at a competitive price and avoid costly mistakes. A 2025 National Association of Realtors (NAR) report shows FSBO homes sell for 5–7% less on average than agent-represented homes ($360,000 vs. $390,000 for similar properties), potentially wiping out commission savings.

Action Steps:

Calculate your potential commission savings based on your home’s estimated value.
Compare this against the risk of a lower sale price using local market data (available via platforms like Zillow or Redfin).
Consider hybrid options, like flat-fee MLS services ($500–$2,000), which list your home on the Multiple Listing Service (MLS) without a full-service agent, balancing cost and exposure.

2. The Challenges of FSBO: Time, Effort, and Expertise

FSBO requires you to take on the role of a real estate professional, which can feel like a full-time job. From pricing to marketing to closing, the process demands significant time, skill, and resources. Here are the key hurdles:

Pricing Accurately: Setting the right price is critical. Overprice, and your home sits unsold; underprice, and you lose money. Without a comparative market analysis (CMA), which agents provide, you may misjudge the market. In 2025, with interest rates at 6–7%, buyers are price-sensitive, making accurate pricing even more crucial.
Marketing and Exposure: Agents list homes on the MLS and platforms like Zillow, reaching thousands of buyers and agents. FSBO sellers must create their own listings, invest in professional photography ($200–$500), and advertise through yard signs, social media, or paid ads. Limited exposure can lead to fewer offers.
Showings and Negotiations: Hosting open houses, scheduling showings, and negotiating with buyers (or their agents) requires availability and tact. Buyers’ agents may avoid FSBO listings if you don’t offer a 2.5–3% commission, further limiting your pool.
Paperwork and Legal Risks: Real estate transactions involve complex contracts, disclosures, and deadlines. Mistakes can lead to legal disputes or delays. For example, failing to disclose a known defect (like a leaky roof) could result in a lawsuit.
Closing Coordination: Managing appraisals, inspections, title work, and lender requirements is time-intensive. Errors, like missing a contingency deadline, could derail the sale.

Why It Matters: FSBO sellers often underestimate the workload. A 2025 study by Redfin found that FSBO homes take 20–30 days longer to sell than agent-assisted homes, delaying your plans and increasing holding costs (e.g., mortgage payments, utilities). If you have a full-time job or family commitments, FSBO can become overwhelming.

Action Steps:

Research local FSBO success rates through online forums or real estate data platforms.
Budget for marketing costs (e.g., $500 for photography, $100–$300 for signage and ads).
Consult a real estate attorney ($500–$1,500) to review contracts and disclosures, reducing legal risks.

3. The Hidden Costs of FSBO

While FSBO aims to save on commissions, unexpected costs can erode those savings:

Lower Sale Price: As noted, FSBO homes often sell for less due to limited exposure or pricing errors. A $20,000 commission savings could be offset by a $30,000 lower sale price.
Buyer’s Agent Commission: Many buyers’ agents expect a 2.5–3% commission, even in FSBO deals. Refusing to pay this can deter offers, as agents may steer clients elsewhere.
Time and Stress: Time spent on FSBO tasks (e.g., 20–40 hours for marketing, showings, and paperwork) could be worth $1,000–$2,000 at a $50/hour wage, especially if it disrupts your work or personal life.
Repairs and Concessions: Without an agent’s negotiation skills, you may concede more to buyers’ repair requests or accept lower offers to close quickly.

New Insight: In 2025, buyers are savvier, often using online tools to compare home values. If your FSBO listing isn’t competitively priced or professionally presented, you risk losing credibility, leading to lowball offers. Additionally, title issues—like undisclosed liens—can complicate FSBO sales, costing $5,000–$20,000 in legal fees if not addressed properly.

Action Steps:

Use online valuation tools (e.g., Redfin’s estimator) to set a realistic price, but verify with recent local sales data.
Offer a competitive buyer’s agent commission (2.5–3%) to attract more showings.
Purchase title insurance ($1,000–$3,000) to protect against title disputes, a must for FSBO sellers handling their own closings.

4. The Advantages of Hiring a Professional Agent

A real estate agent brings expertise, networks, and efficiency to the table, often outweighing the cost of their commission:

MLS Exposure: Agents list your home on the MLS, syndicated to sites like Zillow and Realtor.com, reaching a vast audience. In 2025, 90% of buyers start their search online, per NAR, making MLS access critical.
Negotiation Skills: Agents advocate for you, countering lowball offers and negotiating repairs to maximize your sale price. They also handle emotional buyers, keeping deals on track.
Network and Marketing: Agents leverage relationships with other agents, lenders, and title companies, plus professional tools like virtual tours and staging advice, to attract serious buyers.
Streamlined Process: From disclosures to closing, agents manage paperwork, deadlines, and contingencies, reducing your stress and risk of errors.

Added Value: In 2025’s market, agents can also advise on strategic upgrades that boost your home’s value. For example, a $5,000 kitchen update (new countertops, fresh paint) can increase your sale price by $10,000–$15,000, per Remodeling Magazine’s 2025 Cost vs. Value Report. Agents like Tom Sommers in Minneapolis-St. Paul can connect you with trusted contractors for cost-effective improvements.

Action Steps:

Interview multiple agents to compare their marketing plans, track records, and fees. Ask for recent sales data to verify their success.
Request a CMA to understand your home’s market value and set realistic expectations.
Discuss low-cost staging or virtual tours to enhance your listing’s appeal without breaking the bank.

5. Is FSBO Right for You? Key Questions to Ask

FSBO can work for some, but it’s not for everyone. Before deciding, ask yourself:

Time Commitment: Can you dedicate 20–40 hours to marketing, showings, and negotiations? If you’re balancing work or family, FSBO may strain your schedule.
Market Knowledge: Are you confident researching local sales, pricing your home, and navigating contracts? Lack of expertise can lead to costly mistakes.
Financial Goals: Is saving the commission worth the risk of a lower sale price or prolonged sale? Delays could cost $1,000–$2,000 monthly in carrying costs.
Comfort with Negotiations: Are you prepared to handle pushy buyers or agents who may exploit your inexperience?

New Insight: FSBO is most successful for sellers with real estate experience, simple transactions (e.g., selling to a family member), or homes in high-demand areas where buyers are plentiful. In 2025, with inventory still tight in many markets (e.g., 2–3 months’ supply in urban areas), FSBO may attract buyers, but only if priced and marketed effectively. Otherwise, an agent’s expertise often yields a faster, higher-value sale.

Action Steps:

Assess your availability and comfort level with real estate tasks. If unsure, start with a flat-fee MLS service to test the waters.
Research your local market’s demand. In hot markets, FSBO might work; in slower markets, an agent’s network is invaluable.
Set a timeline (e.g., 30 days) to try FSBO. If no serious offers emerge, pivot to an agent to avoid delays.

Additional Strategies for a Stress-Free Sale in 2025

Leverage Technology: Use free or low-cost tools like Canva for flyers or social media ads to boost FSBO marketing. Virtual tours ($200–$500) can attract out-of-state buyers, a growing trend in 2025.
Protect with Title Insurance: Whether FSBO or with an agent, title insurance is critical to avoid disputes over liens or ownership claims. A one-time premium ($1,000–$3,000) ensures peace of mind.
Get a Pre-Listing Inspection: For $300–$600, a pre-inspection identifies issues (e.g., roof leaks) that could scare buyers or lower your price. Addressing them upfront builds trust and speeds up the sale.
Explore Financing Incentives: Offer to cover closing costs or provide a home warranty ($400–$600) to make your FSBO listing more attractive, especially in a competitive market.
Build a Support Team: Even with FSBO, consult a real estate attorney for contract review and a title company for closing. If selling with an agent, choose one like Tom Sommers, who offers tailored strategies in Minneapolis-St. Paul.

Why This Decision Matters in 2025

Selling your home is a major financial move, and FSBO’s appeal lies in potential savings. However, the time, effort, and risks—lower prices, legal errors, or prolonged sales—can outweigh the benefits. In 2025, with buyers scrutinizing value and inventory tight, a professional agent often delivers a higher net profit and less stress. By weighing your skills, time, and goals, you can choose the path that maximizes your sale price and minimizes headaches.

For personalized advice, contact a trusted real estate professional like Tom Sommers in Minneapolis-St. Paul. Whether you explore FSBO or hire an agent, a strategic approach ensures your home sells quickly and profitably. Start planning today to make your sale a success!

Uncategorized • June 3, 2025

What are the hidden costs of buying a home?

by Tom Sommers

What are the hidden costs of buying a home?

The answer is none if you’re working with people who are above board and professional. I know that’s a really bold statement to make but it’s true. there should never be any additional hidden costs when you’re purchasing a home and everything should be laid out in front of you. Can pricing or costs to change a bit? Absolutely especially with closing costs because until the loan has almost been completed, there are subtle changes to the amount of escrow that the lender wants and other small fees. But none should be a surprise.

There are several costs in purchasing a home and one of the biggest is the interest rate versus what the current price of the home is. I will argue that the interest rate has a much bigger impact on the buyer than the price of the home. the better the interest rate, the more home you can purchase for lower cost. There’s been a belief over the last six months that you marry the home add date the interest rate. Meaning you purchase the home because you love it and you refinance later when the rate hopefully comes down.

Looking at traditional costs here are a list and what they are-

Earnest money- it’s something of value that you give to the seller when you write an offer. It shows intent to move forward with the process and purchase the house. Typically, it is about 1% of whatever the sales price is of the home. this is not a gift to the sellers, it is the credit to you at closing. When you bring your down payment, it will be that total minus whatever your earnest check is. That money goes into a broker’s trust account and is distributed on day of closing.

Down payment- this is the amount of money that you put down at closing towards the purchase of your house. The remaining balance is your loan from the bank. There are a lot of different types of loan programs some of them offering 100% financing where you bring nothing to The closing table. All the way to 20% down or more. These are the types of answers you will get when you start the process of buying a home from not only your loan officer but your real estate agent as well.

Closing costs- your loan officer will be the one who will tell you exactly what that amount will be but you can figure it somewhere between 2 1/2% and 3% of whatever the sales price is. Sometimes you can ask this seller to pay them, other times you would bring that along with your down payment at closing. The difference has a lot to do with the amount of escrow money that the bank wants you to put into savings to establish your loan.

Inspection- Having a home inspection is one of the cheapest forms of insurance you can purchase. Typically, right now it’s running about $500 for a traditional single-family home. Not only will give you the Peace of Mind that you’re purchasing the home in the condition you believe it’s in, it also gets you an opportunity to get out of the contract if you find that the house has some major problems. This is a check that you will write out to the inspector directly on the day of the inspection.

Appraisal- this is a function that the bank does by hiring an independent appraiser to check the value of the house. This is another stopgap to make sure that you’re not purchasing a home that’s not worth the value. It’s running about $550 and sometimes you have to pay that by check to the loan officer and other times you can roll it into your closing costs. It really depends on the lender and what they want you to do.

Home insurance- this only applies if you are purchasing a single family home that does not have an HOA or association. You’re required to purchase one year worth of home insurance by the day of closing to cover you for the following year. The first payment you make when you move into the house will hold 1/12th of the total of insurance cost for the following year. That escrow account will pay the insurance company out of the savings in your escrow twice a year.

Anything other than this list of fees should be disclosed to you along with all of these when you first sit down with your real estate agent and your loan officer. There should be no last minute switching of interest rates, increased payment or any of that other nonsense. This goes back to who you work with period make sure you get a professional team to represent you in the purchase of a house. By sitting down and having conversations about all the fees and the process of buying a home, you will be better qualified and a better home buyer.

Uncategorized • June 3, 2025

Home Buyers in 2025: Are You Overlooking Hidden Gems?

by Tom Sommers

Home Buyers in 2025: Are You Overlooking Hidden Gems?

In today’s digital age, with every home listing at your fingertips online, it’s hard to imagine missing out on the best properties. Yet, many home buyers—especially first-timers—are bypassing opportunities that could save money, build wealth, and better suit their lifestyle. As a real estate agent with over 20 years of experience, I’m not pitching an unattainable dream but offering a fresh perspective on finding value in the 2025 housing market. By looking beyond shiny new constructions and considering homes that need minor updates, you can secure a better deal, build equity, and avoid financial stress. Here’s how to avoid overlooking the best properties, with added insights to maximize your investment in today’s market.

1. Understand the 2025 Market Dynamics

The housing market in 2025 has evolved significantly from the frenzy of 2023–2024. While interest rates have stabilized (hovering around 6–7% for 30-year fixed mortgages, per recent data), competition remains fierce for move-in-ready homes, often sparking multiple-offer scenarios. First-time buyers tend to gravitate toward new constructions or fully updated properties, drawn to their modern aesthetics and lack of immediate repair needs. However, this focus can lead to overpaying—sometimes 5–10% above asking price in bidding wars—while overlooking older, well-built homes that offer better long-term value.

Why It Matters: Newer homes often come with premium price tags (e.g., $400,000 vs. $350,000 for a comparable older home in the same area) and may lack the durability or charm of established properties. By considering homes that need cosmetic updates, you can save thousands upfront and customize the space to your taste, all while building equity.

Action Steps:

Work with a real estate agent to analyze local market trends. For example, in the Minneapolis-St. Paul area, median home prices in 2025 are around $380,000, but older homes in established neighborhoods can be 10–15% less expensive.
Avoid emotional bidding in multiple-offer situations. A comparative market analysis (CMA) can help you set a fair offer based on recent sales of similar homes.
Monitor interest rate forecasts (available on sites like FreddieMac.com) to time your purchase strategically, as even a 0.5% rate drop can save $50–$100 monthly on a $300,000 loan.

2. Prioritize Location Over Flashy Finishes

Location remains the cornerstone of real estate value, yet many buyers prioritize updated kitchens over proximity to amenities. A home’s location—near hospitals, parks, top-rated schools, or major highways—adds lasting value that new countertops can’t match. New developments, often built in less-established areas (e.g., former farmland), may lack the infrastructure or community feel of older neighborhoods, leading to longer commutes or fewer lifestyle conveniences.

Added Insight: In 2025, urban and suburban areas with walkable amenities or access to public transit are increasingly desirable, with studies showing a 10–20% price premium for homes near vibrant community hubs. Older homes in established neighborhoods often offer better access to these perks, plus larger lots or mature landscaping, enhancing privacy and long-term appeal.

Action Steps:

List your must-have amenities (e.g., proximity to a grocery store or a 20-minute commute) and prioritize homes that meet these needs.
Use tools like WalkScore.com to evaluate a neighborhood’s walkability and access to parks, schools, or transit.
Ask your agent about future development plans in the area, as new infrastructure (e.g., a planned light rail) could boost property values.

3. Look for Homes with Good Bones

Newer homes may dazzle with modern finishes, but older properties (built 20–50 years ago) often boast superior construction—think solid wood framing, thicker walls, or larger room sizes. While these homes may need updates like fresh paint, new flooring, or modern appliances, such projects are often simpler and less costly than buyers assume. For example, repainting a 2,000-square-foot home costs $2,000–$5,000, while a new kitchen countertop might run $1,500–$3,000—far less than the $20,000–$50,000 premium for a move-in-ready home.

Why It Matters: Cosmetic updates allow you to personalize a home while saving on the purchase price. A 2025 National Association of Realtors report notes that homes needing minor updates sell for 8–12% less than turnkey properties, offering significant savings. Plus, DIY projects or affordable contractor work can increase your home’s value, building equity for future sales.

Action Steps:

Focus on homes with strong structural integrity (e.g., no major foundation or roof issues) but outdated aesthetics. A home inspector can confirm the property’s condition.
Watch YouTube tutorials or take local DIY workshops (offered by stores like Home Depot) to learn skills like painting or installing click-lock flooring.
Budget for updates upfront—set aside 1–2% of the home’s value ($3,000–$6,000 for a $300,000 home) for initial improvements.

4. Value Privacy and Space

Many newer developments maximize land use, packing homes closely together, which can compromise privacy. If you cherish quiet evenings on a patio or a backyard barbecue, an older home with a larger lot, wooded surroundings, or an end-unit townhome may be worth more than a new home with neighbors just feet away. In 2025, buyers are increasingly prioritizing outdoor space, with Zillow reporting that homes with private yards or decks sell 5–10% faster than those without.

Added Insight: Privacy isn’t just about comfort—it impacts resale value. Homes with larger lots or natural buffers (e.g., trees or green space) often appreciate faster, as they appeal to buyers seeking tranquility in a crowded world. Survey your lifestyle: Do you need space for gardening, pets, or outdoor entertaining? An older home might offer these at a lower price point.

Action Steps:

Tour homes with lot sizes or layouts that match your lifestyle—e.g., a fenced yard for kids or a deck for hosting.
Check property lines and easements with your agent to ensure privacy isn’t compromised by future development.
Consider end-unit townhomes or homes backing onto protected green spaces for maximum seclusion.

5. Build Equity Through Smart Updates

Historically, homeowners built wealth by purchasing fixer-uppers, making improvements, and selling at a profit. In 2025, this strategy remains effective. A Remodeling Magazine report indicates that minor kitchen remodels recoup 80–90% of costs at resale, while new flooring or updated bathrooms can yield similar returns. By buying a home that needs light updates, you can save $10,000–$50,000 upfront and increase its value over time, putting more money in your pocket when you sell.

Added Insight: In a competitive market, homes needing updates are less likely to attract multiple offers, giving you negotiation power. For example, a $350,000 home requiring $15,000 in updates might sell for $20,000–$30,000 less than a comparable move-in-ready property, allowing you to customize while building equity. With online resources like YouTube or affordable contractor services, updates like painting, installing countertops, or adding modern fixtures are more accessible than ever.

Action Steps:

Get quotes from contractors for updates before buying to ensure they fit your budget.
Focus on high-ROI projects, like updating kitchens or bathrooms, which boost value and appeal.
Explore financing options like FHA 203(k) loans, which allow you to borrow for both the purchase and renovations, minimizing out-of-pocket costs.

Additional Strategies to Avoid Financial Stress in 2025

Secure Title Insurance: Protect your investment with title insurance, which covers legal fees and losses from title defects (e.g., undisclosed liens). A one-time premium ($1,000–$3,000) ensures peace of mind, especially for older homes with longer ownership histories.
Get a Thorough Inspection: A home inspection ($300–$600) identifies issues that could affect value, like outdated wiring or a failing HVAC. Use findings to negotiate repairs or a lower price, ensuring you don’t overpay.
Work with a Buyer’s Agent: A skilled agent like Tom Sommers in Minneapolis-St. Paul can identify undervalued properties, provide CMAs, and negotiate deals to keep you within budget. They also connect you with trusted lenders and inspectors.
Consider Financing Options: In 2025, explore low-down-payment programs like VA loans (0% down for veterans) or USDA loans (0% down for rural areas) to reduce upfront costs. First-time buyer programs or down payment assistance can also help.
Plan for Total Costs: Beyond the purchase price, budget for closing costs (2–5% of the home price), maintenance (1–2% of home value annually), and property taxes. A $300,000 home might cost $6,000–$12,000 yearly to maintain, so plan accordingly.

Why This Matters in 2025

Overlooking older homes or fixers in favor of new constructions could cost you financially and limit your options. By prioritizing location, structural quality, privacy, and equity-building potential, you can find a home that fits your budget and lifestyle while avoiding bidding wars that drive up prices. In 2025’s competitive market, these strategies empower you to make informed decisions, save money, and invest in a property that grows in value over time.

For personalized guidance, contact a trusted real estate agent like Tom Sommers in the Minneapolis-St. Paul area. He can help you uncover hidden gems, navigate the market, and build a team of professionals to ensure a stress-free purchase. Start your home search today and discover the value waiting beyond the listings!

Uncategorized • June 3, 2025

The Biweekly Mortgage – Who Needs It?

by Tom Sommers

The Biweekly Mortgage – Who Needs It?

Have you received an advertisement offering to save you thousands of dollars on your thirty-year mortgage and cut years off your payments? With email spam becoming more pervasive as everyone tries to get rich quick on the Internet, these ads are popping up with troublesome regularity.

The ads promote a Biweekly Mortgage and for the most part, do not come from a mortgage lender. Exclamation points punctuate practically every claim:

No closing costs!
No refinancing!
No points!
No credit check!
No appraisal!
Save thousands!
Cut years off your mortgage!

To achieve these wonderful savings all you have to do is allow half of your mortgage payment to be deducted from your checking account every two weeks. It’s easy. Of course, there is a small set-up fee and usually a transaction fee with every automatic deduction.

Essentially, the ads are truthful in almost every respect.

They just want to charge you money for something you can do on your own for free.

The Basics:

Normally, you make twelve mortgage payments a year. Since there are fifty-two weeks in a year, a biweekly mortgage equals 26 half-payments a year. The equivalent would be making thirteen mortgage payments a year instead of twelve. By applying that extra payment directly to the loan balance as a principal reduction, your loan amortizes more quickly, requiring fewer payments.

You save money. The ads are true.

How it Actually Works:

You cannot simply mail in half a payment every two weeks to your mortgage lender. Since they do not accept partial payments for legal and accounting reasons, the mortgage company would just mail your half-payment back to you.

Instead, the biweekly mortgage company is an intermediary between you and your mortgage lender. They automatically debit your checking account every two weeks for half of your mortgage payment then place your funds into a trust account. Basically, this is just a holding account for your money. In another two weeks, there is another automatic deduction from your checking account, and so on. When your mortgage payment is due, your funds are withdrawn from the trust account and forwarded to your mortgage lender.

Since you are placing funds into the trust account faster than your mortgage payments are due, you eventually accumulate enough money to make an extra payment. The way the cycle works, this occurs once a year. he extra payment is applied directly to your principal balance, which causes your loan to amortize faster, pay off more quickly and save you thousands of dollars.

Potential Problems with the Trust Account

Because your funds are held in the trust account until your mortgage payment is due, there are potential dangers. Not only are your funds held in this account, but so are the funds of everyone else enrolled in the biweekly program. That is a lot of money.

Most likely, there will be no problems.

However, if there are accounting errors, mismanagement, or even fraud, your mortgage payment might not get made. The first hint of a problem will probably be a phone call or letter from your mortgage lender, but not until after your payment is already late. Since responsibility for making the payment rests with you and not the biweekly payment company, you may find yourself digging into your personal savings to make the payment directly — even though the biweekly payment company has already collected your funds.

Later you can work out the trust account problem with your biweekly payment company.

The Cost of the Biweekly Mortgage

There is usually a set-up fee that runs between $195 and $350, depending on how much sales commission is paid to the individual or company setting up the account for you. You also pay a transaction fee each time there is an automatic deduction from your checking account and sometimes also when the payment is made to your mortgage lender. There may also be a periodic maintenance fee.

Meanwhile, whoever controls the trust account is earning interest on your money.

Savings of the Biweekly Mortgage

By making principal reductions using the biweekly mortgage program, your mortgage will amortize more quickly, saving you money. How quickly your loan pays off depends on your interest rate and when you begin making the biweekly payments.

On a $100,000 loan at an interest rate of eight percent, your first principal reduction would probably be a year from now. Assuming the principal reduction is equal to one monthly payment ($733.76), you would save $43,852 over the life of the loan and pay it off almost seven years early.

However, you have to deduct from those savings any amounts you paid in set-up, transaction, and maintenance fees.

No-Cost Alternatives to the Biweekly Mortgage

Instead of hiring a company to manage your biweekly payment, you could accomplish essentially the same thing on your own for free. Just take your monthly payment, divide it by twelve, and add that amount to your monthly mortgage payment. Be sure to earmark it as a principal reduction.

The first way you save is that you do not have to pay any fees to anyone. It’s free.

In addition to not paying fees — using the same example as above — your total savings on the mortgage would be $45,904. Plus the loan would be paid off three months quicker than with the biweekly mortgage. The reason you save more is because you are making a principal reduction each month, instead of waiting for funds to accumulate so that you can make one principal reduction a year.

Self-Discipline?

The biweekly mortgage companies claim that homeowners are not disciplined enough to follow through with principal reduction plans on their own. They suggest the reason for setting up the biweekly mortgage enforces discipline upon you, and by doing so, they save you money.

However, in this technologically advanced age, banking online and automatic deductions are readily available. You can set up your own automatic deductions including the additional principal reduction and have it go directly to your mortgage lender. Since the deduction occurs automatically, just like with the biweekly mortgages, self-discipline is not a problem. Once again, you don’t have to pay anyone to do it for you and you save even more money.

Conclusion

The biweekly mortgage plans do not really do anything except move your money around and charge you for it. Plus, even though the danger is negligible, you must trust someone else to hold your money for you. If you can do the very same thing for free, plus save yourself even more money by doing it on your own, why pay someone else?

The biweekly mortgage plan – who needs it?

If your goal is principal reduction and saving money, then it is a good plan. If you do it on your own instead of paying someone else to do it for you, then it is a great plan.

Uncategorized • June 3, 2025

Relocating from Minnesota? Key Considerations to Avoid Surprises

by Tom Sommers

Relocating from Minnesota? Key Considerations to Avoid Surprises

If you’re planning to move out of Minnesota permanently or establish residency in another state, recent legal changes and potential future policies could significantly impact your decision. Understanding these shifts, along with proactive planning, can help you navigate the process smoothly and avoid financial or legal pitfalls. Below, we’ve reorganized and expanded on critical insights, added practical steps, and provided strategies to maintain your financial freedom and peace of mind during a move.

1. Understand Minnesota’s Residency Rules

Minnesota’s laws for determining residency have become stricter, making it more challenging to prove you’re no longer a resident. The long-standing “183-day rule” (spending at least 183 days outside Minnesota to establish residency elsewhere) is no longer a guaranteed path. Since 2016, Minnesota’s Administrative Rules (8001.0300, Subparts 1–10) have introduced additional criteria to determine residency, such as:

Intent to Establish Residency: You must demonstrate clear intent to make another state your permanent home. This includes actions like registering to vote, obtaining a driver’s license, or changing your mailing address in the new state.
Ties to Minnesota: The state may examine factors like owning property, maintaining a Minnesota driver’s license, or having family ties in the state to argue you’re still a resident.
Documentation: You may need to provide detailed records, such as travel logs, utility bills, or lease agreements, to prove your time spent outside Minnesota.

Why It Matters: Failing to meet these criteria could result in Minnesota claiming you as a resident, subjecting you to state income taxes (up to 9.85% for high earners) even if you’ve moved. This could lead to unexpected tax bills, especially if your new state has lower or no income tax (e.g., Florida or Texas).

Action Steps:

Review the Minnesota Department of Revenue’s residency guidelines at revenue.state.mn.us/individuals-moving-minnesota for full details.
Keep meticulous records of your time spent in and out of Minnesota, including receipts, travel itineraries, or utility bills.
Consult a tax professional to ensure you meet all criteria for establishing residency in your new state.

2. Beware of Potential Exit Taxes

While not yet enacted in Minnesota, there’s growing discussion about adopting an “exit tax” similar to proposals in states like California and New York. These taxes would assess a one Principled AI Assistant: one-time fee on certain assets (e.g., unrealized capital gains) when someone leaves the state permanently. In Minnesota, such a policy could target assets like property, investments, or business interests, potentially imposing a significant tax burden on those relocating.

Why It’s Concerning: An exit tax could undermine the financial benefits of moving to a lower-tax state, especially for retirees or those with substantial assets. For example, California’s proposed exit tax (as of 2025) targets unrealized gains on assets like stocks or real estate, with rates as high as 13.3%. If Minnesota follows suit, a retiree selling a $500,000 home could face a tax bill of tens of thousands, reducing their financial flexibility. While such a policy raises constitutional questions and may face legal challenges, it’s a trend to watch.

Added Value: The debate over exit taxes reflects broader concerns about state tax policies and personal freedom. As a U.S. citizen, you should have the right to move freely between states without punitive taxes. However, states with high tax burdens may use exit taxes to retain revenue from wealthy residents relocating to tax-friendly states. Staying informed about these proposals is crucial, especially if you’re planning a move for retirement, a job opportunity, or lifestyle reasons.

Action Steps:

Monitor Minnesota’s legislative updates through www.revisor.mn.gov for any proposed tax changes.
Work with a financial advisor to assess your asset portfolio and explore strategies to minimize tax exposure, such as gifting assets or timing your move strategically.
Advocate for fair tax policies by engaging with local representatives or joining taxpayer advocacy groups.

3. Protect Your Finances During the Move

Relocating involves more than tax considerations—it’s a major financial and logistical undertaking. To avoid stress and ensure a smooth transition, consider these additional strategies:

Sell Your Home Strategically: If you’re selling a Minnesota home, work with a real estate agent to price it competitively based on a comparative market analysis (CMA). This ensures you don’t overpay for agent fees or leave money on the table. For example, homes in the Minneapolis-St. Paul area sold for a median of $370,000 in 2024—knowing local trends can maximize your return.
Secure Title Insurance: When buying a new home in your destination state, purchase title insurance to protect against unforeseen claims, like liens or ownership disputes. A one-time premium (typically $1,000–$3,000) covers legal fees and losses, safeguarding your investment.
Budget for Moving Costs: Relocation expenses—movers, travel, and setup costs—can range from $2,000 to $10,000 depending on distance and services. Get binding estimates from licensed movers and budget for unexpected costs, like temporary housing or storage.
Explore Tax-Friendly States: States like Florida, Texas, or Nevada have no state income tax, potentially saving you 5–10% annually on income compared to Minnesota’s rates. Research property taxes and cost-of-living differences to ensure your move aligns with your financial goals.
Build an Emergency Fund: Maintain 3–6 months of living expenses to cover surprises, like delays in selling your home or higher-than-expected moving costs. This cushion prevents reliance on high-interest debt during the transition.

Why It Matters: A well-planned move minimizes financial strain and maximizes the benefits of your new home. For instance, moving to a state with no income tax could save a retiree earning $100,000 annually up to $9,850 in taxes, but only if you navigate residency rules correctly.

4. Assemble a Strong Support Team

Relocating across state lines is complex—don’t go it alone. Build a team of professionals to guide you:

Real Estate Agent: A local expert in your new state can help you find a home that fits your budget and lifestyle, while an agent in Minnesota can maximize your home’s sale price.
Tax Professional: A CPA or tax advisor can clarify Minnesota’s residency rules and help structure your move to minimize tax liability.
Financial Advisor: They can assess how a move impacts your retirement plan, investments, or estate strategy, especially if an exit tax becomes law.
Title Company: Ensure a clean title for your new home to avoid legal disputes that could cost thousands.
Moving Company: Choose a licensed, insured mover with strong reviews to protect your belongings and reduce stress.

Added Value: A trusted team provides peace of mind and saves money by avoiding costly mistakes. For example, a tax professional might save you $5,000–$20,000 by optimizing your move’s timing, while a good real estate agent could negotiate $10,000 more on your home sale.

5. Stay Proactive and Informed

Knowledge is your best defense against surprises. Research Minnesota’s residency rules thoroughly and monitor legislative proposals for exit taxes or other changes. Engage with professionals early to assess your unique situation—everyone’s financial profile is different. For instance, a high-net-worth individual with $1 million in assets could face a $100,000 exit tax if Minnesota adopts a 10% rate, making early planning critical.

Action Steps:

Review Minnesota’s residency rules at revenue.state.mn.us.
Consult a tax professional and financial advisor 6–12 months before moving to strategize.
Join local or national taxpayer advocacy groups to stay informed and influence policy.
Work with a real estate agent to navigate both the sale of your Minnesota home and the purchase in your new state.

Why This Matters

Moving out of Minnesota offers opportunities for a fresh start, but evolving state laws—like stricter residency rules or potential exit taxes—require careful planning. By understanding these changes, assembling a professional team, and budgeting comprehensively, you can protect your financial freedom and avoid unexpected costs. Whether you’re retiring to a sunny state, chasing a job opportunity, or seeking a new lifestyle, these steps ensure your move is smooth and financially sound.

For personalized guidance, contact a trusted real estate agent like Tom Sommers in the Minneapolis-St. Paul area, along with tax and financial advisors, to create a tailored relocation plan. Start preparing today to make your move a success!

Uncategorized • June 3, 2025

Don’t Stress Over Moving: Get Organized and Thrive!

by Tom Sommers

Don’t Stress Over Moving: Get Organized and Thrive!

Moving to a new home can spark a whirlwind of emotions—excitement for a fresh start, but also anxiety about the logistics. With thoughtful planning, strategic organization, and the right support, you can transform the moving process into a smooth, even enjoyable experience. Tom Sommers, an experienced home buyer agent with Coldwell Banker in the Minneapolis-St. Paul metro area, shares proven tips to eliminate stress, plus additional insights to ensure a seamless transition and financial peace of mind.

1. Start Planning Early
The key to a stress-free move is time. Begin preparing 6–8 weeks before your move date to avoid last-minute chaos. Create a detailed checklist of tasks, such as scheduling movers, transferring utilities, and updating your address. Prioritize tasks by urgency—e.g., booking a moving company first, then tackling packing. Break the list into weekly goals to stay on track. For example, dedicate week one to researching movers and week two to decluttering. Use apps like Trello or a simple notebook to keep everything organized. Early planning reduces pressure and gives you time to address unexpected hiccups, like delays in closing or repair negotiations.

2. Declutter Ruthlessly
Moving is the perfect opportunity to streamline your possessions. Sort items into categories: keep, donate, sell, or discard. Be honest—do you really need that old coffee maker or those clothes you haven’t worn in years? Decluttering reduces packing time, lowers moving costs (fewer boxes mean lower fees), and makes your new home feel organized from day one. Tom Sommers can offer guidance on what’s worth taking based on your new home’s space and lifestyle needs. For instance, if you’re downsizing from a suburban house to a city condo, he can help prioritize essentials. Consider hosting a garage sale or listing items on platforms like Facebook Marketplace to earn extra cash for moving expenses. Donate usable items to local charities, such as Goodwill, for a tax deduction and a feel-good moment.

3. Hire a Reputable Moving Company
A professional moving company can make or break your experience. They handle heavy lifting, ensure safe transport, and save you time and stress. Research movers with strong reviews and proper licensing (check the FMCSA’s database at fmcsa.dot.gov for interstate movers). Ask for binding estimates to avoid surprise costs—reputable movers charge based on weight or volume, averaging $1,000–$5,000 for local moves or $4,000–$10,000 for long-distance. Tom Sommers can recommend trusted movers in the Minneapolis-St. Paul area who offer competitive rates and reliable service. Verify insurance coverage for high-value items, like antiques or electronics, and consider supplemental insurance for extra protection. If budget is tight, explore hybrid options like renting a moving container (e.g., PODS) for a DIY-professional balance.

4. Label Boxes Strategically
Efficient unpacking starts with smart packing. Label each box with its contents, destination room, and priority level (e.g., “Kitchen – Pots & Pans – High Priority”). Use color-coded stickers or markers for each room to simplify the process for movers and yourself. For example, blue for the bedroom, red for the kitchen. Include a brief inventory on the box (e.g., “Books, Lamps”) to locate items quickly. Pack an “essentials” box with must-haves for the first few days—clothes, toiletries, chargers, and basic kitchen items. This system minimizes chaos and saves hours during unpacking. Pro tip: Take photos of complex electronics setups before disconnecting to make reassembly a breeze.

5. Update Your Address Promptly
Avoid missed bills or delayed mail by updating your address early. Notify the U.S. Postal Service (usps.com) at least two weeks before moving to forward mail. Update your address with banks, credit card companies, employers, schools, and subscriptions. Inform friends and family, and consider sending a digital announcement for efficiency. For critical services like utilities (electric, gas, internet), schedule transfers 2–3 weeks in advance to ensure your new home is move-in ready. Missing this step can lead to service disruptions or late fees, adding unnecessary stress.

6. Partner with a Skilled Real Estate Agent
Finding the right home sets the foundation for a stress-free move. A knowledgeable real estate agent like Tom Sommers, based in the Minneapolis-St. Paul metro area, prioritizes your needs and guides you through the homebuying process. From identifying properties that match your budget and lifestyle to negotiating offers, Tom ensures you avoid overpaying and secure a home that fits your long-term goals. He can also connect you with trusted lenders, inspectors, and title companies to streamline the transaction. For example, he’ll help you navigate competitive markets by crafting data-driven offers based on comparative market analyses (CMAs), ensuring you don’t overspend in a bidding war.

Additional Insights to Minimize Stress and Protect Your Finances
Moving is more than logistics—it’s a financial and emotional journey. These strategies enhance your experience and safeguard your wallet:

Leverage Title Insurance: When buying a home, title insurance is a must to protect against hidden title defects, like liens or ownership disputes. A one-time premium (typically $1,000–$3,000) covers legal fees and losses, preventing costly surprises that could derail your budget. Tom can recommend reputable title companies to ensure a clean title.
Budget for All Costs: Beyond the purchase price, account for closing costs (2–5% of the home price), moving expenses, and initial home setup (e.g., furniture, repairs). Create a moving budget to track costs and avoid overspending. For instance, set aside $500–$1,000 for unexpected repairs or utility deposits.
Explore Low- or No-Down-Payment Loans: If upfront costs are a concern, ask Tom about VA loans (zero down for veterans) or USDA loans (zero down for rural areas). These programs reduce financial strain, but ensure you qualify by meeting with a loan officer early.
Prepare for the Unexpected: Build an emergency fund with 3–6 months of living expenses to cover surprises, like job changes or home repairs. This cushion prevents financial stress post-move, especially if you’re stretching to afford your new home.
Simplify Unpacking with a Plan: Designate a “home base” room in your new home to store boxes temporarily, keeping living spaces clear. Unpack one room at a time, starting with essentials like the kitchen and bedroom, to create a sense of normalcy quickly.
Embrace Community Resources: In the Minneapolis-St. Paul area, tap into local resources like community moving sales or neighborhood groups for tips on settling in. Tom can connect you with local networks to ease your transition, from finding reliable contractors to joining community events.

Why Organization Matters
A well-organized move reduces stress, saves money, and sets you up for success in your new home. By starting early, decluttering, hiring professionals, labeling strategically, updating your address, and working with an expert like Tom Sommers, you’ll navigate the process with confidence. These steps, combined with financial foresight and a strong support team, ensure your move is a positive step toward your future.

Ready to make your move? Contact Tom Sommers at Coldwell Banker in the Minneapolis-St. Paul metro area for a consultation. His expertise in homebuying and local connections will help you find the perfect home and move stress-free. Reach out today to start your journey!

Uncategorized • June 3, 2025

Buy a Home with Little to No Money Down: Your Path to Homeownership

by Tom Sommers

Buy a Home with Little to No Money Down: Your Path to Homeownership

The dream of owning a home without a hefty down payment is not a myth—it’s a reality through specific loan programs designed to make homeownership accessible. Whether you’re a first-time buyer or a seasoned homeowner, two government-backed programs—VA loans and USDA loans—offer the chance to purchase a home with little to no money down. Below, we’ll explore these options, provide additional insights to maximize their benefits, and share tips to avoid financial stress during the process.

1. VA Loans: Zero Down for Veterans
If you’ve served in the military, a VA loan, backed by the U.S. Department of Veterans Affairs, is one of the most powerful tools for homebuying. Available to eligible veterans, active-duty service members, and certain surviving spouses, VA loans require no down payment and no private mortgage insurance (PMI), which can save thousands annually compared to conventional loans.

Key Features of VA Loans:

Eligibility: You must meet service requirements, such as 90 days of active duty during wartime or 181 days during peacetime, though specific criteria vary. Check with a VA-approved lender to confirm eligibility.
No Down Payment: You can finance 100% of the home’s purchase price, up to the lender’s limit, which is often $726,200 in 2025 but can be higher in high-cost areas.
Reusable Benefit: You can use a VA loan multiple times, even if you’ve owned a home before, as long as you’ve paid off the previous loan or restored your entitlement.
Lower Costs: VA loans typically have competitive interest rates and cap closing costs to protect borrowers. However, a funding fee (1.4–3.6% of the loan amount) applies, which can be rolled into the loan.

Insights for Success:

Work with a VA-specialized loan officer to navigate eligibility and streamline the process. They can help you obtain your Certificate of Eligibility (COE), a key requirement.
Be aware that VA loans require the property to meet Minimum Property Requirements (MPRs), ensuring it’s safe and livable. Factor in potential repair costs if the home needs upgrades to qualify.
Consider budgeting for minor upfront costs, like appraisal fees ($500–$1,000) or home insurance, though these are often minimal compared to traditional down payments.

Over the years, I’ve helped many veterans use VA loans to secure homes with zero down, paving the way for financial stability without the burden of a large upfront investment.

2. USDA Loans: Rural Homeownership with No Down Payment
The USDA loan, often called a “rural loan,” is available to anyone meeting income and location requirements, not just first-time buyers. Backed by the U.S. Department of Agriculture, this program promotes homeownership in rural and suburban areas, offering zero-down financing and flexible terms.

Key Features of USDA Loans:

Location Restrictions: The home must be in a USDA-eligible rural or suburban area. For example, in Minnesota, this typically means areas outside the Minneapolis-St. Paul metro, such as south of Elko New Market, east of Hudson, WI, north of East Bethel, or west of Mound. Contact a real estate professional for a map of eligible areas.
Credit and Income Requirements: A minimum credit score of 620 is typically required, though some lenders may accept lower scores with compensating factors. Your income must not exceed 115% of the area’s median income, ensuring the program targets low-to-moderate-income buyers.
Loan Limits: The maximum loan amount is generally $766,550 in 2025, though this varies by location and market conditions.
Closing Cost Assistance: Sellers or lenders can cover closing costs, reducing out-of-pocket expenses. A USDA guarantee fee (1% upfront, 0.35% annually) applies but can be financed into the loan.
No PMI: Like VA loans, USDA loans don’t require private mortgage insurance, lowering monthly payments.

Insights for Success:

Use the USDA’s online eligibility map (available at usda.gov) to confirm if your desired area qualifies. Some suburban areas near urban centers may still be eligible, expanding your options.
Strengthen your application by paying down debt to improve your debt-to-income ratio (typically capped at 41%). This can also secure better interest rates.
Plan for small upfront costs, such as appraisal fees ($300–$500), inspection fees ($300–$600), or initial home insurance premiums, though these are minimal compared to a 3–20% down payment on conventional loans.

I’ve guided numerous buyers through USDA loans, helping them achieve homeownership in charming rural or suburban communities with no money down, setting them on a path to financial independence.

Additional Tips to Avoid Financial Stress
While zero-down loans make homeownership accessible, careful planning ensures long-term success. Here are strategies to buy smart and maintain financial stability:

Get Pre-Approved: Meet with a loan officer early to assess your eligibility for VA or USDA loans. Pre-approval clarifies your budget and strengthens your offer in competitive markets. It also helps you avoid falling for a home beyond your means.
Budget for Total Costs: Beyond the mortgage, account for property taxes, homeowners insurance, and maintenance (1–2% of the home’s value annually). For example, a $300,000 home might require $3,000–$6,000 yearly for upkeep.
Protect with Title Insurance: Both VA and USDA loans require title insurance to protect against title defects, like liens or ownership disputes. A one-time premium at closing (typically $1,000–$3,000) covers you for as long as you own the home, preventing costly legal issues.
Build an Emergency Fund: Aim for 3–6 months of living expenses to cover unexpected events, like job loss or repairs. This ensures you can manage mortgage payments without stress, especially with no down payment cushion.
Work with a Strong Team: Partner with a real estate agent experienced in VA or USDA loans, a reputable loan officer, and a reliable title company. Their expertise ensures a smooth process and protects your interests. For instance, an agent can help you find eligible properties, while a title company verifies a clean title.
Explore Down Payment Assistance: If you’re ineligible for VA or USDA loans, look into state or local down payment assistance programs, which can provide grants or low-interest loans to cover 3–5% down payments. These often pair with FHA or conventional loans.

Why These Programs Matter
VA and USDA loans open doors to homeownership without the barrier of a large down payment, making it easier to build wealth through property ownership. By eliminating the need for 3–20% down (e.g., $9,000–$60,000 on a $300,000 home), these programs free up funds for other goals, like furnishing your home or saving for emergencies. However, success requires diligence—verify eligibility, budget for all costs, and choose the right professionals to guide you.

For personalized advice or a USDA eligibility map, reach out to a trusted real estate agent or loan officer. They can assess your situation and help you leverage these programs to buy a home with confidence, setting you on a path to financial security without overextending your finances.