The offset- Waiting to buy a home

 

There’s always a lot of misinformation in real estate. I don’t necessarily feel that it’s malice or intentional. I just feel that many times when I read these articles in the newspaper the person writing doesn’t really have a perspective of what residential real estate is let alone what’s going on currently in the market.

 

As I write in this article several different web-based mortgage calculators are currently using 6.214% interest rate for a 30-year fixed mortgage. This is the rub right now because everybody fears rates. Understandably so because it’s one of those things where common-sense dictates that the lower the interest rate, the lower the house payment.

 

As we work through the remainder of 2025 into 2026, interest rates should continue to drop as the Fed continues to cut their rate making the dollar more appealing. When the dollar becomes more appealing, more countries invest in our US bonds which is what drives the interest rates for home loans.

 

In the meantime, there’s one other thing I would like to point out that a lot of people seem to be overlooking. I’ve included a chart with this article to give you reference. Essentially what I’d like you to consider is this- if you purchased a home today at $400,000 with a 6 1/2% interest rate which is what it’s been up until as of recent. You’re putting down 3% your payment would be roughly 2931 dollars. If you wait for the rate to drop to 5.75%. Hoping that that happens in early 2026 or sometime during the year, with average appreciation that $400,000 house could very well go back on the market $428,000 in the spring market.

 

If that happens with a lower interest rate, putting the same amount of money down but with the higher sale price. You end up having the same payment roughly of 2931 dollars. Lesson to this story is rather than just pay attention to what I have to say or anybody in the newspaper or media, take a look do it for yourself and find out what the facts are. You might be in a better position right now to purchase than you will be if we end up with multiple offers.

 

This is not a scare tactic and it’s certainly nothing that I can prove. But I’ve been a licensed real estate agent for over 23 years, and I’ve seen all different types of markets. It only stands to reason from a commonsense standpoint that interest rates drop which is what a lot of home buyers are waiting for. They will all jump back into the market at the same time. With a limited number of properties even though we have more for sale right now than we did three years ago, it’s very conceivable that the good ones will end up in a bidding war period so it’s very possible you could pay anywhere from $5000 all the way up to $50,000 over the list price depending on how it was priced to start with, location and how many buyers you have in that area looking for the same type of home.

 

All I’m saying is here’s some information for you to read and consider. That’s it, the more you know the better options you have which will lead you to better decisions. There are varying factors and degrees to all of this. Give me a call today and let’s have a conversation. I can connect you with a loan officer that I trust to answer your questions.

How do I price my home correctly for sale (in a market like this)?

 

That seems to be the $1,000,000 question. Let me backtrack by telling you a few things that you may want to know ahead of time before we dive into this. Right now, in October of 2025, it seems to be a case of the haves and the have nots. The homes that are selling quickly are for the most part under $350,000- and single-family homes.

 

For the most part townhomes and condominiums are sitting unless it is a town home that is all living on one level. That is indicative I believe of the current market with the interest rates. Being at 6.25% on average for a 30-year fixed rate right now. Once you jump over $700,000 and then the houses are selling quickly again because a lot of people in that price range are not affected by the current interest rates.

 

Taking all this into account Those are important, but you also have to look at what’s currently active, what is pending to see if the listing price is less than the sold price over the last 180 days. It’s a combination of all of this that will help you determine where you start with a listing price on your home.

 

Absorption rate plays a key role in this right now. You have to consider that along with what has sold. That will help you get to the right list price. The other thing to consider is a lot of new construction right now In many cases is offering an amazing interest rate for 30-year fixed mortgage. They are hurting so badly for sales that they spent 10s of millions of dollars buying down these rates from lenders to get people into their homes.

 

 All of this is just scratching the surface period if you’re truly serious and want more information to understand the current market and what you should do if you’re going to list your home comma please reach out to me, I’ll be more than happy to answer your questions.

Do I need 20% down to buy a house?

 

The answer is no, it’s a myth. Many years ago the standard was 20% down but that’s changed over decades of different types of financing. You can buy a house now with as little as 3% down. The most common is a 3.5% FHA loan. But all of this comes down to what you qualify for based on your credit score, income and everything else that they look at.

 

The next question then is always well if I don’t have to put 20% down to buy a house why would I? Well, there are three really important factors to consider when you’re purchasing a home and how much you’re going to put down. If you’re in a multiple offer situation, the buyer who has more down always looks like a stronger buyer because they have more skin in the game. It can give you an advantage,

 

20% down you’re considered to have enough equity in your property that most lenders will not ask you or require you to pay PMI which is private mortgage insurance period it’s not a huge amount of money but it’ll save you anywhere between $50.00 to maybe $100 a month your house payment period some people may pay more depending again on your situation.

 

Lastly, a lot of lending institutions if you’re putting 20% down would give an appraisal waiver. What that essentially means is they will just look at the comparable sold homes and the activity in the area and give your purchase an appraisal value of the purchase price without having to go through the standard appraisal. The standard appraisal requires an appraiser to literally go into the property take photos, measurements and everything else. Then go back and do a full blown analysis of the property.

 

If you can skip that step, not only does it make it easier for you with your loan but the sellers like it because it’s less likely that there will be an appraisal issue moving forward. Sellers want you to have a home inspection and they want everything to be right. But if you can give them a little bit more confidence that your purchase agreement will go smoother than your competitors, it always puts you in a better position.

 

This is just a quick look inside the possibility of not having to put down 20% for the purchase of the home. There’s so much more that goes into it than what I shared with you today. Please reach out to me and I’ll be more than happy to have a conversation with you and answer any questions that you have.

 

How much house can I afford?

 

That’s the first question most home buyers will ask. And it’s probably the most important one. How do you know what you can buy until you know what you can afford?  You’d be surprised at how many people don’t ask that question up front and just start looking for homes on their own. There’s nothing wrong with looking at homes independently before you ever even contacted a loan officer. The trouble starts when they physically start to look at homes and decide they want to buy one before they’ve gone through the process.

 

Almost every home buyer I’ve ever worked with has been approved for more than they want to spend. There’s a big difference between what you want to spend and what the bank will loan you. The key is knowing where your comfort level is over and above everything else. What is a reasonable payment to make every month That is comfortable and doesn’t make you house poor.

 

The idea that you must put down 20% to purchase a home is simply not true there are different options out there with as little as 3 1/2% down. I’ll give you 3 quick scenarios with an average purchase price of $350,000. All of these are at the current rate today, 6.29%. This is just an average rate that I’ve taken off the Internet. It’s not locked in some will pay more and some will pay less depending on credit and other variables. There will also be a 3% closing costs that you will need to bring in addition to your down payment. I have other videos that explain how closing costs are broken down.

 

If you put down the following, this should give you a rough idea of payment including average price of taxes and insurance.

• 5% down or $17,500 your payment all in would be $2411 per month
• 10% down or $35,000 your payment all in would be $2303 per month
• 20% down or $70,000 your payment all in would be $2087 per month

 

As I had mentioned, everyone’s going to be different depending on how much you have for down payments, what your credit looks like and a lot of other pieces. But here’s a quick little scenario to give you an idea of what you’re looking at. Imagine if the interest rates come down how much better the payments will be. But I should caution you by saying that a half a percentage lower in rate doesn’t change the payment all that much. You really need to see the rates drop a full percentage point or more before you start to really see it difference.

 

The price is being offset a little bit by house prices coming down in some areas. There are a lot of great deals out there you need to know where to look for them.

 

How to win the home buyer war.

 

I know that’s probably a little bit of an overused title it seems like everything is a war period storage wars, concert ticket wars, housing wars, tow truck wars and on and on. But they didn’t know what else to call it simply because of the fact that this is how a lot of my clients at times feel.

 

As a home buyer they feel like they are literally at war. The question then becomes how do you avoid that feeling and how do you battle back to end up in the home that you want to purchase? Their actual several there are actually several different ways to accomplish this but it comes down to the home buyer individually. What are you looking for in a new home? And what are you willing to change, repair or alter to get to where you want to be?

 

Case in point, if you’re looking for a house right now that’s completely move in ready that requires no work at all that looks like something out of a magazine or restoration hardware, be prepared to fight for it. A lot of home buyers are looking for that specifically right now. If that’s the case for you, then we have to look at different ways to write a purchase agreement to make you stand out and make you more attractive than all of the other competition. It’s really not that hard to do but you have to be willing to try something that’s a little bit of the out of box thinking. This is a combination of answering questions from myself as well as your loan officer to put the right offer together for you.

 

If that’s not the case and you’re looking for an older home that maybe needs some updating but stuff you can handle whether it’s your first home or your 5th home, then the strategy is a little bit different you don’t have to worry as much about how you write the offer because you’re not competing with other people. A lot of wonderful homes right now between $400,000 and seven or $800,000 are sitting on the market for several months without any offers and barely any activity. The key is scooping these up before the interest rates drop.

 

The last bit of insight would be what can you do from an interest rate perspective? I would argue that it’s better to purchase a home right now with a higher interest rate and refinance for $5000 when the rates drop. . Then to wait for the rates to become very attractive and all of a sudden now you’re in a bidding war because a lot of buyers who are waiting for the same thing you are will jump into the market. All of this goes back to timing and motivation. Give me a call and let’s have a conversation. You’re under no obligation but I’ll be more than happy to share the strategies in more detail with you and tailor them to your specific needs.

 

 

 

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• Neighborhood Appeal: Look for areas with strong employment (e.g., Minneapolis’s healthcare sector) or attractions (e.g., proximity to lakes). Desirable neighborhoods hold value better.
• Rental Market: Check rental inventory on platforms like Zillow. Low rental supply (e.g., <2% vacancy) signals high demand, ensuring your flip appeals to buyers or renters if it doesn’t sell quickly.
• Home Prices and Trends: Analyze recent sales via Redfin or a real estate agent’s comparative market analysis (CMA). In 2025, homes in up-and-coming areas like St. Paul’s Midway sell for $250–$300/sq. ft. after upgrades, offering profit potential.
• Pre-1978 Homes: Many Minneapolis homes predate 1978, posing lead paint risks (banned that year). Federal law requires lead disclosures, and remediation ($5,000–$20,000) can impact costs.

• Spend 1–2 months researching neighborhoods, visiting open houses, and talking to locals.
• Use WalkScore.com to evaluate amenities and Redfin for sales data.
• Consult a real estate agent like Tom Sommers in Minneapolis-St. Paul for a CMA and insights on emerging areas.

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• Purchase and Down Payment: Expect 20–30% down for investment loans ($40,000–$60,000 on a $200,000 home). Rates are 7–8%, per 2025 MBA data.
• Holding Costs: While renovating (3–6 months), cover mortgage payments ($1,200–$1,800/month), property taxes ($3,000–$5,000/year), insurance ($1,000–$2,000/year), utilities ($200–$400/month), and maintenance.
• Renovation Costs: Budget $20–$50/sq. ft. for updates ($40,000–$100,000 for a 2,000-sq.-ft. home). Kitchens and bathrooms yield the highest ROI (80–90%, per 2025 Remodeling Magazine).
• Lead Remediation: For pre-1978 homes, lead paint stabilization ($2,000–$10,000) or removal ($10,000–$30,000) may be required, per EPA guidelines.
• Selling Costs: Include 5–6% agent commissions ($15,000–$18,000 on a $300,000 sale), closing costs (1–2%, or $3,000–$6,000), and transfer taxes.

• Create a detailed budget using the 70% Rule, factoring in all costs.
• Get contractor quotes ($50–$100/hour) for repairs, adding 10–20% for overruns.
• Work with a lender to pre-qualify for a hard money or investment loan, ensuring funds are ready.

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• Set a 6–12 month timeline to find a property, avoiding pressure to buy prematurely.
• Monitor listings daily on MLS or platforms like Zillow, focusing on distressed but viable homes.
• Avoid foreclosures unless you have cash reserves and legal expertise to navigate risks.

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• Define your ideal property (e.g., 1,500–2,000 sq. ft., built 1950–1970, $150,000–$200,000).
• Partner with an agent to set up MLS alerts for matching listings.
• Hire RRP-certified contractors for pre-1978 homes to avoid $47,000 EPA fines.

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• Cosmetic Updates: Paint ($2,000–$5,000), flooring ($5,000–$10,000), fixtures ($1,000–$3,000).
• Major Systems: HVAC ($5,000–$15,000), roofing ($10,000–$20,000), plumbing ($5,000–$15,000).
• Lead Remediation: For pre-1978 homes, lead paint removal ($10,000–$30,000) or encapsulation ($2,000–$10,000) is often required.
• Permits and Inspections: $500–$2,000, plus lead inspections ($500–$1,500).
• Unexpected Repairs: Add 10–20% ($5,000–$20,000) for surprises like foundation cracks.

• Get 2–3 contractor quotes before buying to lock in repair costs.
• Conduct a pre-purchase inspection ($300–$600) and lead test ($500–$1,500) for pre-1978 homes.
• Secure title insurance ($1,000–$3,000) to protect against liens from past environmental issues.

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• Build a Team: Partner with a real estate agent, lender, CPA, and lead-certified contractor. An agent like Tom Sommers can identify off-market deals in Minneapolis-St. Paul.
• Secure Financing: Hard money loans (10–12% rates, 2–5 points) suit flips but require quick repayment. Self-employed flippers can use bank statement loans, showing 24 months of deposits.
• Comply with Federal Laws: For pre-1978 homes, disclose lead hazards per the 1992 Lead-Based Paint Hazard Reduction Act. Buyers get 10 days to inspect, and violations incur $47,000 fines.
• Market Smartly: In 2025, professional photography ($200–$500) and virtual tours ($200–$500) attract online buyers. Highlight lead-safe upgrades or energy-efficient features to boost value by 5–8%, per Remodeling Magazine.
• Protect Finances: Maintain a 6–12 month emergency fund for self-employed flippers to cover delays or slow sales, costing $5,000–$10,000 in holding costs.

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• Start researching neighborhoods and budgeting today, aiming for a 6–12 month timeline.
• Contact a real estate agent like Tom Sommers for market insights and deal alerts.
• Consult a lender and CPA to secure financing and optimize taxes, especially if self-employed.

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• Children: High lead levels can damage the brain and nervous system, leading to developmental delays, learning disabilities, behavioral issues, slowed growth, hearing loss, and seizures. The CDC notes that blood lead levels as low as 3.5 µg/dL can impair cognitive function in children.
• Adults: Lead exposure can cause reproductive issues (e.g., reduced fertility), high blood pressure, digestive disorders, nerve damage, memory and concentration problems, and muscle or joint pain. Chronic exposure increases risks of kidney damage and cardiovascular disease.
• Pregnant Individuals: Lead can cross the placenta, harming fetal development and increasing risks of miscarriage or preterm birth.

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• Lead-Based Paint: Found on walls, windows, doors, and trim, lead paint becomes hazardous when it peels, chips, or turns to dust. Friction from windows or doors can release lead dust, which settles on floors and surfaces.
• Lead Pipes and Water: Older homes may have lead pipes or lead-soldered plumbing, contaminating drinking water. In 2025, the EPA’s Lead and Copper Rule mandates replacing lead service lines, but many homes remain at risk.
• Soil Contamination: Lead from exterior paint or past vehicle emissions (pre-1980s leaded gasoline) can contaminate soil, especially near busy roads or older urban homes.
• Household Items: Imported toys, ceramics, or cosmetics may contain lead, though less common in 2025 due to stricter regulations.

• Test your home for lead using an EPA-certified inspector ($300–$800) or DIY kits ($20–$50, less reliable).
• Check your water for lead with a certified lab test ($50–$150), especially if you have older plumbing.
• Avoid DIY renovations in pre-1978 homes without lead-safe practices, as sanding or scraping can release toxic dust.

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• Disclosure: Sellers must provide buyers with any known information about lead-based paint or hazards. This includes sharing past inspection reports or maintenance records.
• Lead Disclosure Form: Sales contracts must include an EPA-approved lead disclosure form, signed by all parties, acknowledging lead risks.
• EPA Pamphlet: Sellers must provide buyers with the EPA’s “Protect Your Family from Lead in Your Home” pamphlet, detailing lead hazards and prevention.
• 10-Day Inspection Period: Buyers have up to 10 days (or a mutually agreed period) to conduct a lead risk assessment or inspection at their expense. Buyers can waive this right but must do so in writing.
• Corrective Stipulations: Buyers may negotiate repairs or remediation (e.g., paint stabilization, $1,000–$5,000) as a condition of sale.

• Work with a real estate attorney ($500–$1,500) to ensure lead disclosures are complete and compliant.
• Provide buyers with all lead-related records, even if negative, to build trust and avoid liability.
• Encourage buyers to conduct a lead inspection to limit your post-sale liability.

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• Conduct a Lead Inspection: Hire an EPA-certified lead risk assessor ($500–$1,500) to test paint, dust, soil, and water. A positive result may justify negotiating a lower price or seller-funded remediation.
• Negotiate Remediation: Request lead-safe repairs, such as encapsulating lead paint ($2,000–$10,000) or replacing lead pipes ($5,000–$15,000). In 2025’s balanced market (3–4 months’ inventory), sellers may concede to close deals.
• Secure Title Insurance: An owner’s title policy ($1,000–$3,000) protects against undisclosed liens from past lead cleanup, a hidden risk in older homes.
• Plan for Safe Living: If lead is present but not an immediate hazard, use lead-safe practices (e.g., wet cleaning, HEPA vacuums) to minimize exposure until remediation is affordable.

• Include a lead inspection contingency in your purchase agreement.
• Research local lead abatement programs at mn.gov/health or EPA.gov.
• Budget for lead remediation ($5,000–$20,000) or factor it into your offer.

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• Pre-Listing Lead Assessment: Test for lead before listing ($500–$1,500) to identify hazards and address them upfront. Stabilizing lead paint or removing it safely ($5,000–$20,000) can make your home more marketable.
• Full Disclosure: Document all lead-related information, including past tests or repairs, to comply with federal law and build buyer trust.
• Market as Lead-Safe: If remediated, highlight lead-safe certifications in your listing to attract eco-conscious buyers, a growing demographic in 2025.
• Work with Professionals: A real estate agent like Tom Sommers in Minneapolis-St. Paul can guide you through disclosures and connect you with lead-certified contractors.

• Hire a lead-certified contractor (find at epa.gov/lead) for safe remediation.
• Include lead-safe upgrades in your marketing, like “lead-free windows installed 2023.”
• Secure title insurance to protect against future lead-related claims.

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• Urban Challenges: Cities like Minneapolis-St. Paul face widespread lead risks, with 50–60% of homes built before 1978. Retrofitting costs ($10,000–$50,000) are high, but federal programs like HUD’s Lead Hazard Control Grants can cover up to 80% for low-income households.
• Renovation Safety: The EPA’s Renovation, Repair, and Painting (RRP) Rule requires contractors working on pre-1978 homes to be lead-certified, with fines up to $47,000 for violations. DIY renovations without lead-safe practices can spread toxic dust, endangering your family.
• Water Safety: In 2025, the EPA’s push to replace lead service lines (1–2% complete nationwide) highlights water risks. Test your water annually and install NSF-certified filters ($50–$200) as a precaution.
• Self-Employed Finances: Budget for lead-related costs (1–2% of home value, or $3,000–$6,000 for a $300,000 home) and maintain a 6–12 month emergency fund to cover unexpected health or remediation expenses.
• Eco-Trends: Buyers in 2025 favor homes with modern, lead-free systems (e.g., new plumbing, $10,000–$20,000), boosting value by 5–10%, per Remodeling Magazine’s 2025 Cost vs. Value Report.

• Research federal or state lead abatement programs at epa.gov/lead or hud.gov.
• Hire RRP-certified contractors for any pre-1978 home renovations.
• Work with a real estate agent and environmental consultant to address lead concerns early.

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How soon can you sell a house after buying it?

The answer is right away in the Minneapolis Saint Paul metro area. But there’s more to it than just that. you can legally turn around and sell a home you purchased the next day if you decided you didn’t want it anymore. I probably don’t have to go into detail about the financial hit you’ll probably take. But if you’re in a situation where you need to get out you have options.

The biggest thing holding you back will be your buyer pool. That depends a lot on the price range your home is in. FHA is one of the biggest loan programs available to home buyers. It’s financed by the government, and they have a few different rules. One of them states that a home cannot be sold to an FHA buyer for at least 90 days after its last purchase. This is something that comes up a lot when I’m helping investors purchase homes to flip. If you’re in a higher price range this usually isn’t applicable because most home buyers putting 20% down will go conventional for their financing. The main reason is they get a much better rate and they won’t have to pay mortgage insurance. That’s also known as PMI.

If you’re stuck in a situation where you have to sell quickly, it is an option. But and must caution you to be very careful so that you don’t get taken advantage of. I see this a lot in divorces where one of the spouses is leaving. They want a quick sale because of the divorce but they don’t want to lose any money at all. That’s just not reality in every situation. I’m not saying that you couldn’t walk away with a profit if you bought really well at a certain time of the year and with a certain market. But going back to what I had already mentioned about being cautious, before you even consider something like this I think it’s very important to sit down and really have a conversation with your real estate agent. I will never tell you what you want to hear, I will always tell you what you need to know.

If you have any questions or you would like to get started today, please call Tom Sommers of Coldwell Banker Realty 952-994-7204.

What is asbestos?

Asbestos is still common in some of the older homes. It should be remediated by a professional company that is trained in dealing with asbestos. This video shows you what it looks like to help better prepare you as a home buyer when you’re looking at an older home.

Having said that, it’s not something you should necessarily fear but it’s something that you should be aware of and understand the ramifications of having it in your home. There are multiple reports every single year that come out from the CDC and other professionals saying that asbestos in many forms can cause lung cancer and other disease. Because of this, most people have removed asbestos from their homes over the years.

If you’re thinking about buying an older home especially before 1940, there is a chance you will see asbestos in the basement. It was in a lot of different products but for this example I’m simply going to stick with the asbestos you see that they are usually wrapped around pipes in the basement that are attached to an older boiler or furnace.

Because of the nature of this product, more than likely just to be on the safe side you will want to have it remediated by a professional licensed company. If you run across a home with asbestos or what you believe to be asbestos. A rule of thumb would be to have someone come out that is schooled in this area to look it over during your home inspection period. Also get some quotes of what the remediation will cost before your inspection contingency has expired.

This is the only way to be sure what you think is asbestos is truly asbestos. But also, you will understand how to solve the problem and how much it will cost. Anything shy of that is nothing more than guessing. It’s probably not a bad idea if it’s something you’re concerned about to do some research on Google and read about all the different studies that have been published.

 

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