Buyers: Increase your negotiating power with a pre-approval

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Key insights:

  • A lender will issue a pre-approval letter after a thorough analysis of a potential buyer's credit and financial history.
  • This pre-approval letter explicitly tells real estate agents and home sellers how much a buyer can responsibly borrow in a home mortgage loan.
  • Pre-approvals can help buyers in negotiations, because they show that the buyer is prepared and qualified to purchase a home in a certain budget.

Did you know that you can gain a distinct advantage over other homebuyers by arranging for financing even before you put an offer on a home? Read on for more insights on how a pre-approval can help you compete in a tight market.

What is a pre-approval?

As a homebuyer, you may have heard of getting pre-qualified or pre-approved for a mortgage. In a pre-qualification, a would-be buyer submits their financial and credit information to a home mortgage company (also called a lender). The lender quickly analyzes what was provided and estimates the total loan amount for which that buyer would likely qualify. Importantly, the lender does not verify that the submitted information is accurate.

A pre-approval is a more official and involved process where the lender does verify credit information and financial documents provided by the potential buyer. These documents include, but are not limited to:

  • Income verification (pay stubs)
  • Employment W2s
  • Previous year's tax returns
  • Bank statements
  • A full credit report

After reviewing and verifying this information, the lender can issue a pre-approval letter. This pre-approval letter explicitly tells the buyer, real estate agents and home sellers how much that buyer is eligible to borrow — and states that they have acceptable credit to be approved for a home mortgage loan in that amount.

As you may expect, a mortgage pre-approval is considered more trustworthy than a mortgage pre-qualification.

Is a pre-approval a guarantee?

Your pre-approval letter is based on the information you provided the lender at a certain point in time. If you were to lose a significant amount of money or damage your credit shortly after your pre-approval was issued, you may no longer be approved for that amount when it comes time to buy.

For this reason, a pre-approval letter cannot be considered a guarantee that you will be approved for a loan.

How can a pre-approval boost my negotiating power?

The goal of everyone involved in a real estate transaction – from the buyers and sellers to the real estate agents working with them – is to close the deal effectively and with minimal mishaps.

A pre-approval shows that you are not only prepared to apply for a loan, you are also considered to be a responsible loan applicant by your preferred lender. This can give you an edge over buyers who have not been pre-approved and could help sway the sale in your favor if a seller is reviewing multiple offers with similar terms. A pre-approved buyer presents less risk of being declined for a loan than a buyer who has not undergone that extensive process.

Ready to get pre-approved?

Together, we can ensure you are fully prepared for buying a home by working to get your pre-approval letter. From there, we can have an honest conversation about your buying power and potential path forward.

Reach out today to get started on the buying process.

Prosperity Home Mortgage is an affiliate of Edina Realty. See Affiliated Business Arrangement Disclosure Statement

Tax considerations when selling a home

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Key insights:

  • When you sell your home, you’ll need to determine if you owe the IRS any of the profits from the home sale.
  • For primary residences, capital gains taxes will be charged if your profits exceed $250,000 (as an individual tax filer) or $500,000 (as a couple filing jointly).
  • Those who own vacation home properties or investment properties typically have to pay capital gains taxes from their total home sale profit.

If you’ve sold your home in the last tax year, there could be tax implications for you to consider this spring. Here are insights you can use to determine how your home sale will factor into your tax payments.

Capital gains taxes on your home sale

After you sell your home, you may worry about having to pay capital gains taxes, which is when the IRS charges a levy on the profit of your home sale. Keep in mind that if the home you sold was your primary residence for two or more years*, you will only be charged capital gains taxes on:

  • Profits exceeding $250,000 if you are filing solo or a couple filing separately.
  • Profits exceeding $500,000 if you are filing jointly.

For example, if you are filing your taxes solo and you have just sold your primary residence for $750,000 after paying $525,000 for it, the profit from the sale would be $225,000. That’s a tax-free gain! However, if you sold the same home for $800,000, then your profit would be $275,000. The first $250,000 would be tax-free, and you would be taxed on the remaining $25,000.

In both Minnesota and Wisconsin, it’s quite common for home sellers to earn a tidy profit on their home sale and still not meet the threshold that would require them to pay capital gains taxes.

*Note: The IRS’ fine print says that property owners looking to qualify for this exclusion must have owned the property for at least two of the last five years; have lived in the home for two of the last five years; and have not taken advantage of the capital gain exclusion from the sale of another property in the last two years.

Raising your cost basis to lower your capital gain

As you now know, the capital gain of a home is typically assessed by comparing the price you paid for your home (the cost basis) to its final sales price. However, if you’ve made significant improvements to the property, you may be able to adjust your cost basis.

If you’ve replaced the windows and finished the basement, be sure to tell your tax professional about the cost of those repairs so they can adjust your cost basis. By increasing the price you’ve paid into your home, you’ll decrease the total capital gains on the property.

However, note that the IRS doesn’t count basic upkeep — like hiring a plumber to sweep the drains or adding new carpet — as eligible home improvements for adjusting your cost basis. They require the improvements to be more significant, such as a full basement remodel, replacing a plumbing system or adding a deck or bedroom to the property.

Considerations for second-home owners

The IRS has set up this threshold on capital gains taxes to assist homeowners who are selling their own primary residences. They do not offer similar accommodations to those selling a vacation home or investment property, which means that when you choose to offload a second or third home, you will likely face a higher tax burden than if you were to sell your primary residence.

Some homeowners choose to move into their investment or vacation property for two years before selling, to minimize the total tax payment they will make to the IRS after their home transaction is complete.

Prepping to sell?

If you still own your home and feel ready to make a change, get in touch for help. Together, we can ensure you have a successful home sale.

Why you should get a home inspection before buying a home

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Key insights

  • An inspection can help homebuyers determine the potential damages or defects present in the home they wish to purchase.
  • By asking for recommendations and checking references, you can ensure you get a thorough and neutral inspector.
  • A long inspection report doesn’t necessarily mean you should walk away from the sale. Together, we can determine the smartest next steps.

When buying a home, it’s smart to require a home inspection within your offer. This can help ensure that you enter into homeownership with a true understanding of the property’s condition and the future repairs it may require. Depending on the outcome of the inspection report, you may also be able to renegotiate the terms of your contract.

To ensure you understand the home's condition and potential issues, projects or repairs, follow these home inspection insights.

How to hire the right home inspector

When hiring a home inspector, make sure you find one who is reputable and experienced. Ask for recommendations from folks you trust and once you begin speaking with potential inspectors, be sure to ask specific questions about their work, plus review home inspection reports they provide and check past client references.

Finally, pay close attention to their expertise to ensure it matches the home in question. (An inspector who specializes in historic homes will not be the right fit if you’re looking at properties in a brand-new development.)

What to expect and what to avoid during the inspection

A normal inspection typically lasts between two to three hours. During the inspection, it’s appropriate to be present and ask questions you may have about common maintenance, concerning appliances or other issues you’ve noticed. If you can’t be there for the entire inspection, return to the property as they’re wrapping up to get a high-level report of the initial findings.

The inspector will review a property's key exterior components, including the house's roof, garage and foundation. In doing so, they are looking for defects and failures — missing shingles or cracks in gutters could result in roof damage, while an unsettled or shifting foundation could mean an expensive structural repair is in your future.

Inside, the inspector will check important systems that could be costly to repair or replace. If your soon-to-be home has leaks or water pressure problems, the inspector will look deeper into the home’s plumbing. They will also look into wiring and electrical systems to ensure there aren’t fire safety issues, and test ventilation and appliances throughout the home.

Making sense of the inspection findings

After the inspection is complete, you’ll receive a detailed home inspection report. A typical report can span 20-50 pages.

A longer report doesn’t necessarily mean the house you’ve selected is a money pit; it could be an indication of a thorough inspector who has identified many smaller issues that can be used as leverage in your negotiation.

Together, we will review the report in full and determine how to proceed. Only then can we decide our next steps, which may include:

  • Asking the seller to pay for smaller fixes, such as a broken window or missing gutter.
  • Requesting a price reduction or money back at closing, in recognition of more extensive issues that will need fixing in the near-term — such as an aging roof or windows with insulation issues.
  • Walking away from the property if the identified problems are too extensive or if the seller is unwilling to drop their price or pay for repairs.

Remember, your inspector is a neutral partner

In addition to their inspection report, some inspectors may offer to share an estimated cost of necessary repairs. This can be helpful as you make your home purchase decision. After all, you’re likely not an expert on how much a few broken roof tiles will cost.

Keep in mind, however, that you want to avoid working with an inspector who offers to perform repairs or recommend contractors. Your inspector is an impartial mediator, so they should have no stake in your home purchase or the services that will be needed as a result of their work.

Need someone to help you every step of the way?

When buying a home, it’s critical to work with someone you can trust. Whether you’re ready to put in an offer and request an inspection or need help finding the right neighborhood for your family, reach out today for dedicated assistance.

Helpful tips for downsizing your home

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Key Insights

  • Moving to a smaller home - or downsizing - is a process best accomplished over time
  • There are steps and resources available to help you navigate the emotional and practical sides of downsizing
  • Even if you don’t plan to move, downsizing your belongings can give your home new life

There are many reasons why people decide to move, and downsizing is one of the most common. Whether you’re an empty nester in a new season of life or you just want less stuff, these tips will help you navigate the emotional and practical aspects of downsizing your home. And when it comes time to sell, having a home that showcases your (neat and tidy) storage areas can be a major selling point!

Top reasons to downsize

If you’re considering a move in 2025 or beyond, you might be looking at reducing expenses and space. Here are popular reasons for downsizing:

  1. Cost savings. Electing to take advantage of existing equity and trade in a large monthly payment for a less expensive home can be an attractive option for those looking to reduce or eliminate monthly mortgage payments and unnecessary utilities.
  2. Reducing maintenance and space. Larger properties take more time to clean and maintain, so wanting to maximize your leisure time is an admirable reason to move. Furthermore, having a lot of unused space is impractical.
  3. Moving near family and friends. Whether you’re hoping to be closer to the grandkids or the golf course, proximity to loved ones is a major motivator. And some are choosing to settle in communities organized around lifestyle and age.

Tips for downsizing

Chances are, you’ve been in your home for a while and will have to confront the emotional and practical aspects of making the move. Here are some tips for navigating the process of downsizing:

  • Give yourself plenty of time. It’s not fair to think you can go through decades’ worth of keepsakes, furniture and decor in a couple of weeks. Give yourself a few months to tackle this, and ask for help from family and friends. You may also consider holding an estate or garage sale.
  • Make a plan for trash and donations. You’ll likely want to check with your trash hauler about expanding your services. Some downsizers prefer to rent a dumpster or make arrangements with a local junk hauling company to take unwanted items away. To stay organized, create zones in your home for what you’ll keep, toss and donate.
  • Pass on the good memories. Invite your kids, nieces, nephews or grandchildren over on a Saturday to sift through family relics and memory boxes. Tell your family in advance that they are welcome to keep anything they'd like, but items left behind will be recycled or trashed. Pro tip: Consider buying large plastic storage containers for each family member to fill up. This will reassure them that you don't want to trash their memories, you just want them to find a new home.
  • Shred or recycle papers. You likely have a file cabinet full of pay stubs, tax reports, immunization records, newspaper clippings and more. Take a day (or two) to go through all your paperwork, and try to discard the majority of it. The IRS says that even the most complicated tax filings must only be kept for seven years, so clear out anything older than that. Protect against identity theft by shredding all the documents with personal information, but keep in mind that shredded paper cannot typically be recycled.
  • Pare down items. Save your bathrooms and kitchen for a day when you don't have the heart to throw away sentimental items. If you have specific kitchen-related traditions, like baking spritz cookies during the holidays, consider whether a relative might like to continue the tradition, and pass your items along to them.
  • Discard clothing you haven’t worn in two years. With very few exceptions, you should get rid of any clothing items you haven't worn in the last two years. If you recently retired, consider donating the majority of your suits and work outfits to an organization such as Dress for Success.
  • Try to stick to the “OHIO” rule. For efficiency, it’s often recommended that you “only handle it once” when deciding which items to keep, toss or donate. While this is a nice idea, it may not always be practical. Perhaps a revised goal can be to make a pile of things you need to revisit so that you can move the process along and come back to the outliers later.
  • Save the furniture for last. Unless you know you need to get rid of multiple bedroom sets, wait until you find a new home to narrow your furniture selection down. Then, you can decide if you want to fill your new living space with your formal living room setup or your casual den couch and loveseat. Remember, too, that you don't have to bring any of it with you. Downsizing is a great time to start fresh with modern couches, chairs and tables that suit your new home and your changing tastes.

Taking the next step

Whether you're upsizing or downsizing, we can work together every step of the way to keep you moving forward. Reach out to get started.

7 tips to help you find your first home

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Key Insights

  • Finding the right home can be complex. Don’t rush into your home purchase.
  • Your REALTOR® will be your advocate from the start of your search to the closing table and beyond, so make sure you’re compatible!
  • Determine your must-have home features while maintaining an open mind when viewing new properties.

The process of buying a home can seem daunting, especially when you’re competing with other buyers who are also trying to stand out in a seller’s market. Knowing what to expect and having the right Realtor by your side will make all the difference when it comes time to make an offer. To prepare, first-time buyers should take special care to prep their finances so they can move quickly when they find a home that suits their needs.

Here are seven tips to help prepare first-time homebuyers like you for today’s competitive market.

1. Take your time

Buying a home will likely be the biggest purchase of your lifetime, so it may take time to find the right home for your budget and lifestyle. And while you may get lucky and find your dream home (and also get an offer accepted) immediately, you should be prepared to spend several months searching for and closing on a home. The buying process includes these essential (and sometimes time-consuming) steps:

  • Organizing your financials
  • Working with a mortgage consultant to get pre-approved
  • Hiring a Realtor
  • Researching and touring homes
  • Making offers on properties
  • Negotiating your offer
  • Getting an offer accepted
  • Closing on a house

2. Gain financial footing

Financial experts recommend that you shouldn’t spend more than 28-33% of your total income on housing, but the numbers vary for each person and lifestyle.

When determining how much you can spend on your first home, begin by checking your debt-to-income ratio. This number estimates your ability to pay your mortgage (and other housing costs and recurring bills) when compared to your income.

Why is this necessary? Well, two potential homebuyers who draw the same annual salary (say, $60,000) may have significantly different recurring monthly payments and debts to pay down. One may be able to pay the mortgage on a $300,000 house, while another may wish to stay in the $240,000 range due to recurring payments on student loans, child support or other bills. While it’s smart to keep your housing payments below 28% of your income, knowing your debt-to-income ratio will help you make an even smarter budgeting decision.

3. Hire the right REALTOR®

Hiring a Realtor is an ultra-important step in the buying process. Agents help potential homebuyers in every market but are especially important when buyers need an advocate in a competitive market like today’s.

Since your Realtor will be with you through every step of the home purchase process — which may be slightly longer than usual given the current atmosphere — it’s important to work with someone you trust and are compatible with.

4. Enjoy the hunt

Whether you search on EdinaRealty.com or our MyAtlas at Edina Realty mobile app, you’ll have access to homes for sale across Minnesota, western Wisconsin and southwest Florida. You can search, save and share properties that best fit your criteria.

5. Determine your must-haves

Unless you’re an extremely decisive person, you’ll likely find yourself falling in love with many of the homes you tour. While it may seem challenging to narrow down which home styles, features and locations you like best, this is actually a good thing. In today’s competitive market, it may be necessary to keep your mind open to a variety of home options.

Work with your Edina Realty agent to sift through which home features are just “nice to have” and which are requirements for your first home so you don’t end up with buyer’s remorse. Keep in mind, too, that some qualities can change. While a neighborhood’s walkability or proximity to the highway is set, you can always tear up old shag carpet and put in wood floors.

6. Start touring and remain cautiously optimistic

Now that you’ve established your list of essential home needs, it’s time to attend in-person home showings. Today’s market is competitive, so it’s best to prepare for a few lost offers before you end up at the closing table. When you find a home that you’re interested in, be ready to:

  • Make a fast offer (generally your best and highest).
  • Compete in multiple offers.
  • Potentially lose a home (or two, or three) before an offer is accepted.
  • Have lots of patience, especially if you are buying at a lower price point.

7. Ask your agent about pre-list properties

When you work with an Edina Realty Realtor, you gain access to a large network of 2,000-plus agents and the properties they represent. That means you can find out about homes that might fit your criteria before they are even ready to come on the market.

When housing inventory is tight, having a large network of connections can increase your options and provide an expanded search. Take advantage of this network when searching for a home.

Find your first home!

It’s a great time to start looking for your home – and with this competitive market, the earlier you begin, the better. Reach out today and we’ll get started on your home journey.

Incorporate the 2025 Colors of the Year into your decor

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Key Insights

  • Browns and reds dominated this year’s choices for Colors of the Year.
  • Colors of the Year often show up in designer trends, fashion, cosmetics and more
  • Bold colors may be all the rage, but sellers should keep a potential buyer’s taste in mind when decorating

Many designers, retailers, builders and homeowners look forward to the Colors of the Year announcements each year to see how they might incorporate them into art, spaces and fashion. You’ll likely see these colors in home design magazines and blogs, social media lifestyle photos, fashion runways, and new construction homes in the coming months, and you may even be inspired to add the colors to your surroundings.

While many major paint companies selected colors with similar undertones this year, some are bolder than others. Read on to see the picks, and consider how you might incorporate them into your home—-and beyond.

The 2025 Colors of the Year

Blues were the hues of choice in 2024, but 2025’s undertones inspire more warmth with shades of brown, red and purple topping the picks. While most companies committed to choosing just one color, Sherwin Williams put forth a selection of shades and hues. So whether you prefer browns or blues, you’re sure to find something you love in this year’s Colors of the Year.

Pantone: Mocha Mousse

This year, Pantone selected Mocha Mousse, “a warming, brown hue imbued with richness” as its color of the year. To choose the hue, Pantone engaged the design community and color enthusiasts to capture an expression of the “global zeitgeist,” and they arrived at the color of chocolate and coffee to represent a desire for “connection, comfort and harmony.”

Sherwin Williams: Color Capsule

For their fifteenth year, Sherwin Williams decided they couldn’t choose just one color, and instead, they created a color capsule. The capsule is meant to include an assortment of shades to help address a variety of styles and uses. Most of the shades incorporate muted hues with brown undertones.

Benjamin Moore: Cinnamon Slate

Benjamin Moore selected Cinnamon Slate, described as “a delicate mix of heathered plum and velvety brown.” They also included a palette of colors to accompany the hue, and they offer ideas for using the palette in your home plus an explanation for how an undertone affects paint color so you can be an inspired and informed painter.

Glidden: Purple Basil

Glidden’s 2025 Color of the Year, Purple Basil, “represents the appreciation for self-discovery and self-expression that has led to the rise of maximalism across industries, including design, fashion and consumer goods.” Purple Basil promises rich warmth and energy in the rooms it graces.

Behr: Rumors

Looking for something more bold? The Behr 2025 Color of the Year, Rumors, is described as a deep ruby red that plays well with both warm tones and cooler shades. Behr recommends painting your walls and baseboards in different sheens (satin and flat) to create minor contrast. Use their online tool to create your own color vision by applying various colors to different walls in the same room.

Want more colors?

Better Homes and Gardens has a guide to every color of the year announced so far, and it includes everything from brick red spray paint to a hammered black or warm caramel and even includes hues of blue from Dutch Boy Paints and Valspar.

Using the 2025 Colors of the Year in your home staging and decor when selling

If you’ve got your sights set on selling your home in 2025, you might be in the process of decluttering, staging and revitalizing your home for sale. While we don’t mean to throw shade at current trends, there are things you should keep in mind when planning your updates.

Everyone knows a fresh coat of paint can go a long way when staging your home for sale, but while it might be tempting to douse the walls with the most current trends, providing a neutral canvas for buyers is often the better approach. That doesn’t mean you can’t incorporate the Colors of the Year in other ways (think textiles), but you’ll want to provide a backdrop where buyers can picture themselves in the space, and a bold shade of red may be more distracting than enticing.

Set the right tone for your homeownership goals

Finding the right partner to help you buy or sell can set the tone for your entire experience—and your future in your home. Reach out for insights about your local neighborhood to advice about home renovations, decor and staging today!

2025 Housing market forecast

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Key insights

  • The year ahead will likely include more sales but will look much like 2024, with seasonal peaks in activity.
  • The supply-constrained market will ease as more sellers enter the market, but demand will still outpace supply.
  • The lock-in effect will persist; however, more sellers will have reasons to move that outweigh rates.
  • Interest rates will be lower, but affordability will continue to be an issue, especially for first-time homebuyers.
  • Home prices will follow demand and will likely increase, although those increases will be moderate.

Sharry Schmid, president, Edina Realty

As president of Edina Realty, Sharry Schmid provides guidance and direction to over 2,000 REALTORS® throughout Minnesota, western Wisconsin and southwestern Florida.

There is one question I get asked a lot: “How’s the real estate market?”

And often, the underlying questions are actually: “Is it a good time to sell? Is it the right time to buy?”

My answer is typically some form of, “It is potentially both.”

That’s because the real estate market is highly dependent on your goals as well as your personal and financial circumstances. If you’re a seller who bought five years ago at a low rate, your market experience will be different than a first-time homebuyer who is currently saving for a downpayment. And if you’re expecting a baby and don’t have space for a crib, waiting another 8-10 months to buy may not be an option.

Every single day, our REALTORS work to help people discover the opportunities available to them. And if you’re thinking of making your move in 2025, here’s what I think you can expect when it comes to market dynamics overall.

First, the 2024 highlights

Sellers continued to cash in on record equity, often getting their asking price (or higher) in 2024, but they didn’t keep pace with buyer demand. While we saw an increase in overall inventory, sellers still had the momentum as days on market swung in their favor. This, in part, is due to the lock-in effect, which we’ll explore in greater detail below. These factors and others led to ongoing challenges with affordability and a lack of options for buyers, who also faced higher interest rates. Still, as we moved through the year, the supply of homes for sale grew, offering more options for buyers and setting the stage for more market balance between buyers and sellers moving forward. Interest rates were a bit unpredictable, moving up and down in the 6-8% range for a 30-year conventional loan.

Minnesota

  • The inventory (supply) of homes for sale did not keep pace with buyer demand, but it did increase 8.2% over 2023
  • Prices rose, with median sales prices up 5.3% to $347,500
  • Closed sales activity was up 2.9% over Oct. 2023
  • Average days on market increased 10.5% to 42 days

Based on data from the multiple listing services for the state of Minnesota; current as of Nov. 7, 2024; published by the Minnesota Association of Realtors. All percentages are year over year.

Wisconsin

  • The inventory (supply) of homes for sale did not keep pace with buyer demand, but it did increase 6.1% over 2023
  • Prices rose, with median sales prices up 6% to $310,000
  • YTD home sales were up 3.8% over 2023
  • Average days on market increased 4.7% to 67 days

Based on the September 2024 Wisconsin Real Estate Report published by the Wisconsin Association of REALTORS. All percentages are year over year unless otherwise noted.

What will happen in real estate in 2025?

Markets aren’t as predictable as we’d like them to be, but economists and housing experts look at historical trends and the current economy to inform where markets are likely to go in the future. Based on that information, many experts agree that the housing market in 2025 will look a lot like 2024, but with more buyer opportunities and more moderate price appreciation. Lawrence Yun, chief economist for the National Association of REALTORS (NAR), forecasts a 9% increase in home sales in 2025, while others predict increases closer to 5%.

Housing is highly dependent on jobs and interest rates.

  • Minnesota’s economy is strong and boasts one of the lower unemployment rates, ranking seventh in the U.S. at just 3%.
  • Wisconsin also has a low unemployment rate, ranking second in the U.S. at just 2.8% (Sept. 2024).
  • Many predict that interest rates will hover around 6-6.5% for a 30-year fixed-rate conventional loan.
  • A new incoming presidential administration makes economic forecasts less certain in many areas, including housing and rates.

A seller’s market continues

A seller’s, buyer’s or balanced market refers to who has the advantage when it comes to a home sale or purchase. One key way this is determined is by tracking the months supply of homes for sale. Generally speaking, anything under a five- or six-month supply favors a seller, and anything over six months favors a buyer. This metric is calculated by projecting how long it would take the current supply of homes to sell at the current pace of sales if no new homes came on the market. Minnesota had about 2.9 months supply in Oct. 2024, according to data published by the Minnesota Association of REALTORS; Wisconsin had about 3.8 months supply, according to data published by the Wisconsin REALTORS Association for Sept. 2024.

The housing market will likely continue to favor sellers until more homes come on the market. As we know, when there is not enough of something, the price goes up, which is why we’ve seen housing prices rise, giving sellers the advantage.

The good news for buyers is that inventory levels have risen every month for the past year, and we will continue to see a steady and healthy increase in this area in both new construction and existing residential real estate.

Waiting on interest rates

It’s not uncommon for me to hear from people that they are waiting for interest rates to come down before they buy a home. While I understand this inclination, it can result in significant lost opportunities in wealth building through equity when you factor in home price appreciation. Here are some figures to consider:

  • According to NAR, a typical homeowner has accumulated $147,000 in housing wealth over the last five years alone.
  • According to information shared by Keeping Current Matters and based on data from the Federal Housing Finance Agency, the average increase in the national home price was:
    • 58.4% increase in 5 years
    • 319.1% increase in 30 years
  • According to information shared by Keeping Current Matters and based on data from CoreLogic, the average homeowner gained about $25,000 in equity over the past year.

When you also consider that homeownership provides shelter and the ability to make home improvements without a landlord’s permission, the benefits go well beyond just financial ones.

It’s important to understand that the low rates of recent years (3-4%) were the exception if you look at historical trends, so waiting for rates to come down may not be realistic and will lead you to miss out on home appreciation in the meantime. And when you consider market dynamics, demand generally increases when rates decrease, which means home prices will likely increase if rates come down. With every year you wait, you give up significant equity opportunities.

Remember, even when you buy at a higher rate, there are financing opportunities, including the option to buy down interest rate points or to refinance in the future. Talking to a mortgage consultant can help determine what might be right for you.

Supply, demand and the lock-in effect

What’s the lock-in effect?

The lock-in effect is primarily driven by homeowners with low mortgage interest rates deferring a home sale and subsequent purchase at higher interest rates. As we know, when there is less supply, demand for that limited supply increases. This means buyers compete and prices go up.

But that’s not the only thing at play. When money was cheap and rates were very low, more people chose to hang on to their existing homes and purchase second homes or investment properties because low mortgage rates offered a better return on real estate investments.

Circumstances change

Many things drive real estate decisions beyond interest rates, and they are often referred to as the “Ds”: degrees, diamonds, diapers, divorces, downsizing and deaths. These are key reasons people decide to buy and sell, and while interest rates may cause some people to delay a change in the shorter term, the longer term often necessitates making changes (the Ds) regardless of rates.

Higher rates, a new normal

Now that we’ve seen three-plus years of higher interest rates, we will see new listings accelerating because:

  • Life goes on and people need to move.
  • Some homeowners who bought two or three years ago are not locked in and are more likely to relist and sell.

According to Housingwire, if you consider that 5 million homes are sold each year in the U.S., and we’re two years out from ultra-low rates, that’s 10 million homes that are not locked into low rates — a number that will only grow as we move forward. This bodes well for continued growth if interest rates remain relatively stable (or higher) over time.

Moving forward: Your 2025 outlook

Going back to my original point, where you are personally has more to do with whether 2025 will be the right time to buy or sell your home. Real estate continues to be a local business, and having the right professionals in your corner can make a big difference in understanding your options and capitalizing on opportunities.

Edina Realty agents have the largest professional network in Minnesota, western Wisconsin and southwest Florida. They can provide local neighborhood insights, home valuations and the largest selection of homes not yet available on the MLS. Reach out for help with any of your real estate needs in 2025 and beyond.

How buyers can compete in multiple offers

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Key Insights

  • Home inventory continues to be low, making it a tricky market for home shoppers who have a specific location in mind.
  • By preparing financially and making the right adjustments, buyers can compete and win in multiple offers.
  • While it does help to have the highest offer, there are other ways to stand out from competing buyers to win your dream home.

If you’ve studied Economics 101, then you know that as the supply of a good falls, the demand for that good rises. And while we’re seeing a rise in housing inventory, it still far outpaces buyer demand, making it a sellers' market. As a result, prices have been rising and those shopping for homes may find themselves competing against other eager buyers.

Common wisdom says that the highest offer will win every time, but the reality of multiple offers is a bit more complex. Here are insights you can use if you enter multiple offers when buying a home this year.

Assess the market

Our market research shows that some regions have tighter inventory than others, but no matter where you are buying, it’s important to talk with your REALTOR® about the market and inventory so you know what to expect. They will be able to pull information on what comparable homes are selling for in that area and if there are any other terms that are sought after. Real estate is all about location and local quality of life, so hiring a specialist who serves your desired area will be critical to making the right bid.

Go big to get home

While the highest bid isn’t the only consideration sellers make, you’re unlikely to get the sale if your offer is at the bottom of the heap. When making an initial offer on a home in high demand, your REALTOR can help you submit an offer that is slightly above the average home value for the neighborhood.

Together, you can strategize on the benefits of offering your best offer out of the gate — meaning you would walk away if the home still gets multiple offers — or offering below your “ceiling” so you have the ability to increase your offer against competing bids.

Keep the offer as clean as you can

There are a variety of contingencies and additional terms you could include in an offer. But a seller looking at multiple offers will naturally look more favorably on offers that are not complicated and don’t ask for much. If the offer prices are the same, do you think a seller would prefer an all-cash offer with no contingencies or one where the buyer is asking for intrusive moisture testing (even though the house has no history of moisture) and wants the seller to throw in their big screen TV to sweeten the deal? The cleaner the offer, the better the chance of beating out others.

With that said, you may need some contingencies and terms. For example, you may need to sell your home to be able to buy a new one. If so, you’ll need contingency language for that.

Inspections are another point of contention. Having a purchase agreement contingent on an inspection is extremely common in our marketplace. But in order to compete with other buyers, some may write offers not contingent on an inspection.

Edina Realty recommends getting an inspection on every home purchase because inspectors can see issues that you and agents cannot. And they often identify issues that the seller wasn’t even aware of. Sometimes it may make sense to write an offer not contingent on inspection to get that dream house. Just understand that you are not getting that expert view on the condition of the home and, if there are issues, they likely will be your issues to address once you’re the owner.

Put cash down and get pre-approved

Another way to impress sellers is to show that you have a substantial down payment and that a lender has pre-approved you for a loan. Both of these steps display that you are a lower-risk buyer, and the seller and their agent may feel more comfortable with you than someone who hasn’t done their lending homework.

Offer better timing

One last way to stand out in multiple offers is to offer the seller a beneficial path to closing. If the homeowner is hoping to sell the home immediately, it would benefit you to offer a closing that could take place within a month or even a few weeks. If the seller is waiting on a new construction home that won’t be ready for 60 – 90 days, offer a delayed closing. When multiple bids are close, these tactics can make all the difference.

Starting out

Ready to enter the market? Begin your home-buying process by reaching out today.

Get your house ready for holiday travel

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Key Insights

  • Save money by powering down appliances and turning down your thermostat.
  • Prepare services like snow removal, garbage and mail for when you are gone.
  • Deter thieves with home security measures like lighting and alerting neighbors of your trip.
  • Prepare your home for your arrival to save on stress when you get back from your travels.

There’s no place like home for the holidays, and if you’re traveling to your hometown to be closer to family or making a trip to see distant relatives or friends, you’ll want to prepare your home for holiday travel. Use this checklist to ensure your home stays safe, undamaged and ready to welcome you back.

Protect your property

Your biggest home concern when traveling is bound to be protection. Check off these tasks to keep your home safe and secure.

  • Alert your neighbors: Inform a trusted neighbor or two about your travel plans, and give them a key or access code in case of emergencies.
  • Turn on your alarm system: If you have a security system in place, be sure to arm it for your holiday travels. You may also want to call your security system and local police to let them know you’ll be out of town.
  • Plan for pets and plants: Often overlooked in the flurry of travel planning, be sure you have care for your furry friends that you’re leaving behind. Likewise, set up a watering system or ask a friend to stop by and take care of any plants you may have.
  • Think about your tree if you have one: Depending on when you travel, you may want to take down your Christmas tree before you hit the road. Trees can be a huge fire hazard—especially if you have a fresh one. If you can’t take it down, make sure the lighting is safe, it’s away from heat sources and real trees are watered daily.
  • Prepare for interior conditions: Depending on where you live, you might want to run a dehumidifier in damp places like basements and closets.
  • Lock all doors and windows: Remember to remove any hide-a-keys that might be lying around.
  • Store all valuables: Prepare for the unexpected by storing all jewelry, money and important documents in a safe.

Save money

Don’t pay for services you don’t need while you’re gone. These few steps can keep your bills down while you’re out of town.

  • Adjust your thermostat: Since you won’t be home to enjoy the warmth, change your thermostat. Just make sure your thermostat is set to at least 50 degrees to prevent frozen pipes.
  • Unplug electronics: Even when not in use, electronics draw energy, called “vampire electronics.” Unplug computers, small kitchen appliances like toasters and coffee makers to keep your bills down (and prevent electrical fires).
  • Set up timers: Interior lighting is a great way to make it seem like someone is home, but if you want to cut costs, setting up lamp timers can create the illusion of people turning lights on and off while saving you on electric costs.
  • Close your blinds: Blinds can help insulate your home, meaning less work for your furnace. It also stops people from peeping in to see who’s home.

Plan ahead

The last thing you want to do after traveling is get your home back in order. By planning ahead, you can return to a home ready to receive you.

  • Pause packages and mail: Avoid a mailbox pile-up and deter any front porch thieves by pausing your mail delivery through the USPS or asking a neighbor to bring in your mail.
  • Empty out your fridge: Remove foods about to expire and anything that will go bad while you’re away. Be sure to toss anything perishable in your pantry or on the kitchen counter, like bread or fruit. If you really want to plan ahead, arrange for grocery delivery when you return or stock some items for your first meals after a long, exhausting trip.
  • Take out the trash: Remove all garbage from the home to avoid a stinky situation when you return. If you’re gone over trash pickup day, ask a neighbor to take out your bins and put them away.
  • Do your laundry: Wash, fold and put away all laundry, including towels and bedsheets.
  • Arrange for snow removal: A buildup of snow can cause ice to form and can make getting in the front door an issue. Pay for a service to shovel your sidewalks, plow your driveway and lay down salt if needed. Ask neighbors to let you know if they see any signs of ice dams so you can address the issue right away.
  • Clean your home: If you’re short on time and can’t do a full clean, make sure to hit hotspots like bathrooms and the kitchen, including emptying the dishwasher.

According to data from PwC, 46% of Americans plan to travel during the holiday season. If you’re among those numbers, these home prep travel tips can save you from home damage and extra work when you return. Tired of traveling for the holidays? Reach out to find a house that’s closer to home.

How your credit score affects your mortgage

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Key Insights

  • Most lenders will take your credit score — and other financial factors — into account when considering you for a loan.
  • You have more than one credit score and different factors carry more or less weight.
  • There are things you can do to improve your credit score.

If you are considering buying a home, it’s important to understand all the factors that go into the process. And if you’ll be taking out a home mortgage, knowing how your credit score can impact your options is an important first step.

Why do credit scores exist?

The credit score was first introduced in 1989 by the Fair Isaac Corp, also known as FICO, to make it easier for lenders and borrowers to agree to loan terms. The credit score sought to:

  • Ease the manual and time-consuming process of reviewing consumer data
  • Remove the occurrence of racial, gender and class bias
  • Create a standard that was more transparent to lenders and borrowers alike

The credit score model established a standard that assessed consumers’ credit histories and assigned a three-digit number between 300 and 850 for evaluating a person’s “creditworthiness.”

What factors determine my credit score?

Your credit score is informed by your credit reports, which include things like your personal information, bill payment history, credit cards, loans, bankruptcies and current debt. The three major credit bureaus that collect this information are:

  • Equifax
  • Experian
  • TransUnion

The three bureaus share your history with credit scoring companies like FICO and VantageScore who then use it to calculate your credit score. Because there are multiple scoring models and credit bureaus, there are also multiple credit scores, but the scores are typically pretty similar. Keep in mind that you have the right to dispute inaccuracies in your credit reports and to get explanations of score calculations under the Fair Credit Reporting Act.

What matters most to lenders?

Both FICO and VantageScore have specific scoring models for specific lending purposes, and certain factors may carry more weight when you’re being considered. For example, with both models, your payment history matters more than the different types of credit you have or how long your credit history spans.

Your payment history comprises 35-40% of your total credit score, so it’s important you pay your bills on time and in full. Keep in mind that your credit score will decrease any time you open new lines of credit, so avoid opening new credit cards when you are searching for or buying a home. It’s also smart to avoid big purchases as you are home searching, whether paying for them in full or purchasing them on credit.

How will a lender use my credit score to determine my interest rate?

Your credit score helps lenders assess the risk of lending you money and helps inform whether you’re likely to make good on your payments. Your finances, including your debt-to-income ratio and your credit score, can impact your loan approval, down payment requirements and monthly payments, including your interest rate.

While there are other considerations, generally a credit score in the high 700s (and up) is considered good and will give you more attractive options. The difference between top qualifying scores and lower scores can amount to over a 1% lower/higher interest rate, which can make a big difference in your monthly payment amount.

Of course, there are considerations like the loan type (conventional or FHA), down payment amount, and individual financial situations that vary significantly.

What if I have a lower credit score?

If you have a lower credit score, according to Experian, there are some things you can do to improve your score:

  • Make all of your payments on time
  • Pay down revolving credit accounts like credit cards
  • Explore debt consolidation
  • Keep your oldest account open
  • Limit new credit applications
  • Dispute inaccurate information on your credit report

If you’re hoping to buy in the next year or so, start planning now and avoid unnecessary expenses during the loan application process.

Get in touch

Whether you’ve been saving for a down payment for years, you’re wondering whether you can buy with student loan debt or you’re ready to get pre-approved for a mortgage, reach out today to keep moving forward.

Prosperity Home Mortgage, LLC is not a credit counselor. Information displayed is not credit advice and should not be relied upon or interpreted as such.
Prosperity Home Mortgage, LLC does not offer financial advice.
This information is provided for informational purposes only and does not constitute legal, tax, or financial advice.

Status Definitions

For sale: Properties which are available for showings and purchase

Active contingent: Properties which are available for showing but are under contract with another buyer

Pending: Properties which are under contract with a buyer and are no longer available for showings

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Coming soon: Properties which will be on the market soon and are not available for showings.

Contingent and Pending statuses may not be available for all listings