What should I look for at an open house?

Many prospective homebuyers visiting open houses often become enamored with homes with recent cosmetic updates, such as new appliances or a fresh coat of paint. Buyers should be thorough and complete in their inspection of homes during open houses, so that they can get a good idea of the home's condition. Here are some tips from HGTV's FrontDoor to help homebuyers get the most out of their open house visits.

Be certain to examine the kitchen and bathroom sinks, plumbing fixtures, basements and attics, gutters and foundations. Issues with any of these parts of the home should raise red flags.

You can test plumbing and electrical switches by flipping on light switches and turning on faucets while visiting homes for sale. Later on, you should have a home inspector do a more thorough examination.

Also, be sure to pay attention to odors. Some sellers try to mask bad smells with potpourri or candles during an open house, but any foul odors that permeate a home for sale - for instance, smells from a nearby dumpster or highway - could indicate a substantial issue with the residence. If you're suspicious about any odors, ask the real estate agent holding the open house about it.

If sellers have a room or two they close off to open house guests and you find yourself interested in the home, ask the REALTOR® or arrange a showing appointment to inspect these areas. Though you may like the rest of the house, checking every room in the property is essential prior to making an offer.

Don't forget to scope out the neighborhood. The local school system, attractions, restaurants and businesses should all play a role in deciding whether to make an offer on a home.

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August market update

This month's Market Update will be composed in haiku:

Fewer homes for sale

Sales activity rises

Balanced market looms

Okay, so maybe it's not quite that simple, but sometimes it does help to break things down to their most basic elements. Now let's do a more thorough analysis of July's numbers and the impact the recent credit rating downgrade could have on housing.

According to the Minneapolis Area Association of Realtors (MAAR), new listings in the Twin Cities were down by 16.1 percent (a trend true for six of the past seven months), and pending sales were up 42.7 percent. Overall, the inventory of homes for sale has decreased 18.8 percent, which is great news for balancing the market. On that note, absorption rates improved as the month's supply of inventory came down to 7.6 months, meaning it would take 7.6 months for all of the properties currently on the market to sell at the current rate of sales. A supply of around five to six months is considered a balanced market.

But what does that mean? Well, in real estate, we are always operating in one of three market types: a buyer's market, a seller's market, or a balanced market. The buyer's market favors the buyer and is what we've been in for the past six years (sellers tend to make more concessions, cut prices, etc. in a buyer's market). However, we finally appear to be trending toward a more balanced market where buyers and sellers will find themselves on a more level playing field.

So what about the recent credit rating downgrade's effect on housing? It remains to be seen. While we don't expect much of an increase in interest rates in the near future, job growth is still in the driver's seat when it comes to a full recovery. Since July's labor market posted strong gains, we're hopeful it will continue to have a positive impact on our local housing market.

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Hiring the right contractor

Some do-it-yourself home improvement projects are easier than others. But when the job gets tough, utilize a contractor to get the job done right. Handyman Connection's website offers some tips to take into consideration when choosing a professional.

The first thing homeowners should do is research contractors in their area, and obtain reviews and information about their businesses. Don't simply choose a contractor because he works nearby. The quality of their work should be the biggest consideration when making a final decision.

After finding a few potential candidates, get a firm written estimate about how much a project will cost. Do not accept a general estimate. Specific cost analysis for plans should be determined by the professional hired.

Ask a contractor for their licenses and registrations to ensure their working papers are up-to-date. Only do business with a bonded and insured contractor. Homeowners should ask for proof of third-party injury and property insurance so they can be covered in the case of an accident.

Find a contractor belonging to one or more professional contractor organizations. One organization they should belong to is the Better Business Bureau, which sets and upholds high ethical standards for its members.

If a contractor insists that homeowners pay with cash, this should raise a red flag. High-quality contractors don't mandate clients to pay entirely by cash.

Before signing any papers with a contractor, ask for references. Any contractor unwilling or unable to come up with a list of at least a few references means their work shouldn't be trusted. Should they provide you with a list of people they've worked with in the past - both clients and other professionals - be sure to ask plenty of questions to make sure they're adequate for the job.

Survey: Many renters aspire to own homes

A majority of people renting a home aspire to own a home of their own, according to a recent survey by the National Association of REALTORS® (NAR). The study found that 72 percent of renters surveyed want to purchase homes for sale in the future.

An increasing number of renters believe owning a home is a solid long-term investment. Seven out of 10 say owning a home is a good investment - up from 63 percent who said so a year earlier.

"Despite the economic setbacks Americans have experienced in today's current climate, it is clear that a strong majority still believe in home ownership and aspire to own a home," NAR president Ron Phipps said in the report.

Two-thirds of respondents said this year is a prime time to purchase a home. Renters shouldn't let the obstacle of coming up with a down payment stop them from buying a home. Down payment assistance is a resource homebuyers can look into if they need help with the up-front costs of buying a home.

It's easy to see whether a property qualifies for down payment assistance programs when you search for properties on edinarealty.com. A Down Payment Resource (DPR) icon is displayed directly on the property listing detail page for properties that qualify. You may qualify to receive a down payment loan or grant if you meet the eligibility requirements.

What is earnest money?

When you are searching for a home to buy, there will come a time when you find the perfect home. In order to buy the home, you will submit an offer to the seller. Along with the offer, you will need to submit an earnest money deposit.

Earnest money is a deposit provided by the buyer that symbolizes his or her commitment to buying the property. This deposit is usually held in escrow - an account consisting of all assets still under contention. It is typically held in an escrow account until the closing, and applied to your closing costs at that time.

Earnest money shows the buyer's seriousness about purchasing the home because if the buyer fails to meet the terms of the purchase agreement, they may lose the deposit.

How much money do you need to provide for earnest money? This amount is usually tied to the asking price of the house. An experienced REALTOR® can help you guide you through this critical part of home buying process and help you understand the role earnest money plays in buying a home.