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Luxury Homes

The show on Saturday focused on luxury homes. When people hear the word luxury home they often think that mean a multi-million dollar home. A luxury home is actually determined by the top 10 percent of the homes in the market. The top 10 percent of homes are around the $438,000 to $5 million dollar range right now. Last year the most expensive house sold on the MLS was 5 million dollars. The most expensive homes on the market right now are at 24 million, 22million, and 11.9 million all located in Orono.

Homes that are in the million dollar price ranges are usually categorized by lakeshore and acreage. If you are looking to purchase a luxury home, you need an agent that has the knowledge in that price range. Affluents, which are people with household incomes over $100,000, make up about 62.5 million people and own an average house of around $408,000. An interesting statistic about these people is that they spend about 41.5 hours a week online. People that have a household income of over $500,000 own an average house of around $1,080,000 and spend 53 hours a week online. When you look at the amount of time these people are spending on the Internet, the marketing of a luxury home better include as much exposure on real estate sites as can be. There should be plenty of photos provided along with video tours to give a better idea of how the home is organized.

If you are in the market for a luxury home, there are some interesting things that Justin Jurkovich from WJ Bradley brought up about financing. In terms of the jumbo market, there are some different things to look at. If you have a 24 million dollar home, there aren’t a lot of comparables that they are able to go out and look at. The collateral is going to be looked at and scrutinized a little bit more and the appraisal is going to be reviewed once or twice on a property like that. If you look at a million dollar home, a lot of people are told they have to put 20-25% down in that category which is not always the case. The loan to value is looked at first. If you consider a million dollar home, you can go up to 90% loan to value. Then a maximum loan limit is given, which on a 90% loan to value, the maximum allowed to lend is $850,000. At that point you are only required to put down 15%. When being consider for this kind of loan to value there are going to be different perimeters including credit scores around the 680 range, as well as a debt to income ratio of about 43%.

We had plenty of phone calls and text questions as well:

Netty in Mountrose: We have had our house for sale for the last 5 months and are up to date on our payments. We have received a lower offer than what we are asking and what we owe. Should we take that offer and do a short sale, but we do want to be able to buy again? What do you suggest?

Chris Rooney: Talk to an attorney because sometimes you are not able to short sale, but sometimes banks will work directly with you.

Justin Jurkovich: Depending on the circumstances there are some programs where there is as little as a year after a short sale and depending on if there are any down payments that can reduce the term, typical rule of thumb is 3 years but sometimes there are ifs, ands, or buts involved in it.

Rick from St. Paul: We just got our tax statement back and the market value is a certain amount and taxable value is a certain amount. Can you explain if that is the market value that we would get if we decide to sell our home?

Andy Prasky: Some cities are closer to the actual value when the tax statements are done than others, but it depends on how they are looking are your community. They will determine what you should pay based on the neighborhood you live in and what they see is your fair share. If you do want to sell, you should have a market analysis done in order to decide for sure what the home is worth.

Text Question: We have a cabin with a new addition but a bathroom that is original. Should that be remodeled before placing the cabin up for sale?

Andy Prasky: If there is only one bathroom in the whole cabin it is one of your better returns. It will definitely become more desirable even though it won’t necessarily give you more money, but it will help you sell it faster.

Text Question: When buying a home, can a couple use both of their incomes toward the amount available to purchase a home?

Justin Jurkovich: As long as both parties are on the actual note itself, it’s not an issue. Assuming both qualify equally, based upon their credit characteristics and that they’ve had the same criteria that need to be met, for instance you have to have two years of job experience to be on a loan or coming out of a post-secondary education, then most of the time the answer is yes.