Are Real Estate Agents a Commodity?

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With Zillow, Trulia, Realtor.com and other home search sites easily available, what value does a real estate professional bring?  

 

Clients don’t need me to find properties for them.  The truth is, most of my buyer clients send me lists of the homes they want to see.  However, a list of properties for sale is essentially useless without a deeper understanding.  My clients know that the neighborhood knowledge, understanding, insider information, analysis, and negotiation skills that I bring to the table are how I provide value.

 

 

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A great real estate agent will help clients understand the differences between properties, values and neighborhoods.  We can help our clients win in multiple offer situations.  We can write contracts that protect our clients from buying a home full of structural problems or getting sued.  We can make sure our clients’ earnest money is not at risk during the inevitable bumps in the lending process.  

 

True real estate professionals provide tremendous value.  Searching a list of homes for sale requires minimal skills.  Navigating the complexities of a home purchase in the best interest of our clients is where we really shine.

The Status of Foreclosures in Park City

 

Summit County Distressed Sales ComparisonAbout a year and a half ago, I wrote a post title “Bye, Bye Foreclosures”

What is the picture like today?

The opportunity to buy short sales and foreclosures continues to decline. Distressed properties accounted for less than 2% of all listings and less than 3.5% of sales in the Greater Park City area during the last quarter of 2013. The average discounted price was only 2% off retail.

Nationally, distressed sales accounted for 25% of all sales last December, with an average discount price of 18% off retail.

This is great news for the Park City real estate market. Buyers should feel confident that although they missed the bottom of the market, the absence of distressed property means our market has recovered. It’s good news for sellers, too. They no longer have to price against distressed properties or worry about bank owned sales that will skew appraised values.

Summit County Distressed Sales Q4 2013

Zillow, Trulia & Realtor.com-What’s the Difference?

Graph Source: NAR
Graph Source: NAR

These are generally regarded as the top 3 real estate search sites in terms of the number of property views.   All of my listings are syndicated to each of these sites and many others.  But does quantity of views measure up to quality of views?  I looked at data collected by my brokerage, Summit Sotheby’s International Realty, to take a closer look.

We measured the number of property views and the number of email inquiries.  While Zillow had the most property views (more than double Trulia and Realtor.com combined), it had the least number of email inquires.  The Sotheby’s International Realty Website, came in at number 4 in terms of number of views, just slightly behind Trulia and Realtor.com; but it had more than twice the number of inquiries as each of those sites and more than 4 times the number of inquiries as Zillow.   Our local brokerage website, came in 5th for property views, but third for number of inquires, with almost twice as many inquiries as Zillow.

What conclusions can we make from this data?  Quantity does not always equal quality.  While it’s nice that hundreds of thousands of people are looking at my listings, the people I care about are the ones who will actually turn into buyers. These are the people who are making email inquiries.  The Sotheby’s International Realty website and our local brokerage site are attracting more serious buyers.

Where do Park City buyers come from?  It turns out that the number one state for searches was Utah, followed by California, Texas, New York, and Florida.  This is no surprise to me, as these states make up the majority of where my clients live.  There is no question that it is important for properties to be syndicated to real estate websites, as 92% of buyers use the internet to search for homes.  It is even more important for properties to be syndicated to the right real estate websites.

What do you think?  Which websites do you use to search for property?

Buy That Fixer-Upper-Uncle Sam Will Finance the Improvements

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FHA 203(k) loans are a great tool for buyers who are looking to buy distressed, old or run down properties that require improvements.  They can also be used to finish a basement, add a room or remodel a kitchen.  These loans are perfect for buyers with more vision than cash and who want to live in the home for at least one year after taking ownership.

The financing is based on the purchase price negotiated for the home plus the cost of improvements.  FHA will finance up to 110% of the after-improved value of the home.  The buyer must come up with a 3.5% down payment.  The improvement funds are held in an escrow account and dispersed in 2-5 increments, depending on the complexity and cost of improvements.

I can see this type of financing as being perfect for first time buyers considering homes in Summit Park or Old Town.   Imagine transforming an ugly duckling in desirable neighborhoods such as Park Meadows, Thaynes Canyon, Jeremy Ranch, Pinebrook and Silver Creek into a swan.  The best part is that only 3.5% down payment is required.

If you would like more information about how these loans can benefit you, please contact me.  Thanks to Amy Sharpless and the Academy Mortgage Team for educating me on this great resource.

Why Hiring a Realtor Saves you Money

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1.     Looking for a new home or trying to sell yours?  Realtors network with one another and in today’s fast real estate market can often match buyers and sellers before a home even hits the market.  Realtors are familiar with the local inventory and know about homes that recently left the market.  This saves time and money for both buyer and seller.  Example:  A local real estate agent just showed and sold a home I recently took off the market.  This was a win-win for both the buyer and seller.

2.     Realtors know the sales process.  They understand the terms they can negotiate on behalf of the buyer; they know what is unreasonable for a seller to pay.  Example: I negotiated a $4000 credit towards a new roof for one of my recent buyers.

3.     Realtors understand property values.  Location and floor plan are not evident when viewing comparable sales.  Realtors can help sellers establish a sale price in accordance with current market values and can help buyers negotiate the best deal possible.  Example:  In a recent multiple offer situation, my buyer paid less than the highest offer because of how I positioned her in the negotiation.

4.     Realtors act as a buffer between the parties and take the emotions out of the negotiation.  Negotiations can get heated and parties can take things personally and become offended.  The realtors help smooth the process and focus on the bigger picture, which is to get to the finish line.  Example:   One of my buyers told me “I don’t negotiate with skunks”, a reference to the seller, who she decided she didn’t like.  I kept her focused on the purchase of the home and not the personality of the seller, and she is now enjoying her dream home.

5 Things to Consider When Purchasing a Vacation Home in Park City, UT

Fall Photo Rachel Sharwell

*photo by Rachel Sharwell

With property values on the rise and interest rates still bottoming out, I’ve received many inquiries from people looking to purchase a vacation home or rental property in Park City.  While the process of purchasing a vacation home is similar to purchasing a primary residence, there are a few insider tips to finding the best property.

1.     How are you going to pay for the home?  

If you have the cash to spend, you can usually negotiate a more aggressive price.  If you are financing, you need to understand the financing considerations for the property you have in mind.  For examples, there are two condominium projects in Park City where the HOA has sued the builder.   Lenders will not finance these projects.  If you are looking at a condominium with a front desk, a lender may consider it a “condo-hotel” and require a larger down payment.

2.     Are you going to rent the home when you are not using it?

Some of my clients stay in their homes during the summer and rent them during ski season.  Other clients who do not plan to be in Park City during Christmas or Sundance decide to take advantage of the potential income available during these peak season times.  Is the wear and tear on your personal belongings worth it?  That is a personal decision.

There are tax considerations, too.  The IRS has declared “if you live in your home for more than 14 days, or more than 10% of the time you rent it out in a year, then it is considered your personal residence”.  If these conditions are not met, your home will be considered a rental property and you must report all rental receipts as income.

Lastly, there are specific neighborhoods in Park City that allow vacation rentals and other neighborhoods that prohibit such rentals.  It makes sense to purchase a home in the neighborhood that allows your intended use.

3.     If you are going to rent the home, are you going to manage vacation rentals yourself or will you need to hire a property manager?

While it is tempting to keep all the rental income by renting the home yourself, there can be a lot of work involved, including checking renters in and out, scheduling cleaning, collecting deposits, etc…Park City has many quality property management companies that provide assistance to Vacation Rental by Owners (VRBO) or full, turnkey service.

4.     Does a home or condominium make more sense?

The quality of the condominium HOA association varies.  Some are well run and others are not fiscally sound.  Do the shared walls of a condominium or townhome make sense?  Do you prefer the “lock and leave” lifestyle?  These are a few considerations to keep in mind when weighing the difference between single family and condominium or townhome.

5.     What time of year will you use your vacation home and what lifestyle considerations are important?

Some clients want to be on a ski slope or nearby.  Some want to be able to walk to historic Main Street.  Others prefer more residential neighborhoods.  This is a personal decision.  Proximity to ski slopes and Main Street mean higher prices.

Purchasing a vacation home in Park City is a life changing experience.  I have many happy clients who truly enjoy their Park City homes and the Park City lifestyle.  Some would move here full time, but are tied to other locations due to careers.  The second home is the next best thing.

Should You Trust Online Home Valuations?

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I chose 5 Park City properties that closed last week.  I compared the closed price to the “estimated value” using a popular website.

  • 1226 Lowell Avenue-closed for $866,000; estimated $919,000.  Accuracy:  94%
  • 9041 Daybreaker Drive-closed for $731,000; estimated $787,000.  Accuracy 93%
  • 605 Mountain Holly Lane-closed for $2.5 million; estimated $2.3 million.  Accuracy 92%
  • 1717 Teal Drive-closed for $419,000; estimated $503,000.  Accuracy 83.3%
  • 3320 Tatanka Trail-closed for $2,089,694; estimated $2,150,000.  Accuracy 97%

In contrast to other states, where the sale price is public record, Utah is a non-disclosure state.  That means the sale price is not public record.  The sale price reported on the Park City Multiple Listing Service is not accessible to the public. I do not know what data online services use to estimate property values in Park City.

As you can see, sometimes they get it right and sometimes they get it wrong.  The home on Tatanka Trail is a Promontory Ranch Cabin.  It is a developer built home and similar to other developer built homes in the immediate area.  In contrast, Teal Drive is an older home in a neighborhood where some homes are still original and others have been improved.  I showed Teal Drive and remember that it had a tiny master bathroom and closet.  Those two qualities may not show up in a computer calculation, but clearly had an impact on the price a buyer was willing to pay for this home.

Buyers do not always think like computers.  Purchasing a home is a qualitative and quantitative experience. A home in pristine condition with tasteful furnishings, upgraded finishes, a floor plan that makes sense, views, and an easy driveway will drive value up.  Whereas a home that is beat up with older furniture, older finishes, a weird floor plan, no views and a steep driveway will drive value down.  It’s impossible for a computer program to take these items into account.

A real estate agent who has been inside a home and who understands the competing properties will be able to provide a much better assessment of a home’s value.

If you are curious about the value of your Park City home, please contact me for a complimentary valuation.  There is no obligation.

New Loan Programs Including No Money Down!

2nd Place-Rachel Watts Sharwell

The photo for this week’s blog was submitted by Rachel Sharwell.  She won 2nd place in the photo contest.

New Loan Program to Help People Recover from the Economic Downturn

First of all, good news for people who lost a home during the economic downturn. Borrowers who have had a major economic event that resulted in the loss of income and resulted in a bankruptcy and/or foreclosure or short sale may now be able to qualify for an FHA loan within 12 months from the bankruptcy, foreclosure, or short sale.

New Utah Housing Fannie Mae 100% Financing Loan-Great for First Time Buyers

This is a 100% loan without mortgage insurance.  It is another option for buyers with lower income and zero down payment.  The program includes 97% financing for the first mortgage and 3% for the second mortgage and does not include mortgage insurance payments.  This program requires $84,000 maximum annual qualifying income and is currently available only for owner occupied, single family homes in Utah.  In September, PUDs will be eligible for this loan, including popular Park City projects such as Racquet Club, Elk Run, Park’s Edge, etc..

USDA Loan Provides 100% Financing in Park City

These loans are applicable to single family homes in Park City and surrounding area.  They are part of USDA’s rural housing program. These loans have income restrictions based on household size.  In Summit County for a family of 1-4 the maximum household income is $93,450. In Wasatch County for a family of 4 the maximum household income is $84,150. The downside is that these loans can take nearly two months for processing and approval.

—Thanks to Amy Sharpless, (amy.sharpless@academymortgage.com) for providing the information used in this blog.

Billy Blancos-A New Local Favorite

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Bill White Restaurant Group just opened one of the most fun restaurants to hit Park City in years, Billy Blanco’s Motor City Mexican (Blanco is the Spanish word for “White”, which makes the name of this restaurant, like everything else about it, fun.

Check out these photos.  Where else can you dine under (literally) classic cars.  My 12 year old daughter, Whitney, loves to eat at the bar because she can!  The bucket seats at the bar are comfortable and if you sit near the cars, you catch a nice breeze from the wall that opens to the outdoor dining patio.

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The servers all seem happy; the music is rocking.  The margaritas are tasty and the wine and beer are reasonably priced.

The key to dining at Billy Blanco’s is to order the right food.  The first time I ate there, I had the carnitas tacos with greens.  I felt like I was overpaying for three miniature tacos and a plate of iceberg lettuce with some vinaigrette.  My friend had the mango and guacamole salad and it too seemed pricey for a salad with no protein.

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My husband and son ate there a few days later and said the portions were so generous, they couldn’t finish them.  Really? Turns out they ordered fajitas and a burrito.  The next time I ate there, I had a chicken dish with salad greens.  [I’m trying to eat healthy and did not want to order the fries, which looked delicious.]  Once again, I was annoyed with Billy’s idea of a side salad.  It was really boring.   My daughter and I decided to order some BBQ Rib appetizers, which you can buy for $2.75 each.  JACKPOT!  These were the best ribs I have ever eaten.  They are super meaty and fall off the bone.  When we returned there, my daughter ordered the half rack entrée and I was happy with three of the ribs from the appetizer list.

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Bottom line is that if you order right at Billy Blancos you will be happy.  If you order wrong, you will be disappointed.  However, you will not be disappointed by the ambiance, which is fun, fun, fun.  It’s open for lunch and dinner.  On Sundays during the summer, you can sit outside and listen to the Quarry Village live concert.

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3 Commitments to Steal a Property

901Main-Exterior-01“The housing market has bottomed. It’s not too late to get involved. I still think buying a home is the best investment any individual can make. Affordability is still at an all-time high.”—John Paulson (Billionaire who made his fortune by predicting the real estate meltdown in 2007.)

If you are looking to pick up an investment property or looking to get a great deal on a new home, these are proven tips to win.  The most important concept to remember is that there is a lot of competition for good deals and proper preparation is essential. Skipping any of these steps will decrease your chances of getting the best possible deal.

You must be ready, willing and able to buy.

1.     Ready means that you have cash in hand or you have been through underwriting at a reputable financial institution.  You must have either written proof of funds if you intend to pay cash or a written preapproval letter from your lender.

2.     Willing means you are committed to finding a property and purchasing it.  You are willing to spend time touring properties to educate yourself on the market.  You are willing to sign a buyer-broker agreement with an agent who will work on your behalf (more on this later).  Today’s market is not the market of three years ago.  See quote from John Paulson above.  We already hit bottom.  There are more buyers than sellers of good deals.

3.     Able means that you have the finances, commitment and desire to buy a property.  You are not afraid to write an offer sight unseen because you have developed a trusting relationship with your buyer’s agent.

Here is an example of how being ready, willing and able works in the real world.  I receive at least one call/week from someone who says that they are in no hurry, but if I find a great deal on a property, I should call them.  Imagine you are me.  I see a listing that I know is a great deal.  Am I going to call the person from the internet or the buyer who I know is ready, willing and able?   In today’s market, some of the best deals do not even make it to the Multiple Listing Service.  Agents find out about them through other agents.  If you want to find the best property for the best price, you can begin your search on the internet, but then find an agent you trust and make sure you are ready, willing and able to buy.