Deciding Whether to Remodel or Sell

Deciding whether to remodel or sellMy home was built in 2000, the year my 14-year old son was born. We have lived there since 2003. When I compare my house to many others I show and sell, I regularly come down with a case of house envy. I have learned that styles change about every 5 years and even a newer home can become dated in a hurry. When faced with this situation, how do you decide whether to remodel or sell? Here are some points to help with that very decision.

When to Remodel

This would include remodeling your own home or investing in a dated home and then remodeling.

  • When the location is difficult to duplicate. In my case, I have panoramic views of all 3 ski resorts and the Olympic Park and we back to open space.
  • When the floor plan makes sense. We love the vaulted ceilings and open floor plan of our home. Each child has their own bedroom and sink. They share a jack-and-jill bath.
  • When you like the neighborhood and the neighbors. I enjoy retreating to Jeremy Ranch after working in town all day. It’s also an easy commute to the airport for my husband, a frequent flyer. We have a great homeowners’ association and wonderful neighbors.
  • When the proposed remodeling upgrades make sense for the neighborhood. As a rule, you don’t want to have more money invested in your home than it would fetch if you suddenly needed to sell it and you don’t want to own the most expensive house in the neighborhood.

Over time, we have changed most of the light and plumbing fixtures, upgraded the countertops, replaced most of the carpet, replaced the kitchen appliances, and painted many of the rooms in our home. We also gutted our master bath and added an outdoor deck and fireplace.

When to Sell

This includes selling your home instead of remodeling or pass on purchasing a home that needs updating.

  • When the location doesn’t make sense. Maybe you live on a hillside but really want a yard; perhaps your home backs to Highway 80 and the noise bothers you; or you are located outside Park City School District and have a 4-year old. In these circumstances, it may not make sense to invest money into a location that you don’t love. No amount of remodeling is going to change the location.
  • When the amount of remodeling required will make the home too expensive for the neighborhood. If you need to move walls, the ceilings are low or the floor plan is too “choppy”, you are looking at big time expenses that could be difficult to recoup. If you are purchasing a home with deferred maintenance, get estimates to make sure the amount needed to bring the home up to snuff is in alignment with the purchase price.

I encourage my clients to buy homes that need cosmetic updates. These are usually the least expensive improvements that are sure to increase a home’s value. Examples include new flooring, paint, countertops, appliances, and light fixtures. These improvements also have the most visual impact and allow buyers to customize a home in accordance with their taste and lifestyle.

What are your thoughts or experiences with remodeling vs selling?

Best Places to Find Real Estate Agent Reviews

It’s easy to get lost online when searching for a real estate agent to represent you in the sale or purchase of a Park City home.  When doing a search for “Park City Utah real estate agent reviews” on Google, the following websites came up in the order displayed below.  How useful are these sites in finding an experienced agent who specializes in the Park City market? Read my comments on each.

Park City Real Estate Agent Reviews Case Study

Zillow.com

The entire first page of Zillow displayed agents who work for brokerages outside of the Park City area.  It wasn’t until I got to page 2 that I found 2 agents from my office who are big time Zillow advertisers.

zillow agent reviews

Yelp.com

I could not figure out the criteria used by Yelp to rank agents, but at least all the agents on page 1 were genuinely Park City agents.  One brokerage that has been out of business for several years was also featured, which makes me question how often information is updated.

yelp agent reviews

Angie’s List

I did not want to “join” Angie’s list so I can’t comment on the accuracy of its data.  All I know is that 16 Park City agents are on the list.

angies list real estate reviews

Better Business Bureau

This site was outdated, as it showed real estate groups that are no longer in practice.  I couldn’t find anything useful on this site related to reviews of Park City agents.

bbb real estate reviews

Realtor.com

When you search for a Park City realtor on realtor.com, you get an alphabetical list sorted by first name, A-Z.  The site offers a lot of information about the agent, including a tab for all his or her current listings, biography, open houses, and a “recommendations” button.  One would have to do quite a bit of digging to find an agent with a number of good reviews.  Agents whose first name starts with an “A” are at a serious advantage here.

realtor com agent reviews

Trulia

This site was really fascinating to me.  The agents are ranked in order of who has had the most listings posted on the Trulia site and “claimed” them via Trulia’s back end.  At least all the agents on the first page were truly Park City agents.

YP (Yellow Pages)

Mostly brokerages are listed.  There is a space where one can submit a review, but it looks like no one has reviewed any of the brokerages listed.  There was an opportunity to “claim” a business, but it doesn’t appear that any of the brokerages listed have taken that opportunity.

yp agent reviews

LinkedIn

Linkedin did not appear from the Google search, but many real estate agents have asked their clients to submit reviews on their LinkedIn pages.

linkedin-reviews

Conclusion

How useful are the reviews on these sites?  I have asked clients to review me on Zillow and they declined because Zillow requires them to provide their email address.  Let’s be honest.  Most of the recommendations on these online sites were made at the request of an agent.  The real estate agent reviews are not as “honest” or spontaneous as those you will see on sites such as tripadvisor.com or opentable.com.

What are your thoughts on agent reviews? I’d love to hear your feedback in the comments.

How Accurate are the Park City, UT Zestimates?

Are Park City Zestimates Accurate
Zestimates are the estimate of a home’s value on the website Zillow.com. They are sometimes used by real estate clients to discuss the list price or initial offer on a home. A couple of weeks ago, a client called and told me the Zestimate of her home was $1.2 million. Was it time to sell? My estimate of the market value was closer to $900,000. This got me thinking about Zestimates and segued nicely into this week’s blog post.

How Accurate are Zestimates in the Park City Market?

To answer this question, I decided to do a small case study. I chose 6 single family homes that closed within the last 7 days. The closed price is the market value because that is what a buyer actually paid for the home. Each home I chose for my study is in a different Park City neighborhood. I compared the list price, sold price and Zestimate.

The Comparison

Old Town Neighborhood
List price: $2,195,000
Sold price: $2,110,000
Zestimate Accuracy: 41.3%

505 Park Ave Zestimate

Bear Hollow Neighborhood
List price:  $565,000
Sold price:  $560,000
Zestimate Accuracy: 98.7%

5652 N Kodiak Way Zestimate

Willow Creek Estates Neighborhood
List price: $3,495,000
Sold price:  $3,250,000
Zestimate Accuracy: 120%

1100 Old Rail Lane Zestimate

Summit Park Neighborhood

List price:  $599,000
Sold price:  $600,000
Zestimate Accuracy: 100%

470 Parkview Drive Zestimate

Jeremy Ranch Neighborhood
List price:  $715,000
Sold price:  $715,000
Zestimate Accuracy: 94.8%

3078 Creek Road Zestimate

Promontory Neighborhood
List price:  $2,695,000
Sold price:  $2,510,000
Zestimate Accuracy: 104%

8414 N Sunrise Loop Zestimate

Conclusion

In one case, the Zestimate was close to 100% accuracy of market value. In another case it was off by more than 40%. Even a 4% margin of error on the Promontory listing equates to a difference of over $100,000. To me, that’s not acceptable.

Furthermore, since Utah is a non-disclosure state (meaning sold prices are not accessible to the public), I do not know how Zillow obtains the data to figure out its “Zestimates”.

My conclusion is that property valuations are best left in the hands of real estate professionals. Park City real estate agents have access to the relevant data and the market knowledge to assess the qualities that go into a valuation, including floor plan, finishes, and condition.

5 Park City Real Estate FAQs

As the Park City Real Estate Strategist, I often get questions about price trends, down payments, and more. Here are my answers to some common questions about the Park City Real Estate Market.

  1. What is the current trend in single family home prices?

The median price in Park City has been stable for the past 12 months, but is up about 10% since 2012.  Nationally, home prices increased about 10% according Case Shiller and 5.9% according to FHFA.  The Park City market is highly segmented.  Some neighborhoods have seen over 10-15% increases in pricing over the past year and others have bloated inventories and are buyers’ markets.

  1. Can I purchase a home or condominium with less than 20% down payment?

There are some great programs available for home buyers who want to take advantage of today’s attractive pricing and rates.  FHA programs are available for owner occupied homes.  They require just 3.5% down but have a mortgage insurance requirement.  Programs where the borrower puts 5-10% down and obtains a 10-15% supplemental loan are a great alternative as well.  With rates still below 4.5%, taking on a bit more debt does not substantially increase the monthly payment.

  1. Do I need a REALTOR© when I can easily find houses online?

Finding houses does not require much expertise.  Understanding a property’s value relative to recent sales requires greater skill.  Where a REALTOR© really provides value is in negotiating and managing the transaction.  This is where buyers can lose money and make expensive mistakes.  I have been involved with over 20 property sales in 2014 and was involved with 24 in 2013.  I leverage my knowledge and experience to help my clients negotiate the best possible price and terms and prevent them from losing earnest money and making other expensive mistakes. Read our recent article on the Park City Board of Realtors.

  1. Is buying a home still a good investment or does it make sense to rent?

If you are not planning to stay in the same home for 2 years, it could make sense to rent.  Otherwise, every study that compares the net worth of renters vs owners shows that home ownership is still the best way to build wealth in the United States.  In fact, a new study by the Federal Reserve shows that a homeowner’s net worth is over 30 times greater than that of a renter. The average homeowner has a net worth of $174,500, while the average net worth of a renter is $5,100.

  1. Will housing costs rise in 2015?

Lawrence Yun, with the National Association of REALTORS©, predicts mortgage interest rates will gradually rise from an average fixed rate of 4.7% in 2014 to 5.5% in 2015.  (Remember, a 1% increase in interest rates has the same payment effect as a 10% increase in purchase price).

Housing economists predict that the increase in housing prices will be slower in 2015 than 2014.  The reason for this slowdown is that home prices are approaching fair market value and there is a predicted increase in inventory due to new construction becoming available.  Experts predict an increase nationally of 3-5.7%.  So the answer is yes.  Housing will become more expensive next year.

Park-City-MooseAnd here’s a cute photo of a moose I took recently. Life in Park City is great. Whether you are currently renting, looking to upgrade, or trying to follow a dream of investing in Park City, let me help. Do you have a real estate question I can answer? Drop me a line at nancytallman@gmail.com.

5 Reasons Not to Do “For Sale by Owner”

I was sitting down to write this week’s blog but I came across this article by Keeping Current Matters and frankly couldn’t have stated it any better myself. Would like to share their article with you here. Please leave your comments and questions on the subject of FSBO.

For Sale by Owner

Some homeowners consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). We think there are several reasons this might not be a good idea for the vast majority of sellers.

Here are five of our reasons:

1. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to FSBO.

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies which work for the buyer and will almost always find some problems with the house
  • The appraiser if there is a question of value
  • Your bank in the case of a short sale

2. Exposure to Prospective Purchasers

Recent studies have shown that 92% of buyers search online for a home. That is in comparison to only 28% looking at print newspaper ads. Most real estate agents have an extensive internet strategy to promote the sale of your home. Do you?

3. Actual Results also come from the Internet

Where do buyers find the home they actually purchased?

  • 43% on the internet
  • 9% from a yard sign
  • 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

4. FSBOing has Become More and More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 9% over the last 20+ years.

5. You Net More Money when Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real commission. The seller and buyer can’t both save the same commission.

Studies have shown that the typical house sold by the homeowner sells for $184,000 while the typical house sold by an agent sells for $230,000. This doesn’t mean that an agent can get $46,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

What is the Function of the Park City Board of REALTORS®?

Most people know that a real estate agent functions as an intermediary and sales person to facilitate the exchange of real property between buyers and sellers. Real estate agents have a fiduciary responsibility to the party who they represent. But, not all real estate agents are REALTORS®. Only members of the National Association Of REALTORS® (NAR) are REALTORS®.

Park City Realtors

From left to right: Marcie Davis, 2014 President; Deb Hartley, 2014 Secretary; Tami Whisker, Past President; Marc Coulam, Past Board Member; Nancy Tallman, 2014 President-elect; Suzanne Sheridan, 2014 Treasurer

NAR: The Parent Organization

Founded in 1908, NAR has 720,000 members and is the world’s largest professional organization. Each member belongs to at least one local and state association. The Utah Association of REALTORS® is our state association and the Park City Board of REALTORS® is our local association.

As the “voice for real estate”, the NAR and its state and local member organizations work with government and the public for the purpose of preserving the free enterprise system and the right to own real property. Think about how this affects all of us. For example, any time legislators want to cut the mortgage interest deduction, NAR uses its influence to defeat such legislation.

How The Park City Board of REALTORS® Serves the Public

The Park City Board of REALTORS® (PCBR) was formed in 1980 and has almost 900 members. The Park City Board of REALTORS® serves the public in many ways:

  1. We champion private property rights and home ownership.
  2. We ensure local REALTORS® are educated and adhere to the NAR code of ethics. PCBR enforces the NAR Code of Ethics and Standards of Practice. In addition, the PCBR provides professional development, awards of recognition for its members, collects market statistics and improves the standard forms Park City REALTORS® use in their transactions.
  3. We manage the Park City MLS Multiple Listing Service and collect and distribute sales data to the public. This service allows brokers and agent members to post their listings electronically and to offer cooperative payments to one another. This means that as a Park City MLS member, I can show any other agent’s listings and know that we automatically have a cooperative commission sharing agreement. A more recent development is our ability to syndicate (share) our listings with public real estate websites, such as Zillow, Trulia, realtor.com, Yahoo, etc.Luxury Home Tour 2014
  4. We are also stewards of our local community, raising and distributing money for local charitable organizations. Our Philanthropic Foundation is very active. We have raised hundreds of thousands of dollars for community organizations through fundraisers like the Luxury Home Tour and the Turkey Drive.

I am currently the President-elect of the Park City Board of REALTORS®.  In January, I’ll become its President. It’s an honor and privilege representing Park City’s REALTORS®.

Park City New Construction Update, July 2014

There are several new construction projects in the Park City area and they are very popular. Some of my favorites are:

  1. Stein Eriksen Residences ($2,400,000-$6,900,000)
  2. The Parkite ($1,595,000-$5,495,000)
  3. Enclave at Sun Canyon ($1,799,000-$1,960,000)
  4. River View ($452,000-$519,000)
  5. Black Rock Ridge ($429,900-$499,000)
  6. Park’s Edge ($339,900-$349,900)
Enclave at Sun Canyon, River View & Parkite
Enclave at Sun Canyon, River View & Parkite

What do these new properties have in common?

  • Mountain Contemporary Style
  • Vaulted and/or high ceilings
  • Oversized solid wood doors
  • High end finishes throughout, such as solid surface counter-tops and stainless, commercial grade appliances
  • Big windows that take full advantage of views
  • Excellent insulation to minimize sound penetration from neighbors
  • Energy efficient/”green” construction & use of technology
  • Decks for indoor/outdoor living
  • Hardwood and/or natural stone flooring
  • Stein Ericksen Residences and Enclave have “floating” staircases
  • Many of theses homes allow the buyer to select their own finishes.

Buyers Prefer New Construction

How many older homes can you think of that have the above list of popular features? Even a home that has been gutted and remodeled may have a floor plan or system that is now functionally obsolescent. Park City’s homebuyers love new construction and all of the above-referenced homes are selling faster than they can be built. As a home seller, it is important to note the newer homes you may be competing with and price accordingly.

Are you interested in learning more about some of the newer developments in the Park City area? Contact me at 435.901.0659 or nancytallman@gmail.com.

12 Strategies for Winning Real Estate Multiple Offers

winning offersIn the Park City real estate market and many areas of the country, low inventory, high demand and low interest rates have created a seller’s market. Multiple offers should be anticipated. It can be extremely emotional to lose a dream home to someone else over a couple of thousand dollars.

To help you in your quest, here are some strategies to win multiple offers. As a buyer, it’s best to use as many of these strategies as possible to stack the deck in your favor.

How to Win in Multiple Offer Situations

how to win real estate multiple offers

  1. Be ready. You MUST be preapproved for financing or demonstrate sufficient cash funds. This is the most important step. You really can’t compete if you have a home you must sell before you can buy.
  2. Be fast. Preview a home the minute it hits the market and don’t delay in writing an offer. If you are not present in Park City when the home hits the market, don’t be afraid to write an offer before physically seeing the property.
  3. Write a full price offer.
  4. Use “escalator” clauses.   (If you don’t know what this is, contact me for an explanation.)
  5. Reduce or eliminate contingencies.
  6. Write a personal letter.
  7. Understand that the home may not appraise and be prepared emotionally, mentally, and financially to deal with that.
  8. Have a “Plan B”, a second choice home if the first choice doesn’t work out.
  9. Understand that an appraisal is a reflection of where the market has been over the past 3 months and the market value or purchase price is the value today. These two numbers may not be exactly the same.
  10. Find out what terms are most important to the seller. You would be surprised that oftentimes price is not the most important term.
  11. Don’t be afraid to write a back up offer. In today’s market, many buyers get cold feet and back out of transactions.
  12. Understand the risks and rewards for coming up with creative terms that allow you to purchase the home.

multiple offersAnd last, it is critical to work with a buyer’s agent who you trust. Your buyer’s agent should understand exactly what you are looking for and your financial situation. This will allow you and your buyer’s agent to work together as a team to push the envelope as much as possible to get you into the home you want to own for the best possible price and terms. If you get into a real estate multiple offers situation, don’t panic. Follow these steps, and may the odds be ever in your favor.

This blog post was inspired by a recent webinar by Larry Kendall with “Ninja Selling”.

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It’s Shoulder Season, Park City!

Shoulder Season Park City, UT65° and sunny. 40° and rainy. Six inches of snow. What do they have in common? They are all weather possibilities during spring in Park City, Utah.

It’s that time of year again. In what is generally referred to as the “shoulder season”, the town is letting out a collective sigh after another successful ski season under its belt. On the tails of being named Outside Magazine’s Best Active Town last fall and some fantastic powder days this past ski season, the first quarter of 2014 real estate sales showed an increase in sales volume of 16.6% over the first quarter of 2013. We holidayed. We Sundanced. We skied and enjoyed the day and night with friends and family. But now it’s time to change gears.

The schizophrenic weather patterns don’t even bother us. You know why? Because if it’s sunny, we’ll hit the trails. If it snows, we’ll hit the trails. And if it rains, we’ll take the rare excuse to relax and do nothing. We do need a reason, after all. We Parkites tend to feel guilty if we are couch bound for longer than an hour.

The great news for businesses which rest their livelihood on the tourists that visit our town, and for tourists who want to visit during this time, is that the shoulder season isn’t nearly as quiet as it used to be. 15 years ago, Main St. was a ghost town after mid-April and well into the summer. Now, a few businesses may take a couple of weeks off, but then the summer pulse, albeit quieter than winter, starts to tick.

Another thing about the shoulder season is that it’s a great time to buy or sell your Park City real estate. School is about to let out, so you can make your big move while life is just a little less busy. We are constantly adding new listings, so bookmark our site and find the next property of your dreams this spring. (In between biking and skiing, of course.)

Are Real Estate Agents a Commodity?

7042 Powderhorn Ct Park City-small-004-DSC 1043-666x445-72dpi

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.

 

 

Commodity-Definition2-e1378358514548

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.