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Updating your Insurance Policies

September 30, 2021 By Tayson Rockefeller Leave a Comment

One of the tools we use to protect our real estate investments includes insurance policies. The obvious one is your homeowners insurance. With both real estate values and construction costs going crazy, we often overlook the level of protection we have in the event of a catastrophe. If you acquired your home more than a year or two ago, it’s definitely time to revisit this.

Even more overlooked includes title insurance. In fact, many of us don’t even realize that we have a title insurance policy. That’s because title insurance policies are issued once, usually at the time you purchased your property. To reiterate a few of my past articles, title insurance is a form of insurance designed to protect lenders and homeowners from financial loss due to a defect in title. Policies are issued to lenders for the loan amount and owners for the purchase amount. Defects in title can range from errors in the public record to liens on the property and a huge variety of other issues related to your home’s title and its history.

So, if you’ve been issued a policy at the time you purchased your property, why update it? Much like your homeowners insurance policy, we have to establish a value to base the policy. If you are insuring your 800k home for only 400k, you’re only covered up to 400k in the event of an incident. Title insurance works the same way. When a title insurance policy is issued, it’s usually for the original purchase amount. If you purchased your property more than a few years ago, chances are that you’ve seen a significant increase in the value of your property. If a defect is found or if one arises, it’s important to remember that you’re only covered for the original amount of your policy. This can be especially concerning for those improving their properties.

When it comes to updating your homeowners insurance policy, it’s usually just a quick phone call to your insurance provider. In most cases they are aware of the market conditions and can easily make adjustments. Increasing insured amounts is not unusual in markets like these, but it will add to the annual premium cost. Updating your title insurance policy can also be done, but it will sometimes require additional information to justify the increase in value. If you are refinancing the property the appraisal is an easy solution. However, even if you aren’t in the process of refinancing, your property’s assessed value with the county can be enough to increase the limits on your title insurance policy. Similar to your homeowners insurance, this will add to the premium, but remember that title insurance is a one-time expense, so the added premium will only be paid one time. In order to update this you will need to contact the title insurance company that wrote the original policy. If you don’t remember who this was, you can usually reference your deed or contact your real estate agent who should have a record of this for you.

Fall ’21 Market Update

September 27, 2021 By Tayson Rockefeller Leave a Comment

The Teton Valley real estate keeps humming along. A few sectors of the market seem to be cooling off, but nothing earth-shattering.

LAND

The second quarter of 2021 seem to be a high point in the market with 190 land sales, consistent with the huge increase in sales since the real estate craze began in 2020. Total volume was just over 42m with sales prices exceeding list prices in many cases, but averaging 91% of the asking price. Of the 190 sales, just over 10% of them were financed.

The third quarter in 2021 brought newfound inventory, likely due to our newfound average sales price for land of just under $220k in 2021 (YTD) compared with an average sales price of just over $121k in 2020, though that average increased significantly as the year came to a close. Total volume was a touch over 38m. While the average sales price is up and sales prices are holding fairly firm at just 4% under the ask, inventory is also up and the number of sales are down over the last quarter. These are indicators that the increase of supply seems to be providing a sense of relief for buyers. We’ve seen a fair share of price reductions, but this is mostly attributed towards overzealous sellers beginning to understand that the current trajectory of land prices likely isn’t sustainable. Of the 138 sales, almost 14% were financed, a bit of an increase compared with last quarter.

RESIDENTIAL

The residential market continues to exceed expectations, likely due to the low inventory of just 58 active listings at the time of this writing and a dismal 14 new construction offerings. The third quarter of 2021 saw 93 residential sales at the time of this writing with home selling on average between 1 and 2% under the ask, with many selling above. The average sales price per square foot was $428 per square foot during this time which included land, this number is fairly consistent with the cost of construction not including land – the biggest factor when considering the lack of new inventory. Teton County reported about 38 new building permits for residential properties which included garage apartments and remodels. Builders have been turning away work with schedules booking several years in advance, but if you canceled projects because of unexpectedly high building costs have created just a few openings with custom home builders.

Backup offers – a good idea?

August 29, 2021 By Tayson Rockefeller Leave a Comment

This is a contentious one amongst real estate agents. Before I get into that thought process, let’s go over the mechanics.

You’ve listed your home, you had a number of good showings and two great offers. Of course, you can only choose one. The other buyer presents a backup offer with a “backup addendum” accompanying the offer. It’s a short agreement, and it basically states that your agent will give them notice if the first buyer terminates. Things will then commence in accordance with the terms of their offer as soon as they receive that notice. If they have a deadline for an inspection, to deposit earnest money or provide a pre-approval letter, the clock won’t start ticking until that notice of the first position offer terminating is provided. Essentially things automatically roll right into the second offer.

Usually, a buyer’s agent is always an advocate for a backup offer because the buyer can terminate the backup offer up until the notice is given, at any time. Basically, there’s no risk. This is exactly why some agents agree that accepting a backup offer is a detriment to a seller. Why not just go back to the market and potentially receive more offers?

When acting as listing agents, we sometimes get used to increasing markets so it’s easy to make this advice. However, (in my view) there are still a few good reasons to consider a backup offer if a buyer wants to present one.

1) As agents, we try, but don’t always take a seller’s emotions into account like we should. I can tell you that listing a home in today’s competitive market is exhausting. We sometimes field dozens (even hundreds) of calls, texts, emails, social media notifications, the list goes on. It also doesn’t matter the day of the week or the time of the day, and we juggle a huge number of showings and showing requests. With all of the craziness, we sometimes forget that the seller oftentimes endures some of the same challenges. Keeping the house clean, ready for showings, juggling kids, dogs, life. In addition, making decisions can be tough. Good agents don’t tell you what your decision should be (sometimes we try to inform sellers of bad ones), they lay out the options, pros and cons in an organized fashion, answer questions and provide advice. The point is, a backup offer can create a calm environment and segue into a new transaction without going through all of the trouble again.

2) There’s an old saying that your first offer is always your best offer. However, in today’s crazy market it is not unusual for buyers to fire off quick offers with even quicker response times before the “bidding war” begins. In this context I’m not suggesting the very first offer is the best offer but rather the first group of offers is usually your best group of offers – if that makes sense. The more time that homes spend on the market, whether they are available or have an accepted contract, the more buyers assume there is room to negotiate. There are exceptions to every rule and that would include the points above. Of late, we have seen home values rise even during the time of which homes are in contract, but that seems to be subsiding. To bring this full circle to the market today, things appear to be leveling off (not dropping) in this new plateau appears to be a baseline for home and land prices, at least for now. This is all the more reason to consider these points, and to seek good real estate advice with these fast moving and ever evolving markets.

Changing the way we negotiate

May 3, 2021 By Tayson Rockefeller Leave a Comment

I distinctly recall hearing stories from customers in different areas of the country before the recent real estate boom changed the real estate world, particularly in rural areas. Stories about negotiations pushing home prices 10% over the asking price seemed pretty crazy to me, but in some cases, here we are.

It’s important to look at the date on this article, this information is likely going to be accurate only for a few months, but it’s good to earmark where things have been. I’ve got articles from 2014 with much different advice.

Price: Asking prices and offer amounts seem to change weekly, if not daily in this market. With the lack of public sale information and the unknown as to how far things are selling over the asking price this one’s hard to nail down without the advice of an agent that is in the thick of current trends. I have seen sale prices anywhere from $5,000 to 15% over the asking price depending on the sector of the market. We will usually see significant increases over asking on condos and townhouses, but that does not preclude any other type of Real Estate depending on the initial asking price. I should also note that some things are still selling under, it’s all about the tactic of the seller.

Finance and Appraisal: This one has been incredibly tough for buyers looking to get into the market. It’s frustrating and disheartening when a finance contingency is holding up the ability to compete with cash buyers. As a result, we’ve seen buyers agree to waive appraisal contingencies, assuming they have the cash balance to cover the difference. Waiving appraisal contingency and providing a pre-qualification letter with 5% down is difficult, but we haven’t seen too many problems with appraisals. Appraisers seem to be in the know with real estate prices. However, cash is still king, and hard to compete with as mentioned.

Inspection: Fortunately we haven’t seen a shift in our market where buyers have been (or need to) waving inspection contingencies in order to compete. Deposits that are immediately non-refundable are rare, and personally, I hope it stays that way. These are big investments and buyers need the opportunity to vet properties inside and out. This market also produces a number of site-unseen offers (often there is no choice with the quick timing of things) and I believe it would be unreasonable for sellers to expect buyers to waive contingencies altogether as a result.

There are a handful of other negotiating tips and tricks like escalation clauses and the like, and there’s a time and place for different tactics to achieve maximum results. I know I sound like a scumbag real estate agent when I say this, but as mentioned above, it’s absolutely paramount to have a local agent that has a close ear to the ground.

It will be fun to come back to this article 2 years from now!

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