Teton Realty Blog

Teton Region Real Estate Market Stats, Articles & News

Price Reductions, You’re Doing it Wrong

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Who’dve thought we would be discussing price reductions today, with such a crazy market just yesterday. First.. Am I indicating that prices are falling and it’s a buyer’s market? Not necessarily. We are however seeing market stabilization, but some sellers aren’t ready to come to those terms just yet. We are continuing to see listings surge on with new listing prices 5-10% over the last quarter. Many of these listings are sellers that don’t want to leave money on the table, understandably so. The market is moving directions quickly, and none of us want to leave money on the table. In addition, some sellers are listing with “make me move” prices, and there is nothing wrong with that.


With the above said, don’t put yourself at a disadvantage, particularly if selling is a priority, and not just something to take advantage of if the price is right. If your motivations are the former, take a hard look at an analysis provided by a broker to see if it makes sense. As the market stabilizes, many brokers and brokerages are finding themselves with too much overhead and two little selling inventory, which may result in taking listings with unrealistic listing prices, or even providing unrealistic advice, though I hate to admit that it would happen in our community, as most of my colleagues and competitors are, in my opinion, some of the best in the Nation.


Notwithstanding, if you do find yourself in the position to reduce price, do it based on data. In many events we are seeing “panic” reductions, and in some events for properties that are appropriately priced. We all have concerns about the selling season, but don’t reduce too soon.


My second tip, only reduce once. Multiple price reductions lead the market to believe that they should wait for the next reduction. I understand that we don’t know how many times you may need to reduce, hence the need to look at the data closely. Unfortunately we aren’t currently in a position where reducing too much will bring the sales price back over the market value. Regardless, you need to act carefully, but not (too) quickly. Price reductions should be concise, well thought out, and substantial enough that you only do it once – but not so much that you leave money on the table. A good real estate agent will help you plan the starting price appropriately, and provide the data as to how they arrived at the suggested price in a comprehensive way that is also easy to understand in order to make an informed decision.

Property Assessments, Are Taxes Going Through the Roof?

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Unless you were living under a rock for the past 2 years (which might have been nice) you probably know that property values are up significantly. Until now, we haven’t seen County assessed values follow suit. With the recent release of 2022 assessed values, many are concerned that property tax increases are soon to follow. However, this doesn’t necessarily mean that your tax bill is going to go up proportionately.


In Idaho, each county is allowed to increase its property tax budget by up to 3% of the highest property tax budget of the past 3 years. The county can also increase their budget to account for new growth.


In order to calculate the tax rate, each taxing district within the county (Teton County has 18 taxing districts that each have slightly different budgets and needs) determines a levy, or the rate of which the county will multiply the assessed value to determine each property’s annual tax bill.


As an example, let’s say that district 1 has a total budget of $900k. In 2021, the total market value of every property in district 1 is $70m. To determine the levy, we would simply divide 900k by 70m, or 1.287%. If your assessed value is $300k, we simply multiply that by 1.287% to arrive at your 2021 tax amount of $3,861.


Now, let’s run a hypothetical based on what we are seeing today. We know that the total budget is going to increase with the new growth and the state’s allowance to increase the budget by up to 3% (ahem, inflation). Let’s assume that the new budget is $990k, and the collective value of all properties has risen to a whopping $110m. Using the same math, we divide $990k by $110m and arrive at 0.9%. Your value went from $300k to $450 this year. The math puts your 2022 tax bill at $4,050. While your tax bill has risen, it hasn’t risen 150% like your assessed value has.

The good news? Property values are up, and I know an agent that would love to sell your house.

Key Dates:

  • Mid-November – Current year tax bills mailed
  • December 20th – FIRST HALF TAX PAYMENT DUE
  • March 15th – Agricultural Exemption Applications Due
  • April 15th – Application deadline for Hardship Tax Relief or Circuit Breaker Program
  • April 15th – Application deadline for Homeowner’s Exemption
  • June 20th – SECOND HALF TAX PAYMENT DUE
  • First Monday in June – Assessment notices sent out
  • Last Monday in June – Last day to appeal current year’s property values
  • Summer – County begins planning budget for following year
  • Second Monday in September – County certifies budget

Application for Agricultural Exemption

Agricultural Lease Agreement

Interest Rates, Ideas for Buyers and Market Impacts

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It’s no secret, interest rates are definitely on the rise, and likely will continue to do so. It’s interesting hearing about all of the potential impacts. A lender friend of mine provided some good insight recently. Interest rates are still very low from a historical standpoint, and there are still some great ways to minimize the impacts of rising rates. These include mortgage points that come with a variety of options and the ability to have these points negotiated into a transaction or even paid by the seller. A mortgage point is effectively a way to buy down the interest rate up front. This can be a great tool to help buyers keep up with today’s real estate prices, which don’t seem to be going down despite interest rates creeping up. Buying mortgage points can also work well for buyers that intend to keep their loans long-term. Typically a “point” is equivalent to 1% of the purchase price and that will usually reduce the interest rate anywhere from 1/8 to 3/8 of a percent. Other options include a 2-1 (or even a 3-2-1) buy down which reduces the first year by 2 points in the second year by one point, which is where the highest amount of interest is paid on a loan while the principal of balance is still high.

Obviously interest increases are coming as a way to combat inflation, and it’s probably the lesser of two evils. Interestingly, supply chain issues, high building costs and other factors on the supply side are keeping new inventory at bay. Whereas real estate is primarily supply and demand based, this has created an interesting dynamic for both buyers and sellers. Personally, I do believe that the cumulative total of these issues will have an impact on the market, but without the increase of supply, I’m interested to see how much (if any, I should add).

Marketing Backfires in a Seller’s Market

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Notwithstanding some recent market volatility, looming interest rate hikes and other noteworthy news headlines, supply remains incredibly low and demand is as high as ever here in Teton Valley. While the market likely won’t always be in this predicament, I believe this advice will remain pertinent for many market cycles to come.

Getting back to the subject line here, we’ve grown accustomed to allowing the market to “autocorrect” when it comes to listing properties, at least listing them too low. If we know the last sale for something was $100,000, and it was more than a couple of months ago, we usually anticipate multiple offers at or above that number. With this consideration I arrive at my first no-no;

Listing too high

This can be a delicate balance, particularly when we know that the market increases month by month. We almost have to anticipate how much it has increased but not overshoot. Overshooting typically results in “days on market”, and the general conclusion by the public is that there is something wrong with the property. Days on market can be normal in normal markets, but detrimental in hot markets.

Anticipating multiple offers

I’ve seen this one happen a few times over the past 12 months. Just because the market is hot doesn’t mean that it can’t be eclipsed by random happenings. Real estate markets always come and go in waves and cycles. It’s strange how everybody looks at real estate at the same time, and oftentimes we find that people aren’t looking at the same time. Marketing a property stating that you are “accepting offers through Tuesday at noon” when you don’t actually have an offer might deter the only person looking at the house.

Overdoing itThis one’s hand in hand with the scenario above, but overdoing it can sometimes create a marketing issue. For example, scheduling an open house with a tagline of “multiple buyers expected, showings limited between 12 to 3:00” might also detour someone that isn’t interested in bidding against multiple buyers, even when there aren’t multiple buyers. Scheduling too many open houses is also a signal that the activity was less than expected, almost as if sellers are begging for buyers, we don’t want to give that impression.

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