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Will Renovations Pay for Themselves?

May 29, 2021 By Tayson Rockefeller Leave a Comment

This article, like many that I have written over the past 12 or 14 months may not be as relevant one year from now as it is today, but I have given the same advice on many occasions throughout my career in real estate.

The question is (as I renovate my own home) is it worth it? In my case, I am updating a kitchen that is as old as I am, and was somewhat budget oriented to begin with. It’s not that I don’t care what it might cost, but rather, I do not care as much about the value it will add to the home as I don’t plan to sell anytime soon. If you have the same mindset, I say go for it. Generally real estate improvements will at least pay for themselves, unless you’re doing something that is highly specified to your style or needs.

What about for resale? In this case, it depends on the market, and particularly right now, timing. At the moment (and I suspect you have noticed) appliances, carpet, roof shingles, windows… everything is in short supply and high demand. Similarly, labor is in short supply and as a result everything is far more expensive than it was a few Summers ago. It’s a seller’s market today and timing, coupled with supply and labor shortages is not on your side. With this combination, my current recommendation would be to leave well enough alone (if it is well enough) with the exception of a few examples below. In markets where time and materials are easier to come by, I think renovations should be considered on a case-by-case basis. Either way, the examples below well usually equate to a net gain.

1) Paint, where it needs it. Changing the laundry room from green to blue probably isn’t going to make a huge difference, and your time might be better spent cleaning the basement. On the other hand, freshening up a small room with an out-of-date color or poor paint job isn’t a bad idea. Another important aspect to painting is quality – tape those edges and use a hard, fine line brush where you can’t. Prime over top of those dark colors, and always do two coats.

2) Appliances, if you need them. It’s hard to get rid of a great appliance, they don’t make them like they used to. That being said, there’s something about those quiet dishwashers and stainless steel french door refrigerators that buyers tend to notice. Again, add a month to whatever delivery time estimate you receive.

3) Your trade, but be careful with this one! We live in an area that provides skilled labor for high-end real estate and as a result many are capable of improving some aspects of their homes. Why careful? I have seen plenty of hardwood flooring contractors “showcasing” their abilities in their own homes. While the herringbone transition to a diamond pattern of oak and dark walnut is respectable in terms of the skill, it’s probably not what buyers are looking for. Keep it clean, don’t overdo it.

4) Clean, this one is free (kind of). Declutter, depersonalize and freshen things up. buyers open closet doors, pantries, garages. This one is huge, and it might even help showcase how big a space is that otherwise might look smaller than it is.

5) Kitchens, bathrooms… I’ll bet if you hop online and do a quick search, this is going to be the first thing that comes up. True, buyers love fancy kitchens and shiny new bathrooms – but it’s hard right now. Things will get back to normal, but even in “normal” times, getting work done in a rural/resort area like this is difficult and expensive. It always has been, and it always will be. On that note, it’s easy to blow the budget and not be able to recover all of, or as much of the cost that you had hoped. Also keep in mind that these projects are often like picking at a scab. It’s never as simple as, “let’s replace the countertops!” Further, I’ve heard buyers ask why a seller would put such nice countertops on top of old, out of date cabinets. That’s a loss in my book. If a customer is questioning an investment you’ve made, you may have been better served not doing it in the first place.

I’m sounding a little pessimistic, but it’s probably my mood after wrapping up my own project. To be clear, I would rather sell a house with a new kitchen and master bath, and you will probably net out positive. Just remember the timing aspect mentioned above. Note that in any market things are probably going to take longer than you had hoped, and cost more than you expected. The best thing you can do is ask for your real estate professional’s advice before pulling the trigger if it’s strictly to improve the value of your home before listing it for sale.

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!

The Importance of Performance

April 5, 2021 By Tayson Rockefeller Leave a Comment

For those of you who haven’t witnessed this crazy real estate market, things are booming. The market is changing almost daily, and the value of a home a week ago probably isn’t the same as it is today.

With these crazy markets, it’s important to follow through and meet all of the obligations of any agreement that you have, primarily as a Buyer. The purchase agreements we often use are provided by the Idaho Realtors association. These contracts have some boilerplate, key deadlines and obligations for Buyers to meet in most circumstances. In addition, there may be a number of built-in contingencies or Buyer obligations beyond the traditional ones. I will outline a few of the most common examples below.

– Earnest Money Delivery: Depending on how your contract is written, it may be stated that the earnest money is already delivered, or shall be delivered within a certain time frame. As a Buyer, it is your responsibility to make absolutely certain that you deliver these funds in accordance with what the agreement states. For example, if the agreement states that the earnest money shall be delivered in the form of a personal check within three business days of acceptance to title company x, make sure it’s there. If the earnest money is not received in a timely manner, the Seller can elect to terminate the agreement.

– Proof of Funds or Loan Approval: Another common example is the requirement to deliver proof of funds and/or a loan approval letter within a certain amount of time. The agreements are typically written in a way that provides the Seller a few days to cancel the agreement if you don’t deliver these items by the deadline.

– Closing/Loan Funding: This is a big one. It is important to stay in close communication with your lender and remind them the importance of closing on time. Like everyone else, loan officers are busy and it’s easy to set a file aside and pick it up a couple of days too late. Make sure everyone involved in the transaction from real estate professionals to title companies knows exactly who the loan contact is, and try to set up reminders for appraisals and periodic check-ins. Other obligations and contingencies exist, so it’s important to have your real estate representative prepare a timeline with key dates and deadlines. Make sure you pay close attention to the difference between a business day and the calendar day, and understand that business days end at 5:00 Mountain Time. Sellers have obligations too, but in a Seller’s market it usually doesn’t benefit a buyer as much to try to act on these deadlines.

Beware of Unsolicited Offers!

February 28, 2021 By Tayson Rockefeller Leave a Comment

Generally speaking, it’s no secret that Teton Valley’s real estate market is booming. In times like these, those looking to capitalize or at least get their foot in the door are out in droves doing what they can to get a deal. I have noticed a significant increase in “letters of intent” to purchase real estate, cold calls, and other forms of communication from those I described above.

Some of these are pretty easy to pick out, and most have a general understanding of their property’s value to recognize that these are borderline scam prices. However, in times like this, the market values change very quickly. While I have seen some laughable offers, I have also seen a few that appear pretty enticing on the surface. However, it’s important to remember that these people are contacting you for a reason. The market is strong, and it is almost an assurance that a good agent can help you sell your property, quickly. With that said, there is no advantage to considering a one-off offer in almost any event. Some exceptions might include neighbors offering to buy real estate, knowing that neighbors are usually the most motivated buyers in the marketplace.

I always joke about “scumbag” realtors, but the truth is, our region has some of the most responsible, well intended, and market educated professionals that I have seen in the industry. There’s always an exception, but I suspect that there is concern that trying to communicate with a real estate agent or obtain a fair opinion of value without being pressured to list your property can be challenging, but that’s really not the case. Most agents or local market professionals offer a quick, no frills opinion of value at no cost and with no strings attached. We do these valuations all the time for customers trying to understand tax rates, situations with family members, and so forth. If you’re really looking for a non-biased opinion, even paying an appraiser to give you a market value could save you significantly if you are considering an unsolicited offer from an individual. These offers come in many forms, but they will usually come in the mail. However, phone calls, emails, or even door to door solicitations should be expected.

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