Posts – Page 12

Time to sell?

October 31, 2021 By Tayson Rockefeller Leave a Comment

I’ll try to keep this article generic so that it is relevant in years to come, but in so many ways much of this information will likely be outdated before we know it. One thing is for sure, this market has had so many unexpected twists and turns that the craziness now seems to be normal, and it probably is normal until the next crazy happens… You know how it goes.

The inspiration for my article was an advertisement I saw on behalf of one of my realtor friends on social media in another area. It was something like looking to sell? It’s a great time to sell! Are you looking to buy? It’s a great time to buy as well! Of course, this could have been handled differently and they could have talked about the low interest rates for buyers and the obvious hot market for sellers but it didn’t really come out that way. From a marketing standpoint, I think it’s difficult to group everybody into one advertisement like this. Generally speaking, buyers buy when they want to buy. It doesn’t matter if it’s a seller’s market and they know it, or if it’s a buyer’s market and the value is easy to justify. I can look back through my career with dozens and dozens of potential buyers that always felt the market was overvalued. They are always going to feel that way. I can also remember buyers that seems to be making an impulse decision that didn’t seem to make sense. Sometimes that worked out, sometimes it didn’t. As always, my job is to provide data, facts, and information. Unless it is overwhelmingly clear I generally won’t answer the question of “Is it a good time to buy?”. Besides, buyers want to make their own decisions, they just want to hear straight information.

But is it a good time to sell? Is it ever a good time to sell? It depends who you ask. Most stock brokers will talk about averaging. Investments tend to increase over time, hang on, hang out and let the world do its thing. Is it a good time to sell if you don’t have anywhere to go? Not really. Is it a good time to sell if you are planning to do so? How about if you have a real estate investment that isn’t providing a great return? How about one that you are tired of maintaining or otherwise don’t need? To those questions, I would probably say, yes. Here again, probably not directly (which I seem to have done here) but I would mention some indicators that would point to the appropriate timing for such a task if it were a consideration. First, foremost and always – supply and demand. There was a weird time in October of 2020 after the craze where all of the land inventory was totally wiped out. While land in some areas has seemed to increase since then, so has the supply. As a result some land listings have stagnated despite the overall market continuing to perform well. Regardless, we saw an enormous bump in land real estate values during that time. On a side note, I’ve said this more times than I can count, land was too cheap for too long and that contributed to what happened in October. Anyway, when inventory gets tight, people tend to spend more. Getting back to the buyer thing, when people decide they want something, they pursue it and buy it. We’re all guilty of it. The starter goes out on your car. You start to have thoughts of the next thing, what’s the next big expense? You start looking at options. At that point, I would say with relative certainty, you’re probably going to buy a new car. If the automotive market seemed to be at a point where inventory was tight and things were more expensive than they should be, would you overspend to buy that car? Probably. A lot of people are looking at real estate right now, and there isn’t much available. We seem to have hit the inventory levels comparable to what we were seeing with land a year ago mentioned above. There’s also some uncertainty in the markets (although there always seems to be) and we only know what we know, now. Getting back to it, is the market going to hold? Are values going to increase? No clue. What I can tell you is that values are high, now. If you’re in that category and you’re planning on selling when the time is right, think about it.

To be clear, I am definitely not sounding any alarms. Most local real estate professionals and those with a close ear to the ground in the financial sector agree that this market still holds steam, and a lot has changed in ways from how the lending market works with protections in place to the clear indications that our little paradise has finally been discovered. Not as many people are “finding” Teton Valley through Jackson, they are traveling and investing here because we are a destination.

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.

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