Tuesday, May 29, 2012

What's Happening in the Market?

If you like stats and graphs, you'll love this post.  If you don't, go suck an egg because I love understanding trends.  If you're a buyer out there, beating the street trying to find your dream home, you may have noticed a different market shaping up in Fort Collins and Northern Colorado. 

Emerging from the mess of the past few years, Northern Colorado may be seeing a more balanced market.  I'm not going to jump the gun quite yet and say that it is nearing a sellers market, but things are starting to balance much more.  I'll explain....

The chart below shows the number of homes sold from 2010 through April 2012:

As you can see from the data above, we are seeing very impressive sales in 2012 far surpassing corresponding monthly sales from 2010 and 2011.  Keep in mind there was a tax credit offered to buyers in Mar/Apr/May/Jun of 2010, and 2012 is still looking very good compared to those sales.  What's causing the increased sales?  Well it could still be a little tough to tell at this point, but supply and demand is much out-of-balance as it was in the past few years.  Now supply is lower and demand is rising as interest rates and prices continue to stay low. 

The next chart shows an interesting trend as well, can you spot it?
Here we see that since July 2011, we have seen consistent (sometimes double digit) gains in the percentage difference in sales from the previous year.  On top of that, the main reason why the first and second quarter of 2011 was skewed was because of the tax credit from 2010.  Several hundred buyers were able to jump into the market in early 2010, which made first quarter 2011 look less impressive.  Regardless, 2012 is showing very impressive differences from the previous year and all signs point to continued sales growth.

The common thought about supply and demand is that when supply is low, demand creeps up.  In the housing market when supply is low, it means that there are fewer homes on the market, and there are "slim pickins" for buyers.  That also means there is more competition for fewer homes, which eventually causes price increases, quicker sales and happier sellers. 

You'll see seasonal trends that indicate homes more homes come on the market in early spring and begin to trail off as the peak summer season wanes.  Both 2010 and 2011 show a very logical trend line, but 2012 is seeing something a little different, nearly flatlined inventory.  And beyond that, the inventory levels are much less than 2010 and 2011.  What's the reason?  Could it be that all the homes that "could" be sold have been sold, and now the homes that are tougher to sell are going to need to prop up the market?  It's tough to say.  About 20% of the current inventory is either a short sale or a foreclosure, and there are hundreds if not thousands of homeowners that just can't sell because they're underwater on their mortgage and just can't move. 

Over the past 2 years, we haven't seen an increase in active homes for sale versus the previous year.  That stat alone makes it very apparent that inventory levels are shrinking.  This proves that buyers are having tougher times finding an abundance of homes to choose from.  If the trend continues, prices will gradually rise, days on market will fall substantially and sellers will eventually have the upper hand. 

Will we see a return to multiple offers, double digit yearly appreciation and the start of a new bubble?  Probably not, but we could be experiencing a nice rebalance that will help us in consistent, sustainable growth.

Thursday, May 24, 2012

3 Outdoor Kitchen Essentials For Memorial Day

It's been a long, cold journey since your last day off.  Memorial day weekend is the unofficial start to summertime and it's time to be thinking about how you're going to spend those days and nights in the season's unofficial headquarters: your backyard.  When it's time for grillin' and chillin', nothing beats the outdoor kitchen.  Good friends, good food, mixed in with a whole lot of fun and some adult beverages....how bad can that be?  Here are some great tips on what it takes to begin or complete your outdoor kitchen.

1.  The Grill
The smell of cooked meat conjures memories of great times at backyard parties.  Essential to any outdoor gathering is top notch, high volume grill.  For value and convenience, I highly recommend a gas grill.  Gas grills can vary between $50 and $5000, so it's best to consider how often you'll use it, and what extras you might need.  If you've got the money, I'd suggest a grill between $400 to $800 depending on how many people you'll want to be feeding.  These are typically stand alone models (as opposed to built in models) and are above average in capacity, durability and quality.  Invest in a heavy duty cover (typically $30-$50 bucks) and possibly a $20 gas gauge so you'll always know how much gas you've got left.  There is a difference between propane and natural gas, so if you're hooking to a gas source from the house, make sure your grill can accommodate it. 

2.  The Outdoor Sink
Nothing makes preparation and clean up easier than an outdoor sink.  Even when not in use an outdoor sink can be filled with ice and becomes an easy access cooler for all your summertime drinks.   The real cost of outdoor sinks comes in running an outdoor water line from the home, which depends on the home.  There are two main issues to consider when purchasing a sink:  material and thickness.  For the money, most outdoor sinks will be stainless steel; however, they can be made from most anything depending on your tastes.  Some grades of stainless steel are more resistant to corrosion (such as grade 304) because of the material properties.  As for thickness of material, that really depends on your intended use.  Obviously, thicker material will cost more, but will be much more durable.  Anywhere between 16 and 20 gauge should give you value and durability.  Consider most sinks to be between $250 and $500 with the additional plumbing of $1000 to $3000.

3.  The Fridge
Believe it or not, there is a difference between indoor and outdoor refrigerator models.  Because of the varying levels of temperature and humidity, outdoor fridges typically work harder and have to be more durable.  Venting is also an issue, which will influence whether you need a built in or free standing model.   Free standing models are vented in the front so less clearance is required.  Typically, all outdoor fridges are made out of stainless, to prevent rust and corrosion.  Refrigerators run off of a 110 volt GFCI outlet which will be an additional cost if you don't have an outlet to accommodate it.  Outdoor fridges are perfect for homes with pools because you can always grab a cool drink without tracking anything in your home.  Let's also not forget the options you have with dedicated beer fridges or kegarators. Oh the possibilities...

All in all, setting up and paying for your outdoor kitchen doesn't need to be difficult.  By doing the right research, you can really make an outdoor kitchen come to life.  Nothing is better than hosting your friends and family over Memorial Day and making memorable experience.  I wish you a very safe and happy holiday!

Jared Reimer is a real estate broker with Prudential Rocky Mountain Realtors in Northern Colorado.  Real estate is his passion and he always wants to connect with like-minded and savvy real estate fans.  For more information or to get in touch with Jared, please visit his website at www.ReimerRE.com or email him at JaredReimer@ReimerRE.com

Tuesday, May 15, 2012

Seven Easy Curb Appeal Projects

My document title Whether selling your home or just enjoying it all season long, curb appeal can really make a difference. First impressions are the longest lasting. Curb appeal doesn't have to be a war, just a few short projects can really up your value and presence.

1. Add Pizazz with Container Gardens

Why even worry about all that planting, digging, waiting, and hoping, just to make your plants grow? Container gardens are simple and cost effective ways to add plenty of pizazz to your boring or unappealing front steps. Typically, a staggered, asymmetric pattern is most appealing because a very organized, symmetrical systems of planters just doesn't look organic and natural. Stop by your local home improvement store and see what's available.
2. Install Outdoor Lighting
Beyond the aesthetic effects of gorgeous outdoor lighting, installing a set of low voltage lights can also enhance the safety and security of your property. No more tripping over those flagstone steps after you've had one to many adult beverages! Install the lights along a path, or up-light a tree or design feature that you want to show off all night long. Outdoor lighting provides a welcoming feel to your home. A dark and scary front lawn makes you seem like the mean, old person who doesn't give out candy on Halloween, all year long.
3. Repair, Replace or ReFinish Your Front Door

Nothing says neglect like an old beaten down door. It is the focal point of your home, anyone who ventures in, must pass it, so why forget about it? A fresh coat of paint goes a long way if your current paint is peeling, it can also change the entire feel with just a different color. For a more expensive but dramatic flare, consider buying a brand new door, either steel or custom wood. Nothing says "welcome" more than an appealing front door.***
***A door mat literally says "welcome" but lets just move on...
4. Replace Old Hardware

If your front door is in good condition but you've got some dated fixtures, take an afternoon to replace some of that hardware. Changing out hardware is a fairly inexpensive and elegant touch that has an instant impact. Don't stop at the door either, try changing out worn, cracked or faded house numbers too. If you've got dated or broken light fixtures, take care of everything at once to keep the update consistent and appealing to the most buyers.
5. Clean up Your Planter Beds

Planter beds can be both an asset or an extreme liability. If you're selling your home and your flowers and plants are just allowed to go crazy, the buyer is going to see those planters as a hassle, headache and possibly a deal breaker. Now, if you take just an afternoon to clean up those planters, pull the weeds, prune back some wild ones, and drop in some fresh mulch, your garden now becomes an asset. You don't have to have the biggest, best and most beautiful garden in all the land, just keep it tidy.
6. Make a Difference with Window Boxes

If you've got a small yard, or maybe some hefty pets that like to roll around in your garden, window boxes are for you. Not only do they add a little garden real estate, but they are also a very impressive touch when it comes to curb appeal. Window boxes are relatively inexpensive but be sure to buy or build one that fits your decor. Is your home more traditional or does it have a cottage feel?
7. Keep Your Lawn Looking Nice

I don't care if you've got the best looking front door, planter boxes -- the works; if you've got a dead, dying or poorly manicured lawn, you don't have a shot at having nice curb appeal. Most people think that keeping a nice lawn is a chore, but when you recognize how much value it can add to your home, you might think otherwise. To keep your lawn green and beautiful, water it (but don't over water) in early morning or the evening to prevent evaporation during the sunny hours. Fertilize in the fall just before your lawn goes dormant and once again in the springtime for best results. When mowing, change patterns and paths to avoid permanent and unattractive ruts in your lawn and don't leave it too short, or it'll get scorched by the summer sun.

Tuesday, May 8, 2012

The Easiest Way to Make Your Home Stand Out

If you're selling your home, you've probably got a lot of competition.  Whether its short sales, foreclosures, or just other folks trying to get an edge, what can you personally do to make your home that much more appealing?  Beyond the curb appeal, staging, pre-inspections, warranties and all the other incentives, is there anything that you can do to make your home stand out?  Of course there is!  It's called the "Seller's Personal Love Letter".
Basically, a seller's personal love letter is a story that only you, the seller, can (and should) write.  How does the story give you an edge?  Well, once a buyer understands your point of view, it makes it much easier for them to understand how they might love your home as much as you have.  This is one opportunity that you have to personally control what your buyer thinks when they walk in your home.  You don't want to give away all your personal information, write your life story, or mention anything that might be used as a negotiation tactic, but a well written personal love letter can change a buyer's mindset, if it follows a few simple rules.

1)  Help Personalize Your Home
With all the homes on the market in your neighborhood, you can't just sell the unique features of your neighborhood, everyone can do that, you need to personalize your specific home.  If your home has outrageous mountain views that no other home has, make sure to use a line like,

"During the warm summer months, we relax by watching the sunset over the mountains from our back porch".

One key aspect to writing a great love letter is one that all trained salesmen know, don't sell the product, sell the benefit or value.  It does no good to mention how you love your large dining room or ample space, rather mention,

"We've loved celebrating Christmas in our home, and on numerous occasions we've had over 20 extended family members stay with us to celebrate!" 

Whatever major family events or cherished memories you've had in your home, make sure to make mention of it in your letter.

2) Set Buyer Expectations
Buyers and sellers should really never co-mingle, especially during the sale process.  That being said, your personal love letter is one of the only chances you have to help shape the mindset of your buyer when they enter your home.  Sometimes a letter may even help sway a buyer if they are on the fence or making a choice about your home versus another.  It could also help the buyer overlook some obvious flaws if your letter mentions some perks that other homes don't have.  A buyer may think he/she knows the area, but they'll never know the actual benefits and values each home has.  You know everything there is to love (and hate) about it, so set their expectations.  If a certain tree helps shade the home and lower utility bills in the summer, creatively mention it.  If your jacuzzi tub is where you spend most relaxing evenings, mention it.  Use your home's unique aspects to really show it off.

Do's and Don'ts
  • Do:  Display your story with flyers and contract preparation forms.
  • Don't:  If you are a poor writer, skip this letter.  No letter is better than a boring or poor letter.
  • Do:  Keep it light and creative - don't be overtly "salesy".
  • Don't:  Don't sell, tell!  Tell the story of your home, don't sell them, that's your Realtors job.
  • Do:  Proofread, Proofread, Proofread!
  • Don't: Please, don't let your agent write it for you.  This is your home, take the time!
  • Do:  Personally sign your signature at the bottom (kids signatures are also a unique touch)
  • Don't:  Don't be generic or generalize, be specific and unique.  It will stand out!
  • Do:  Ask your family what their best memories are and incorporate them into the story.
  • Don't:  Never display it before your agent gets a chance to see it or tweak it.
  • Do:  Keep it to one page.  Be concise and engaging.
Be Creative!
Just like an annual Christmas card update, be creative.  Nobody wants to hear a list of home renovations, utility information, landscaping features, etc.  Write it from your child's perspective, or maybe even your pet's perspective.  Sure, it might seem cheesy or hokey, but if your competition isn't doing it, it will most likely give you an edge.  A unique and creative letter can really make a difference with a buyer.  The more personalized the home is to them, the less they start thinking about the "major investment" or the mortgage payment.  They may even be less apt to be fierce negotiators if they like you and understand your family.  Take the time to write the letter, you'll never know what it might do for you...

Jared Reimer is a real estate broker with Prudential Rocky Mountain Realtors in Northern Colorado.  Real estate is his passion and he always wants to connect with like-minded and savvy real estate fans.  For more information or to get in touch with Jared, please visit his website at www.ReimerRE.com or email him at JaredReimer@ReimerRE.com

Tuesday, May 1, 2012

What to Consider When Buying a Foreclosure

If you haven't seen the abundance of for sale signs with the a "foreclosure" sticker or sign rider, you've been under a rock for the past couple of years.  These days, foreclosures have been commonplace in every neighborhood, from $80,000 homes to $1M+ homes.  The public is getting increasingly savvy in purchasing foreclosures because after all, they really aren't that much different than purchasing a standard resale home, with a few minor twists. 

How to Find Foreclosures
The days of tirelessly tracking down foreclosed properties are gone.  Nowadays, Realtors are happy to have foreclosed homes as listings, as it means increased traffic from smart buyers.  If you're using a Realtor (and I obviously recommend you do), they should have tools at their fingertips to weed out foreclosures and should be able to produce a list for you within a few minutes.  If they say they can't, you might want to try someone else.  If you aren't using a Realtor, the internet is your best tool.  Search for your desired area, and look for the words "foreclosure" or "REO".  On top of that, there are specific websites that you can search government foreclosures:  Hud Homes, HomePath Homes, and HomeStep Homes.  All of these have simple, easy to navigate websites to find a foreclosed property.

Financing Your Foreclosure
Keep in mind, your lender will be using the foreclosure as collateral, should you not be able to pay your mortgage, at least they will have a reasonable asset to cover the amount owed.  That being said, there are some homes that are in just awful shape.  When using government backed financing like FHA and VA loans, they are unlikely to loan against homes in poor shape.  They have strict guidelines to protect their collateral, but if you're able to use FHA/VA financing, the down payment is much less.  Conventional lending requires a larger portion for down payment, but they are less strict with the properties they'll lend against.  There are trade offs for each type of financing.  Speak with your lender or mortgage broker for more information on financing your foreclosure purchase.

Writing the Offer
Chances are when buying a foreclosure, you're looking for a great deal in exchange for having to do a little work on the home and jump through some hoops with the paperwork.  Foreclosures are typically priced to sell and are most likely at or just below market value.  One question I hear often is, "Can we negotiate on price with the bank?"...Of course you can, consider the bank another faceless seller in this situation.  The bank will most likely always counter your offer, but don't fret, stay strong.  If it's the perfect house for you, take it, if not, write an offer on another foreclosure.  Along with most counteroffers, the banks are most likely to include an addendum that protects themselves.  Mainly, it reiterates that the home is being sold "as-is" which means that the bank is unlikely to pay for any repairs.  The addendum will also lay out what they expect from you, should you accept their counter.

Negotiating the Transaction 
I mentioned that the bank will drive home the fact that the home is being purchased "as-is".  That is not always the case.  Should your inspection uncover some issues that are mandated by state law, or a health/safety issue, you may have the opportunity to have the bank pay for those issues to be cleared up.  If the problem is too big, then walk away.  Please don't buy a money pit.  Similarly, if there is an issue that the appraisal finds that would prevent your lender from loaning against the property, the bank may end up paying for that as well.  

After all the hoops have been jumped through, and all the due diligence performed, you'll be headed to closing.  Closing can be extended or delayed because sometimes banks move a little slow or need a signature on some paperwork that was missed.  My advice: roll with the punches.  You're getting a relatively nice home at a great deal.  You can't beat that!