Colorado Real Estate Market Update

Posted in Colorado Real Estate Market Update by Matthew Gardner, Chief Economist, Windermere Real Estate 

 

The following analysis of the Metro Denver & Northern Colorado real estate market (which now includes Clear Creek, Gilpin, and Park counties) is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere agent.

 

ECONOMIC OVERVIEW

Colorado’s economy continues to grow with the addition of 44,800 new non-agricultural jobs over the past 12 months. This represents a reasonable growth rate of 1.7%. As stated in last quarter’s Gardner Report, we continue to see a modest slowdown in employment gains, but that’s to be expected at this stage of the business cycle. I predict that employment growth in Colorado will pick back up as we move through the year, adding a total of 70,000 new jobs in 2019, which represents a growth rate of 2.6%.

In February, the state unemployment rate was 3.7%, up from 2.9% a year ago. The increase is essentially due to labor force growth, which rose by more than 84,000 people over the past year. On a seasonally adjusted basis, unemployment rates in all the markets contained in this report haven’t moved much in the past year, but Boulder saw a modest drop (2.7%), and the balance of the state either remained at the same level as a year ago or rose very modestly.

 

HOME SALES

  • In the first quarter of 2019, 11,164 homes sold — a drop of 3% compared to the first quarter of 2018 and down 13.5% from the fourth quarter of last year. Pending sales in the quarter were a mixed bag. Five counties saw an increase, but five showed signs of slowing.
  • The only market that had sales growth was Adams, which rose 4.9%. The rest of the counties contained in this report saw sales decline, with a significant drop in the small Park County area.
  • I believe the drop in the number of home sales is partially due to the significant increase in listings (+45.6%), which has given would-be home buyers more choice and less need to act quickly.
  • As mentioned above, inventory growth in the quarter was significant, but I continue to believe that the market will see sales rise. I expect the second half of the year to perform better than the first.

 

 

HOME PRICES

  • Home prices continue to trend higher, but the rate of growth is tapering. The average home price in the region rose just 2.1% year-over-year to $456,243. Home prices were .3% higher than in the fourth quarter of 2018.
  • I anticipate that the drop in interest rates early in the year will likely get more buyers off the fence and this will allow prices to rise.
  • Appreciation was again strongest in Park County, where prices rose 21.9%. We still attribute this rapid increase to it being a small market. Only Clear Creek County experienced a drop in average home price. Similar to Park County, this is due to it being a very small market, making it more prone to significant swings.
  • Affordability remains an issue in many Colorado markets but that may be offset by the drop in interest rates.

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home in Colorado rose five days compared to the first quarter of 2018.
  • The amount of time it took to sell a home dropped in two counties — Gilpin and Park — compared to the first quarter of 2018. The rest of the counties in this report saw days-on-market rise modestly with the exception of the small Clear Creek market, which rose by 26 days.
  • In the first quarter of 2019, it took an average of 42 days to sell a home in the region, an increase of four days compared to the final quarter of 2018.
  • Job growth drives housing demand, but buyers are faced with more choice and are far less frantic than they were over the past few years. That said, I anticipate the late spring will bring more activity and sales.

 

 

CONCLUSIONS

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

For the first quarter of 2019, I have moved the needle a little more in favor of buyers. I am watching listing activity closely to see if we get any major bumps above the traditional increase because that may further slow home price growth; however, the trend for 2019 will continue towards a more balanced market.

 

 

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

Posted on May 22, 2019 at 8:00 am
Jon Holsten | Category: Buying, Fort Collins Real Estate, Homes for Sale, Housing Trends, Loveland Real Estate, Northern Colorado Real Estate, Selling, Timnath Real Estate, Wellington Real Estate, Windermere Real Estate, Windsor Real Estate | Tagged , , , , ,

Inventory vs. Sales

A stat we find interesting is the relationship between the inventory for sale versus what is actually selling.

Specifically what we look at are price ranges.

We are curious to know if the inventory that is for sale lines up with what the buyers want.

Here’s what we notice…

In Larimer County, 23% of all the single family homes for sale are priced under $400,000. No surprise, this is a popular price range among buyers and it represents 45% of all sales.

So, the ratio is 23% of the inventory versus 45% of the sales.

In Weld County, the difference is more pronounced.

Homes under $400,000 represent 44% of the inventory and 69% of the sales.

Because the percentage of sales is higher than the percentage of inventory, properties under $400,000 will sell much quicker and are more likely to have multiple offers.

__________________________________________________________________________________________________________

To see the latest on the market, be sure to check out a copy of the new Gardner Report, our Chief Economist’s quarterly look at Front Range real estate.

Posted on May 21, 2019 at 8:00 am
Jon Holsten | Category: Buying, Homes for Sale, Loveland Real Estate, Northern Colorado Real Estate, Selling, Timnath Real Estate, Wellington Real Estate, Windermere Real Estate, Windsor Real Estate | Tagged , , , , , , , , , , ,

How Reliable Are Home Valuation Tools?

What’s your home worth?

It seems like a simple question, but finding that answer is more complicated than it might seem. Sites like Zillow, Redfin, Eppraisal, and others have built-in home valuation tools that make it seem easy, but how accurate are they? And which one do you believe if you get three different answers? Online valuation tools have become a key part of the home buying and selling process, but they’ve been proven to be highly unreliable in certain instances. One thing that is for certain is that these valuation tools have reinforced that real estate agents are as vital to the process of pricing a home as they ever were – and maybe even more so now.

There are limitations to every online valuation tool. Most are readily acknowledged by their providers, such as Zillow’s “Zestimate”, which clearly states that it offers a median error rate of 4.5%, with varying accuracy across the country. That may not sound like a lot, but keep in mind that amounts to a difference of about $31,500 for a $700,000 home. For Redfin and Trulia, there are similar ranges in results. When you dig deeper into these valuation tools, it’s no small wonder that there are discrepancies, as they rely on a range of different sources for information, some more reliable than others.

Redfin’s tool pulls information directly from multiple listing services(MLSs) all over the country. Others negotiate limited data sharing deals with those same services, but also rely on public records, as well as homeowners’ records. This can lead to gaps in coverage. These tools can serve as helpful pieces of the puzzle when buying or selling a home, but the acknowledged error rate is a reminder of the dangers of relying too heavily on them.

Home valuation tools can be a useful starting point in the real estate process, but nothing compares to the level of detail and knowledge a professional real estate agent offers when pricing a home. An algorithm can’t possibly know about a home’s unique characteristics or those of the surrounding neighborhood. They also can’t answer your questions about what improvements you can make to get top dollar or how buyer behaviors are shaping the market. All of this – and more – can only be delivered by a trusted professional whose number one priority is getting you the best price in a time frame that meets your needs.

If you’re curious what your home might be worth, Windermere offers a tool that provides a series of evaluations about your property and the surrounding market. And once you’re ready, we’re happy to connect you with a Windermere agent who can clarify this information and perform a Comparative Market Analysis to get an even more accurate estimate of what your home could sell for in today’s market.

Posted on May 15, 2019 at 8:00 am
Jon Holsten | Category: Buying, Homes for Sale, Northern Colorado Real Estate, Selling, Windermere Real Estate | Tagged , , , , ,

How to Create a More Beautiful and “Sale” Ready Home

When you love your home but want to make some changes, how do you know where to begin? As a real estate broker and advisor to my clients, I am often asked what improvement projects are most worthwhile or where money is best invested.

RGN_1In today’s market, I am consistently seeing that buyers are looking for the “cream puff” listings. They want a home that is well maintained, “move in” ready, priced well, and in a good location. No surprise there, right?

As I work with clients, whether they are preparing to move now or just looking to improve their home for their own enjoyment, I find a few things that consistently show rewards in the end.

Beginning with maintenance items such as roofing, siding, paint (both interior and exterior), windows, and a couple secret weapons that are often overlooked, which offer a huge impact and are more reasonably priced than you may think, are new garage doors and outdoor fixtures. Remember you never get a second chance to make a first impression!

Outdoor living areas have become all the rage by giving the homeowner an opportunity to add additional entertaining space to their home. The options here are endless depending on your budget and amount of space you have to work with, but this can be a great way to improve the function and finish of your home.

Take a minute to ask yourself, where do I spend most of my time in my home? Kitchen, kitchen, kitchen! We all love to eat and hang out in the kitchen. As a result, improvements here are always a good place to start.

RGN_2

 

Owner’s bedroom suites and bathrooms are also very popular areas for improvement.  The range of options for these areas is vast based again on size and budget.

Consider replacing hard surfaces, base and trim, fixtures, and doors. Think outside the box and ask an expert for help choosing something that might set your home apart. Why use the same six-panel door that everyone has? Change it up a bit. Starting with the solid bones using neutral tones and embellishing with accessories to add a splash of color and your own flair is always a winner!

RGN_3

 

The more open, clean, and well maintained your home is, the greater your return on your investment will be. Buyers in today’s market have access to an abundance of information and have a good eye for short cuts. Work done just to “flip” a home will be called out very quickly! Always ask a professional for advice. You will find your favorite contractor or real estate professional will be more than happy to spend some time helping you make educated decisions that will meet your needs and show long term return.

RGN_4By Aimee Shriner

Windermere Real Estate/Northeast Inc.

Kirkland, WA

Orignially posted on RGN Construction’s blog.

All photos are from www.rgncon.com

Posted on May 7, 2019 at 8:00 am
Jon Holsten | Category: Home Maintenance, Homes for Sale, Northern Colorado Real Estate, Selling, Windermere Real Estate | Tagged , , , , , ,

10 Tips to Minimize Stress When Selling Your Home

Posted in Selling by Guest Author 

 

When I was growing up, my family must have moved a dozen times. After the first few moves, we had it down to a science: timed out, scheduled, down to the last box. Despite our best efforts, plans would change, move-out and move-in days would shift, and the experience would stress the entire family out. Despite the stress, we always managed to settle in our new home and sell our old one before the start of school.

With a lot of planning and scheduling, you can minimize the stress of selling your house and moving. Here are some tips:

Plan Ahead

Know when you want to be moved out and into your new home and have a backup plan in case it falls through. Before you sell your home, familiarize yourself with local and state laws about selling a home so you’re not caught by surprise if you forget something important.

Lists and schedules are going to be your new best friend through the process. Have a timetable for when you want to sell your house when you have appraisers, realtors, movers, etc. over. Also, keep one for when your things need to be packed and when you need to be moved into the new place. I suggest keeping it on an Excel sheet so you can easily update it as the timeline changes (and it will – stuff happens).

Use Resources

First time selling a house? Check out some great resources on what you need to know. US News has excellent, step-by-step guides on what you need to know to sell. Appraisers and realtors can also be good resources, and since you’ll be working with them through the process, be sure to ask them questions or have them point you to resources.

Appraisal

Have your house appraised before you sell so you know your budget for your new home. This will help you look for an affordable home that meets your family’s needs. It will also help you maximize the amount you can receive for your old home. You can also learn useful information from an appraisal, such as which repairs need to be made, if any.

Repairs

Does your house need repairs before you move? If so, figure out whether you’ll be covering them, or whether your buyers will (this will be a part of price negotiations, so factor it in with your home budget). Will you need to make repairs in your new house, or will that be covered? Either way, make sure you know which repairs need to be made – and either be upfront with buyers about them or make them before you sell.

Prepare to Move

If you’re moving to a new town or a new state, you need to prepare more than just a new home. Research doctors and dentists, places to eat, and what to do for fun. If you have school-aged children, look at the local school district or private school options – not only to learn how to enroll your kids, but also to get a feel for the school culture, see what extracurricular activities your kids can do, what standards/learning methods your kids’ new school will implement, etc.

Packing

Think: how soon are you moving, what will you need to use before you move, what can get boxed and what needs to stay out?  The sooner you’re moving out, the sooner you need to pack, but if you have time, just take a day per weekend to organize a room, pack what you want to take and arrange to donate what you want to get rid of.

Downsizing

Moves are a great time to purge old, unwanted and unused stuff from your home. Sometimes, it’s necessary if you’re moving into a smaller space. Either way, as you pack each room, think about whether you use what you’re packing to take with you. If you do, pack it to go. If not, put it in a separate box to go to your local donations place. You can also call some organizations to have your unwanted things picked up, no hassle.

If You Have Kids

Moving with kids can be extra stressful. Be sure to include them in the process. This is a wonderful opportunity to teach younger children about moving and prepare them for the changes it brings. Older children can help out with responsibilities, like packing their room or researching their new town.

Your New Place

Moving into a new place takes some planning as well. Once you’ve bought your new home or condo, design at least a basic outline for where your stuff will be set up. Make necessary repairs and decorate (painting, for example) before you unpack. Ideally, you should have some time to do these things before, but if you don’t, don’t be in a hurry to unpack everything – it can be a hassle to paint if you have all your furniture and bookshelves up!

Staying In Touch and Making New Friends

Finally, moving can mean good-byes with family and/or friends. Social media is a great way to keep in touch with people after you’ve moved, but distance can still weaken these old relationships. Make some time to call or message your old friends to keep in touch. Pair that work with a concerted effort to meet new people. See what hobbies or groups are in your new area and start there. It doesn’t seem like a lot, but it can make your new house a home and make your new town a community you can enjoy.

 

Patrick Bailey is a professional writer mainly in the fields of mental health, addiction, and living in recovery. Patrick is currently a writer for Mountain Springs Recovery as well as on his own blog.

Posted on May 2, 2019 at 8:00 am
Jon Holsten | Category: Homes for Sale, Selling, Windermere Real Estate | Tagged , , , , , , , ,

How to Get Started in Real Estate Investing

Posted in Buying by Kenady Swan 

Investing in real estate is one of the world’s most venerable pathways to building wealth. When properly managed, income from renting or real estate investment trusts can provide you with the financial security to plan out the rest of your life. The conclusion is easy to envision, but knowing where to begin can be overwhelming, particularly for anyone who has never previously owned a home.

At Windermere our goal is always to improve and support our communities, so we’ve put together a few key things to keep in mind as you enter the world of real estate investment.

Know the right type of investment for you

Investing in real estate needn’t commit you to being a landlord. A Real Estate Investment Trust (REIT) is a low-maintenance way to get involved in real estate with next to none of the day-to-day monitoring required of direct property management. REITs are trusts that typically own multiple properties, and investors may purchase shares within the REIT. Typically, as the value of the property rises, so too do the values of your shares. If you’d like to dip a toe into real estate investing before diving in fully, a REIT is a great place to start.

Start with your own home

Owning the roof over your head is a basic step towards investing success. Even better, when you plan to live in the home you’re buying (rather than renting it out), you will likely benefit from lower mortgage rates and a cheaper down payment. The reasoning is straightforward – lenders see a loan to people purchasing the home they live in as an investment in people highly committed to the property.

Once you’ve owned your own house for a few years, you can look to purchase a new home to move into. By purchasing the new home with the intent to move in, you’ll be eligible to receive more favorable financing once again. After you’ve secured your new home, your first home is primed to be transformed into a rental property, and you can continue to see a return on your investment. If you’re seeking further support with buying a first, second, or third home, our website and our agents are full of information.

Cast a wide net

The best investment opportunity isn’t always going to be right underneath your nose. While there are logistical benefits to focusing locally with your investment, you may miss more profitable opportunities in another burgeoning market. Real estate is a long game, and patience tends to be rewarded. There’s no cause to rush a decision of this magnitude, so investigating other states and regions to find the property that best fits your situation is a process worth considering.

Posted on April 29, 2019 at 8:00 am
Jon Holsten | Category: Buying, Homes for Sale, Housing Trends | Tagged , , , ,

A Beginner’s Guide to Securing a Mortgage Loan

Entering into debt is a concept I grew up diametrically opposed to. I was raised, like many with frugal family members, to understand that anything you couldn’t pay for on the spot was something you couldn’t afford. But as we age we learn the pathway to financial growth requires a commitment beyond what many of us can deliver up front. Building and stabilizing wealth is, for many families, tied to home ownership. To reach that initial threshold, most aspiring homeowners will need to apply for a mortgage loan. That process can be daunting, but the long-term rewards of securing your home are worth it.

Step One – Break down your budget

A major financial decision like this can’t be made lightly. Many experts recommend a 50-20-30 style plan for finances, particularly for first-time homeowners. That means 50% of your budget is committed to core, unavoidable, monthly expenses like rent, groceries, loan payments, utilities, insurance, etc. The 20% segment is savings, placed in reserve towards a general or specific future financial goal. The final 30% (at maximum) is left as a remainder for personal spending, however, is most desired. Once this is set, you’re ready to evaluate the rate at which you can repay your loan and adjust accordingly.

Step Two – Take the time to get it right

It’s exciting to be in a position to purchase your first home, but if you find the right spot and realize the funds aren’t there yet it can be a huge disappointment. That’s what makes seeking pre-approval for a loan a must – particularly if it’s your first time. Having your credit in order, along with all key financial documentation (bank statements, tax returns, debt copies, prior records of significant ownership). If your credit isn’t in a great place, it’s likely worth taking the time to amend it before applying for your mortgage loan. When you earn lower interest rates and more manageable monthly payments you’ll be thankful for your prudence.

Step Three – The bigger the down payment the better

It’s rare that first-time homebuyers have significant cash on hand, but whatever you can muster makes a difference. Typically, the greater a down payment you can muster, the lower your subsequent interest rates will be. For many, there’s only so much that’s tenable as a bulk sum up front, of course. If that fits your situation, seeking a loan insured by the Federal Housing Administration (FHA) can earn you a healthy loan for a down payment of just 3.5% of your home’s total value. To calculate the limitations of your target home’s loan options, you can input your information on the Department of Housing and Urban Development (HUD) website here.

Step Four – Stick to the plan!

After all the effort you’ll go through to secure a mortgage loan, you’ve earned the home it’s helped you purchase. That loan, like any loan, is contingent on your continued monthly payments. It can feel daunting and dispiriting after a time to continually be paying for a home you’re already living in, but maintaining your financial balance is vital. You’ll never be able to predict every expense that comes up but maintaining your budget towards paying off your mortgage loans will set you up to be more financially flexible in the future. Should you ever hope to purchase a second home or other major investments requiring of loans, having a record of consistent mortgage loan payment can help you secure far more favorable interest rates in the future.

A mortgage loan, like any loan, is a major commitment, but entering into homeownership is a massive step towards financial stability and future life-planning. With proper patience and focus, you can get the loan you need at the rate you can afford.

Posted on April 26, 2019 at 8:00 am
Jon Holsten | Category: Buying, Fort Collins Real Estate, Homes for Sale, Windermere Real Estate | Tagged , , , , , , ,

How Staging Your Home Well Impacts Its Value

 

For more than 20 years, the benefits of staging a home have been well documented. Numerous studies show that staging helps sell a home faster and for a higher price. According to the National Association of REALTORS®, 88 percent of homebuyers start their search online, forming impressions within three seconds of viewing a listing. When a home is well staged, it photographs well and makes the kind of first impression that encourages buyers to take the next step.

Studies also indicate that buyers decide if they’re interested within the first 30 seconds of entering a home. Not only does home staging help to remove potential red flags that can turn buyers off, it helps them begin to imagine living there. Homes that are professionally staged look more “move-in ready” and that makes them far more appealing to potential buyers.

According to the Village Voice, staged homes sell in one-third less time than non-staged homes. Staged homes can also command higher prices than non-staged homes. Data compiled by the U.S. Department of Housing and Urban Development indicate that staged homes sell for approximately 17 percent more than non-staged homes.

A measurable difference in time and money

In a study conducted by the Real Estate Staging Association in 2007, a group of vacant homes that had remained unsold for an average of 131 days were taken off the market, staged, and relisted. The newly staged properties sold, on average, in just 42 days, – which is approximately 68 percent less time on the market.

The study was repeated in 2011, in a more challenging market, and the numbers were even more dramatic. Vacant homes that were previously on the market for an average of 156 days as unstaged properties, when listed again as staged properties, sold after an average of 42 days—an average of 73 percent less time on the market.

Small investments, big potential returns

Staging is a powerful advantage when selling your home, but that’s not the only reason to do it. Staging uncovers problems that need to be addressed, repairs that need to be made, and upgrades that should be undertaken. For a relatively small investment of time and money, you can reap big returns. Staged properties are more inviting, and that inspires the kind of peace-of-mind that gets buyers to sign on the dotted line. In the age of social media, a well-staged home is a home that stands out, gets shared, and sticks in people’s minds.

What’s more, the investment in staging can bring a higher price. According to the National Association of REALTORS, the average staging investment is between one percent and three percent of the home’s asking price, and typically generates a return of eight to ten percent.

In short, less time on the market and higher selling prices make the small cost of staging your home a wise investment.

Interested in learning more? Contact your real estate agent for information about the value of staging and referrals for professional home stagers.

Posted on April 23, 2019 at 8:00 am
Jon Holsten | Category: Buying, Homes for Sale, Northern Colorado Real Estate, Selling, Windermere Real Estate | Tagged , , , , , , ,

What You Need to Know About the US Luxury Housing Market

Luxury homes sales across the U.S. continue to perform strongly, but I’m noticing some headwinds starting to appear that are worthy of a closer look.

It’s often thought that luxury real estate runs totally independent of the overall market, and while this is true in some respects, there are definitely correlations between high-end housing and the rest of the market.

The first similarity is that the luxury market has suffered from some the same inventory constraints that are almost endemic across all price points in the U.S. But, similar to the overall market, we are starting to see a rise in inventory, which should be good news for real estate agents and luxury home buyers alike.

Impact of rising inventory 

This increase in the number of luxury homes for sale has started to have a tapering effect on price growth, which again, is similar to what we’re seeing in the rest of the market. But as real estate professionals, we know full well that all housing is local and some markets are performing far better than others.

For example, luxury markets in Maui, Northern California, Colorado, and Sarasota, Florida, are all experiencing substantial price growth, while there are noticeable slowdowns in many parts of New York and New Jersey. Even Queens and Jersey City, which have continued to benefit from high demand, have seen price growth stall recently, indicating that those markets could be losing some steam.

Why the slowdown? 

The slowing of luxury sales in certain areas around the country piqued my interest, so I decided to explore why this is happening. The first thing I noticed is that cities with high property taxes are fairly prevalent on the list of slowing markets; this includes cities like Boston, Austin, New York City, and Chicago. It is likely that the federal tax changes limiting the deductibility of property taxes are the culprit for such slowdowns in these areas.

Something else that has undoubtedly impacted luxury home sales in markets, such as New York City and Seattle, is the significant decline in foreign buyers from countries like China and Canada. According to the National Association of Realtors, the number of purchases by international buyers fell by 21 percent between 2017 and 2018, amounting to a drop of $32 billion – the largest decline on record.  Foreign buyers spent $121 billion on 266,754 properties, making up 8 percent of the buyers of existing (previously lived in) homes.

My research tells me that foreign home buyers are pulling back amid political uncertainty in the U.S. Ongoing concerns about a potential trade war, combined with rhetoric against foreigners, have done their part to dampen some of the enthusiasm to invest in U.S. housing. Also playing a role in this slowdown is the Chinese Central Government which has started placing tighter controls on the ability to spend money outside of mainland China. And finally, rising home prices and a strong U.S. dollar are likely two other key factors behind the tumbling interest in luxury real estate from overseas buyers.

So how do I see the luxury market performing in 2019?

Luxury real estate sales in markets like Boston, Clearwater, Austin, and Alexandria, Virginia will continue to slow down for the reasons stated earlier, but in other parts of the country, home buyers will provide the demand needed to keep the market plugging along at a healthy pace.

The changes affecting mortgage interest deductions and property taxes will also continue to impact the luxury market in certain areas, but this will, to a degree, be offset by other tax changes that favor high-income households and increase their disposable income. Something else that will help keep the luxury real estate market afloat in the coming year is jumbo mortgage interest rates which remain remarkably competitive compared to historic standards.

On a whole, high-end real estate sales have been strong over the past few years. While I am predicting somewhat of a slowdown next year given the headwinds discussed earlier, 2019 will be remembered as a year where balance started to return to the luxury housing market.

 

Mr. Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. 

Posted on April 17, 2019 at 8:00 am
Jon Holsten | Category: Buying, Homes for Sale, Housing Trends, Northern Colorado Real Estate, Windermere Real Estate | Tagged , , , , , ,

How to Acquire the Right Appraisal for Your Home

Appraisals are designed to protect buyers, sellers, and lending institutions. They provide a reliable, independent valuation of a tract of land and the structure on it, whether it’s a house or a skyscraper. Below, you will find information about the appraisal process, what goes into them, their benefits and some tips on how to help make an appraisal go smoothly and efficiently.

Appraised value vs. market value

The appraised value of a property is what the bank thinks it’s worth, and that amount is determined by a professional, third-party appraiser. The appraiser’s valuation is based on a combination of comparative market sales and inspection of the property.

Market value, on the other hand, is what a buyer is willing to pay for a home or what homes of comparable value are selling for. A home’s appraised value and its market value are typically not the same. In fact, sometimes the appraised value is very different. An appraisal provides you with an invaluable reality check.

If you are in the process of setting the price of your home, you can gain some peace-of-mind by consulting an independent appraiser. Show him comparative values for your neighborhood, relevant documents, and give him a tour of your home, just as you would show it to a prospective buyer.

What information goes into an appraisal?

Professional appraisers consult a range of information sources, including multiple listing services, county tax assessor records, county courthouse records, and appraisal data records, in addition to talking to local real estate professionals.

They also conduct an inspection. Typically an appraiser’s inspection focuses on:

  • The condition of the property and home, inside and out
  • The home’s layout and features
  • Home updates
  • Overall quality of construction
  • Estimate of the home’s square footage (the gross living area “GLA”; garages and unfinished basements are estimated separately)
  • Permanent fixtures (for example, in-ground pools, as opposed to above-ground pools)

After considering all such information, the appraiser arrives at three different dollar amounts – one for the value of the land, one for the value of the structure, and one for their combined value. In many cases, the land will be worth more than the structure.

One thing to bear in mind is that an appraisal is not a substitute for a home inspection. An appraiser does a cursory assessment of a house and property. For a more detailed inspection, consult with a home inspector and/or a specialist in the area of concern.

Who pays and how long does it take?

The buyer usually pays for the appraisal unless they have negotiated otherwise. Depending on the lender, the appraisal may be paid in advance or incorporated into the application fee; some are due on delivery and some are billed at closing. Typical costs range from $275-$600, but this can vary from region to region.

An inspection usually takes anywhere from 15 minutes to several hours, depending on the size and complexity of your property. In addition, the appraiser spends time pulling up county records for the values of the houses around you. A full report comes to your loan officer, a real estate agent or lender within about a week.

If you are the seller, you won’t get a copy of an appraisal ordered by a buyer. Under the Equal Credit Opportunity Act, however, the buyer has the right to get a copy of the appraisal, but they must request it. Typically the requested appraisal is provided at closing.

What if the appraisal is too low?

If your appraisal comes in too low it can be a problem. Usually, the seller’s and the buyer’s real estate agents respond by looking for recent and pending sales of comparable homes. Sometimes this can influence the appraisal. If the final appraisal is well below what you have agreed to pay, you can renegotiate the contract or cancel it.

Where do you find a qualified appraiser?

Your bank or lending institution will find and hire an appraiser; Federal regulatory guidelines do not allow borrowers to order and provide an appraisal to a bank for lending purposes. If you want an appraisal for your own personal reasons and not to secure a mortgage or buy a homeowner’s insurance policy, you can do the hiring yourself. You can contact your lending institution and they can recommend qualified appraisers and you can choose one yourself or you can call your local Windermere Real Estate agent and they can make a recommendation for you. Once you have the name of some appraisers you can verify their status on the Federal Appraisal Subcommittee website.

Tips for hassle-free appraisals:

  • What can you do to make the appraisal process as smooth and efficient as possible? Make sure you provide your appraiser with the information he or she needs to get the job done. Get out your important documents and start checking off a list that includes the following:
  • A brief explanation of why you’re getting an appraisal
  • The date you’d like your appraisal to be completed
  • A copy of your deed, survey, purchase agreement, or other papers that pertain to the property
  • If you have a mortgage, your lender, the year you got your mortgage, the amount, the type of mortgage (FHA, VA, etc.), your interest rate, and any additional financing you have
  • A copy of your current real estate tax bill, statement of special assessments, balance owing and on what (for example, sewer, water)
  • Tell your appraiser if your property is listed for sale and if so, your asking price and listing agency
  • Any personal property that is included
  • If you’re selling an income-producing property, a breakdown of income and expenses for the last year or two and a copy of leases
  • A copy of the original house plans and specifications
  • A list of recent improvements and their costs
  • Any other information you feel may be relevant

By doing your homework, compiling the information your appraiser needs, and providing it at the beginning of the process, you can minimize unnecessary phone calls and delays and get the information you need quickly and satisfactorily!

Posted on September 25, 2018 at 5:00 am
Fort Collins | Posted in BlogBuyers & Sellers | Tagged 
Posted on April 15, 2019 at 8:00 am
Jon Holsten | Category: Buying, Fort Collins Real Estate, Homes for Sale, Housing Trends, Northern Colorado Real Estate | Tagged , , , ,