The Charm of the Patty Jewett Neighborhood

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The beginning of summer of 2001, I moved to Colorado Springs. I actually drove, all by myself, a 22’ diesel U-haul truck into Colorado Springs. That’s a different and much longer story.  I had visited Colorado Springs once or twice before, and this young, recent college grad was thrilled that this town was going to be my own. I quickly fell in love with the grand spectacle of Pikes Peak and all this town had to offer. As I settled in on the east side, I began exploring my new found home.

Being from the south, I quickly began to swoon over Downtown Colorado Springs, the Old North End, and Old Colorado City. I loved the old victorian homes with their porches and tree lined streets. It made me feel at home. And I’m a sucker for old houses and buildings, even old people are the best! I love anything with a story, and you have to have some age to have a story!

Many times driving from the east side of town, with it’s exquisite views of the mountains, I would be overcome with awe. Look at that view. What a gorgeous place this is!

How I Discovered Patty Jewett

As I would make my way to downtown, a trail head on the west side, or a restaurant in Old Colorado City, I would drive through this perfect little neighborhood with it’s mostly early to mid 20th century homes and tree lined streets. It quickly became a favorite of mine. I would intentionally plan my routes to drive through this part of town. And back then, you did have to plan your routes by getting directions from an actual person perhaps. Crazy!

Then one day, a friend invited me to go hit golf balls at the driving range. They gave me directions to this little public golf course. And there I was driving through that fantastic little neighborhood again, and I arrived at what I would say is one of the most fantastic and lovely places in the Springs -- The Patty Jewett Golf Course.

So, we hit some balls and made a plan for coming back to play a round of 9 in a couple of weeks. Before we left, we sat and enjoyed a drink at the Clubhouse with one of the best views of Pikes Peak you’ll find in town! And I figured it out, this neighborhood that I loved so much was called Patty Jewett. A number of years later I bought a house in what I would call part of the greater Patty Jewett neighborhood, a little neighborhood just on the northside called Bonnyville.

Where exactly is Patty Jewett?

Generally speaking, the greater Patty Jewett neighborhood is bordered by Union on the east, Uintah on the south, Wahsatch on the west, and La Salle in the Bonnyville area on the north. Why do I say generally speaking? Well, parts of Wahsatch are in the Old North End. And the boundary between Old North End and Patty Jewett is really the alley between…. Anyway, I won’t bore you with those details. We can have coffee sometime, and we can cover these nuances.

Map of Patty Jewett

The Patty Jewett Charm and Appeal

The Patty Jewett part of town is full of charm and character. And it’s connected to major history in our city. The golf club was established in 1897, and predates all but two other golf clubs in the country. The golf course was built in 1910, and then in 1919 the course was given to the city of Colorado Springs by W.K. Jewett in honor of his late wife, Patty Stuart Jewett. Now we know the neighborhood around this course by this same honor.

I said I loved a good story! And this neighborhood sure does have a GREAT one!

My Neighborhood Tour of Patty Jewett

My colleagues at Springs Homes asked if I would like to make a video about my favorite neighborhood. “Oh, you mean Patty Jewett?”, I laughed as if there is any doubt that this is my favorite area. Preparing to make this video gave me a great chance to dig a little bit into the history of the area, think about all of the reasons that I like living here, and summarize why I feel this is such a good neighborhood for such a wide variety of people. And now you have a chance to watch a personal tour of Patty Jewett given by yours truly. My only regret is I wish my hair was behaving better during the filming.

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2017 Real Estate Market Heads Strong into the Fall

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This year Colorado Springs real estate market made the list of top 10 cities in the nation for hottest real estate markets, according to Realtor.com, and it's no wonder.  Home prices continue to rise. Home sales are abundant. And there is significantly less inventory (homes for sale) than in years past. Here is a breakdown of what is happening in our little boom town this year.

Single Family Home Sales =  UP 5.6% over last year

Average Price for a Home =  UP 11.2% over last year (currently at $313,652)

Total Homes for Sale =  DOWN 15% from last year

Condo/Townhome Sales = UP 15% over last year

Average Price for a Condo/Townhome = UP 10.5% over last year (currently at $193,564)

Total Condos/Townhomes for Sale = DOWN 25.9% from last year

Supply is low. Demand is high. More buyers are buying and relocating here. And there are less homes for them to choose from. Competition is steep, driving home prices way up. Bidding wars are the norm, especially in the under $500,000 price range. 

I recently had two listings which received multiple offers within 24 hours of going on market. And both ended up selling for above asking price!  We call this a seller's market where homes sell fast and at top dollar.  Buyers, on the other hand, are at a disadvantage. They have less homes to choose from and prices are higher than ever.  The only fortunate thing is interest rates remain low, enabling buyers to qualify for higher amounts.

The big question? Will this trend continue?  And for how long? My belief is we will see this robust market for awhile, and definitely well into next year.  But eventually there will be a correction. History has proven markets like this always correct at some point. If you are looking to buy or sell and want to find out more about the market, give me a call.  

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Tips on Buying a House

Tips on Buying a House

In Residential Real Estate a Seller's market is defined as having less than six months of available inventory, and this means that sellers have the advantage. I don't know what you call a market where inventories are measured in weeks not months.

If you are trying to buy a house, you already understand the frustration this type of market creates. To have success in this kind of market, you need to have a solid strategy. These “Tips on buying a house”, apply to any kind of market but are more pertinent in the type red hot seller's market we are currently experiencing.

Having said this, no matter what the condition of the market it's a good idea to have a plan. Here is an overview of how we approach the home-buying process at springs homes. 

Choose a Realtor

You can certainly try to do this on your own, but frankly, it's just a bad idea. Every listing agent will see you as a potential buyer prospect, doing this dance is going to waste an incredible amount of your time.

The smartest move you can make is to pick a good realtor and stick with them. A good Realtor is someone that has experience, ethics and a genuine interest in you. Consider this, the end game here is to buy a house you are really excited to own. This house will most likely be listed for sale by another Realtor (a.k.a. listing agent). That Realtor’s goal is to sell the home for a price the seller is happy with to the buyer that is most likely to close with the fewest hassles.

When an offer comes in on that house the listing agent cannot help but consider who brought that offer People are people and as hard as they try to overlook their biases they cannot. It's a good thing to work with a realtor that has an excellent reputation in the real estate community. Let's say you are the "Listing Agent" and "Home Seller". You have four identical offers and you know you're going to spend the next 30 days working with someone. Wouldn't you rather work with someone that's a real professional? Realtors want to do this as well nobody messes up a transaction like an inexperienced non-professional.

Realtors are supposed to adhere to a strict “Code of Ethics, ” and a good Realtor will take this code seriously. It’s a good idea to read through this “Code of Ethics” to get a sense of what you should be looking for in a Realtor. At the end of the day, you are trying to find someone you trust that knows what they are doing.

Once you choose this realtor, you need to help them understand what your goals. They need to do a “Needs Assessment” to get a sense for what and where you should be focused.

Springs Homes Realtor Maggie Turner, tells us about her recent experience with a buyer. I just closed on a property with buyers that were super easy to work with, and they were clear on their non-negotiable needs versus their flexible wants and desires in a house. That helped us to be decisive in the process of eliminating houses that were not a fit, quickly determining what houses met the criteria and which ones didn't. This also came in handy when ranking their options. And in a market where decisions have to be made quickly, it helped us move on the house that was their close second choice after the offer on their first choice house was not accepted.

If you still need convincing, here's a great article by Mark Brian on, Why You Need to Work with a Realtor

Pick an Area

Once you have done a needs assessment and looked at some areas and neighborhoods, you and your Realtor should be able to narrow down the scope of your search. At this point, it’s a good idea actually to look at homes in this neighborhood. Be direct with your Realtor about what you think about the homes you see, and this helps them realistically assess the likelihood of finding something you will be excited about.

It’s a good idea to drive through the neighborhood frequently when you are in the home buying process. You’ll quickly get a feel for prices and availability. When new listings go on the market, you’ll see the signs in the yards, usually before they hit the MLS.

It doesn’t hurt to meet the people that live in the neighborhood. Letting them know you are looking for a home there will often elicit suggestions about possible availability.

Use The Web

Understanding the MLS (Multiple Listing Service) is essential to success in the house hunting process.

By definition, the MLS is a database with information about for sale and for rent real estate. Listing Broker's offer compensation for cooperation by other real estate brokers. In other words, if you have a buyer for this house, we will pay you if you sell it.

MLS’s now aggregate their listing data to “Portals” Realtor.com, Zillow and Trulia are examples of Real Estate portals.

The MLS also aggregates its data to its members through something called an IDX feed. The members then display those listings on their website with the stipulation that the listing brokers name and company appear on their listings.

It’s important to note that any listing data not found directly on the MLS requires aggregation and this requires time. Each entity sets its own download schedule, this is why you often find a listing on one site but not another.

SpringsHomes.com downloads every 3 hours we have found that this interval keeps our data up to date and our buyers on top of the market.

Not all portal receive data from the MLS. For example, Zillow the real estate portal giant relies on agreements with individual brands and private aggregators to receive their data. If you are aggressively looking for a house, Zillow will be among the last to receive the listing data. Your Realtor can help with this as well.

Setup Alerts

Most MLS’s have the ability for Realtors to setup email alerts for clients. This is a type of reverse prospecting method. The Realtor sets up a search using the prospective buyer's criteria. Any time a listing agent enters a new listing that meets the buyer's criteria, the buyer gets an e-mail notification.

In the event you have yet to choose a Realtor, you can usually set these types of alerts up on many Realtor websites.

Go Social

Don’t ignore social media. Many Realtors will use social media to advertise their upcoming listings. You can use this as an opportunity to get a jump on the competition. The best way to handle this is to forward the post to your Realtor. This allows them to verify the details of the listing to make sure it’s legitimate.

Don’t Ignore FSBO’s

For Sale by Owner properties are another option you should explore. These sellers are usually willing to pay the buyer's agents commission. In the rare instances when they are not, you will need to assess if you are willing to work with the owner yourself or if you are willing and able to pay your own agents commission.

In our experience, the For Sale by Owner that isn’t willing to pay a Buyer's Agent is determined to maximize their net on the sale. This means an unwillingness to deal with inspection items or appraisal issues. Sometimes the home is so spectacular, you can overlook this but this is generally not the case.

Get Pre-Approved

We have talked at great length on this site about getting pre qualified and preapproved, there is a difference. Pre-qualification means the lender thinks you can buy a house. Pre-approval says that based on your loan application, income, and debts, they are willing to lend you the money, you just need to find a house.

Springs Homes Realtors Kelly Moriarty and Maggie Turner share this about pre-qualification vs. pre-approval; Maggie Turner-I recently worked with buyers in a competing offers situation. We had a strong pre-approval letter, not just a pre-qualification letter. I later found out the listing agent knew and respected the (local) lender that wrote the letter, that ultimately ended up being the assurance the sellers needed to take our offer. A pre qualification letter might be good enough when making an offer in a slower market, but right now some listing agents are only accepting offers with a pre-approval. I'm encouraging my buyers to go ahead and get that step out of the way if you want to bring a strong offer and eliminate the questions of your financial position. Kelly Moriarty-I totally agree with Maggie, pre approval vs. pre qualification. That just helped me get a home under contract. When the listing agent called to tell me they were taking our offer, and she said you were the only one with a pre-approval, that kind of shocked me.

Be Available

In hot markets, Realtors scan the MLS for new listings in an obsessive compulsive manner. When properties do hit the market that meets a buyer’s criteria, the realtor will do one of two things either go preview that property or contact the buyer to meet them at the property, depending on market conditions and potential of the property. There's nothing more frustrating for a realtor then not being able to get ahold of their buyers when a great property hits the market.

Make sure that you and your realtor set up some guidelines about how and when you can be contacted about properties.

Make a Strong Offer

So you have done everything we've suggested above and you found the house, now it's time to make an offer. This is when your Realtor should really show their value. The first thing they should do is prepare a CMA (competitive market analysis). This analysis will essentially show you what the home you're getting ready to make an offer on is really worth. The analysis we'll approach the home's price based on comparable sales in the neighborhood. This is what the appraiser will do at a much more detailed level later on.

From this analysis, you will be able to get an idea of what the home is truly worth. The next part is how much to offer and this question can only really be answered by you. Your realtor can give you guidance but since you're going to have to live with the number you need to pick it.

Once you've decided on a price there are a multitude of things you can do to make your offer stronger. Remember, the goal of the listing agent and the seller is to get the property closed for the highest price and the fewest road bumps because road bumps cost money.

Here are some tips from springs homes agents Brooke Mitchell and Courtney Gilmore:

Brooke Mitchell-As, the listing agent I really like agents I know are good...and dependable lenders (preferably local).

Courtney Gilmore- Right now in our market, buyers are putting homes under contract and then continuing to look in hopes of finding something better. If they do find something better, they just cancel the contract on the inspection or other contingency. This is a big problem for sellers because they have essentially taken their home off the market. The buyer who has no real skin in the game just walks away with their earnest money intact. Listing agents have gotten wise to this game and are now looking for contracts that get the buyer invested in the deal much earlier. I have started asking my buyers to instruct their lender to order the appraisal within three days of going under contract. Additionally, we schedule the inspection to be completed and any objection submitted to Seller within 7 days of going under contract, this is difficult to pull off and sometimes it’s not possible, but it sends the seller the message that we are serious about buying your home.

Cash is King

In a hot market home sellers aren't so concerned about getting their house sold as much as they are with the timing and hassles associated with the process. Additionally, sellers worry about appraisal issues that might affect their bottom line. This is why cash sales are very popular with home sellers. Cash buyers will often waive the appraisal contingency that way they reduce the seller's concern about potential appraisal issues.

From the buyer's perspective paying cash is a good idea if you can do it but you also need to look at the value of the property you want to buy. You don't want to overpay for a home that won't appreciate, especially if you want to resell it in a couple of years.

Debbie DrummondWrites about Cash Sales in This Article: Should I Pay Cash For My Home?

Add an Escalation Clause

There are some instances where you find a house that you must have. These types of properties are usually involved in multiple offer situations. The Escalation Clause can come in handy in these situations.

Brooke Mitchell shares a real world example of how this works-On a modular home out in the county, there were competing offers. My buyers wanted to offer $5,000-9,000 over list price, draining all of their savings & parental gift funds to make this purchase. I advised them to write a strong offer (at list) and include an “escalation clause”... This would give them the opportunity to offer more in the event competing offers started to push the price up. This clause meant they would have the opportunity to raise their price and could be willing to pay more, but may not have to.

Here is a very detailed article about the escalation clause by Kyle Hiscock:What is an Escalation Clause?

Offer to Lease Back

We have seen some success with seller leasebacks. In this scenario the buyer allows the seller to rent the home after closing until the seller figures out where they're going. This is a big incentive for a lot of home sellers for the next closing ready is and their cash to find a new place because it means they're not rushed, and they have proceeds from their home sale to put towards the next purchase thereby eliminating a double move.

From the buyer side, depending on the timing of your move this may or may not be an inconvenience.

Write a Letter

In a market where we see multiple offers, the offers start to look the same in terms of closing dates prices terms and conditions. One thing that can separate an offer from a slew of similar offers is a little touch of personalization. We have seen agents have success with writing personal letters to the home sellers to be presented at the time of offer. Here Nicole Happel and Brooke Mitchell share some experiences they've had with letters.

Nicole Happel-Recently I had a listing which received two offers. Both were a good price and from well-qualified buyers. But surprisingly sellers did not accept the highest offer. Instead, they accepted the slightly lower one, and all because those buyers took the time to write a very personal note to the sellers explaining how much the house would mean to their family. They went on to say how the teenage boy would enjoy the basement area for his personal “man cave” space. The wife loved to cook and would appreciate doing so in the gourmet kitchen. They even said they had been married for 20 years and would enjoy their children’s last years in this house. The picture they painted was heartfelt and endearing. It worked. My sellers were sold!

Brooke Mitchell- The buyer I discussed in the escalation clause section also decided to write a letter to accompany the offer, about how he had been raised in the area and these newlyweds couldn't wait to buy a home outside of town and start their family. Oh, and her husband loved the shop the guy built!! That was the tipping point for the agent and seller. They did not have the pay more than their original offer, saving them $$thousands. The agent was also the buyer's bus driver when he was much younger, it's a small world!

Inspection

The property inspection negotiation is difficult in any market. Sellers feel like the inspection is petty nitpicking and a chance for the buyer to negotiate the contract. Buyers, on the other hand, feel the need to make sure they're not buying somebody else's deferred maintenance issues and undisclosed problems.

If you're buying you should definitely do an inspection. Once you know the condition of the property you'll be able to decide what to ask for versus what to accept based on the condition of the market.

It's important to note that you can write a contract for a property in as-is condition and still cancel the contract based on an inspection. If the inspection reveals serious defects that weren’t documented in the “Seller's Property Disclosure” you can walk away. As is, simply means that based on what you currently know about the property, you aren’t planning on asking the Sellers for any repairs.

Don’t Lose Your Pre-Approval

Home buyers often forget that once they are under contract on a property any kind of change in their financial situation can get their pre-approval revoked. Every Realtor has heard the stories of a home buyer pulling up to the inspection in a new vehicle. The bottom line is, make no changes in your financial situation until after you close on the property.

Bill Gassett has written a great article about 14 Ways to Get Your Mortgage Preapproval Revoked.

KeIly Moriarty Summarizes it best when she says- The escalation clause has helped me, the 60-day close option helped, being available and showing buyers the day a home is listed is a must as well. These are all great tools, but at the end of the day, I think this is a time where you depend on Realtor relationships and being respectful and most importantly working together to help our clients. Remember that markets go up and down and people remember how you treat them in this business. Treat them fairly and respectfully when you don't have to and they will most likely return the favor. Real estate sales success is a long game.

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Essential Tips to Buying a Home with Bad Credit

Buying a house with bad credit

Qualifying for a mortgage can be one of the more frustrating aspects of the steps to buying a house, even if you have great credit. On the other hand, if your credit is bad or damaged, getting a loan will be even more difficult, but not impossible.

Bad Credit, Bankruptcy, Short Sale and Foreclosure don’t mean you’ll never be able to buy a house; they are merely setbacks that you can overcome. Armed with a little knowledge and a bit of patience, you can navigate the mortgage application and approval process, even with less than perfect credit.

Buying a House with Bad Credit

Bad credit or the idea that you have bad credit is the most common reason people don’t buy homes. It’s becoming increasingly difficult to even rent a home with bad credit. So, if you want more control over where you and your family live, repairing bad credit needs to be a priority.

If you're looking to buy a home with bad credit and can't wait to repair your credit, there are certainly private lenders out there that will make those loans. “Private Money Lenders” act like banks and much like a bank will require insurance on the property as well as their name on the deed. Of course, these loans have much higher interest rates and shorter terms than traditional loans because the risk is much higher. You the borrower will be paying a premium for this risk. Evidence that these investments are lucrative is the fact that there are even private money lenders that will loan with no credit check or loan amortization.

If you choose to pursue this method of financing, make sure you look at things like better business bureau ratings and online reviews. In the long run, you're much better off repairing your credit before buying a house.

The idea is to get you to a point where your credit score is high enough to qualify for an FHA loan. FHA requires a FICO score of 580 to be eligible for their 3.5% down payment program.

We don't have time to discuss all the merits of an FHA loan in this article. If you'd like to know more here's a great read by Kevin Vitali: Should You Get an FHA Loan?

Before we worry about what your FICO score is, we first want to pull your credit report and see how that looks.

Rip that Band-Aid off

Good news or bad news, it’s important to know the status of your credit health. And if you’ve suffered some bumps in the road credit wise you may be hesitant even to take a look. This is understandable, but at the end of the day, you need to take this first step.

Federal law requires the three national consumer credit reporting companies - Equifax, Experian and TransUnion, give individuals a copy of their credit report for free every 12 months, all you have to do is ask for it. The best first step is to check your report at www.annualcreditreport.com.

Investigate

Once you have a copy of the report you’re going to want to comb through it and look for the following:

  • Verify that all of the personal information on the report is correct. Check your name, address, Social Security Number, etc…
  • Next, you’ll go through the individual accounts and loans to make sure they are correct as well. You want to ensure accounts from a person with the same or similar names don’t appear on your report.
  • Another thing you want to look for is any accounts that were created as a result of identity theft.
  • Check for Incorrect account statuses. You are looking for things like, closed accounts that are still being reported as open.
  • Accounts that are incorrectly reported as late or delinquent
  • Incorrect date of last payment, date opened, or date of first delinquency
  • The same debts listed more than once ( perhaps with different names)

Dispute

It’s important to note that if you are already applying for a mortgage, you should not dispute any derogatory information on your credit report. If your report shows that you are in the middle of a dispute, your loan application will be rejected, or it will be referred to a person (instead of a computer) for a “manual underwrite,” which can take a very long time to resolve. Wait until your mortgage is approved and then dispute the report.

If on the other hand, you are in the process of repairing your credit to get a loan, your next step is to address the incorrect or negative items on your credit.

If there is erroneous information or negative reporting based on late or missing payments on your credit report, you have a couple of options. The first option is to contact and pay a company to handle this for you. If you choose this option, be careful and seek references. We refer our clients to River Stone Law. This firm offers a deal of $199 for sign up and $99 per month for guiding you through credit repair; they’ll tell you what to do and how to do it, send out letters on your behalf, and get items removed from your credit that shouldn’t be affecting it.

On the other hand, if you decide that you would like to handle your disputes with the credit reporting companies yourself, here’s the breakdown.

You’ll need to contact the appropriate reporting company directly to handle any disputes. These disputes can be submitted online or by mail. Here are the sites you’ll need:

Online:

Additionally, the Federal Trade Commission has some great information about disputing items on your credit report

Prequalification and Preapproval

Once you know the erroneous information items have been corrected, it’s time to move forward with the pre-qualification and pre-approval process. If you’ve done your homework and cleaned up your credit report, your lender will want to run your application through a system known as Desktop Underwriting.

Desktop Underwriting

To save time and alleviate frustration, you’ll want to seek pre-approval through Desktop Underwriter (DU), this is the quickest path through the mortgage maze. Desktop Underwriter is a software program used by mortgage lenders to qualify prospective home buyers using Fannie Mae and Freddie Mac guidelines. Although Desktop Underwriting is used for Conventional and FHA loans, VA has its own automated system as well “Automated Underwriting System” (AUS).

The counterpart to desktop underwriting is Manual Underwriting this is a long, arduous process. You must avoid manual underwriting unless it's your only option.

Buying After Bankruptcy

Let’s go a step further and talk about another financial stress point many people think spells doom for their prospects of home ownership, Bankruptcy.

Bankruptcy. Yes, you can be approved for a mortgage even if you’ve declared bankruptcy. If you have declared a Chapter 7 bankruptcy (one in which all debts are forgiven), you must wait 2 years after the bankruptcy is discharged to qualify for an FHA or VA loan. For a Chapter 13 (when you agree on a repayment plan), if you have been making on-time payments for one year after the declaration, you may qualify for an FHA or VA loan. In either case, you must not have a single late or missed a payment during the post-bankruptcy waiting periods—if you do, the qualifying period will be reset close to the date of your missed payment.

For conventional (non-government insured) loans, the waiting period is 4 years after the discharge of a Chapter 7 bankruptcy and 2 years after the 1-year payment period for a Chapter 13 bankruptcy.

Short Sale and Foreclosure

If you go through a short sale (selling your home for less than the outstanding debt), your credit score will not be affected if the lender notates it as “Paid as agreed.” If your lender agrees to forgive a portion of your loan, you will most likely sign an unsecured note promising to pay back the agreed-upon amount. As with Loan Modification, have your lender give you written proof that “Paid as agreed” will be reported to the credit bureau. If you don’t take this step, and the lender notates “Settled for less than the full balance,” you will be dinged a whopping 105 points!

If you are experiencing foreclosure, in which the lender takes possession of the property due to non-payment of the loan, you will also want to negotiate with the lender about how he will report it. If the notation “Foreclosure” appears on the report, you will be dinged 110 points.

In both cases, with a potential short sale or foreclosure, speak to your lender as soon as you realize there may be trouble looming. Don’t wait until the situation becomes dire, as many lenders are now much more willing to negotiate help for homeowners than in previous years.

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How Do You Determine Market Value?

marketvalue

As a Realtor people often ask me how market value is determined. Sellers want to know their market value so they can decide on a fair asking price. Buyers want to know the market value of their home so they can see that the price of the home is justified. Here is the advice that I usually I give them.

Factors that Influence Market Value

Back in school, they taught us that market value is "what a willing buyer will pay and a willing seller will accept". That's definitely true. Here are some factors that influence market value.

1. Inventory - In a competitive market like we're in now, there aren't as many homes for sale. Supply is low and demand is high, creating bidding wars. A willing buyer will pay more for a property now than they would have a few years ago. Many people are desperate to secure the sale and they are willing to pay a higher price to beat out the competition. Market value is redefined each time buyers write an offer.  

2. Home Sales - Recent home sales in the area also influence market value. You may have heard the term "comparable properties". The definition of comparable properties is homes nearby which are similar in size, age and condition to the subject property. These comparable homes will definitely be used to establish a home's market value. Buyers will look to see what homes have been selling for lately and will often base their offers on such. And appraisers will use these comparable sales to justify the current contract price.

Factors that Do NOT Influence Market Value

1. What a seller originally paid for the property does not determine it's current market value. It doesn't matter if they got a screaming deal on it just two years ago. It doesn't matter if they paid a crazy low price when they bought the home. They could have paid five dollars for the property. You are not going to benefit from the great deal they once got.

2. What your relatives in another state think the price "should be" doesn't determine market value. If your parents live in Texas, chances are they paid less for their 4,000 square foot, all brick rancher on 2 acres of land than you're going to pay for that 1,700 square foot 2-story home in Colorado Springs. Conversely, your sister in California paid more for her $925,000 townhome in Santa Barbara than you will pay for a spacious single family home in Colorado. An accurate estimate of market value needs to compare apples to apples, and we all know that home prices can really vary across different regions.

3. The public assessor's site property valuation is not actual market value. I don't know why, but the assessor's estimate is always under market value. And really, that's a good thing. Our property taxes are calculated on this, and if the county assessor thinks a home is worth less, then our property taxes are lower. Hooray!

4. Public internet sites are not always accurate with their valuations. For example, Zillow posts home values on their site and call these valuations "Zestimates". I constantly tell buyers and sellers not to believe the Zillow Zestimate they have seen. They are always low. To prove my point, NBC News recently reported a class action lawsuit was filed against Zillow for undervaluing properties. It turns out they are obtaining these valuations from the county assessors site. Interesting!

Realtors, the Best Resource for Market Value

Anyone can give you an idea of what they think your home will sell for, but they won't always be right, and it won't always be supported by data and facts. The only way to get an accurate determination of the market value of your home is to call a professional. Realtors live and breathe the housing market, and giving homeowners a market value on their home is a regular part of our job. When I meet with a homeowner to do a market value analysis, I will not only give you a value based on data and my many years of experience, but I will tell you how I arrived at the market value and all of the factors that were considered.

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