What's The Return On Investing in Central AC For Our Home?

Hi Dave,

 I have lived in Grand Junction for nine years. A year and a half ago my husband and I bought an older home with a swamp cooler. We love the house but really miss the central AC that we had in our previous home. As summer approaches we are considering installing central AC in our house but are wondering what sort of return on that investment we would see if/when we ever decide to sell this home.

 Thanks!

Jenn L, Grand Junction

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Jenn,

Great question!  It is funny, I grew up in Grand Junction and spent most of my childhood living with a swamp cooler and that was all we knew.  I don’t believe, or at my advancing age am I able to recall if, anyone had refrigerated air.  My how times have changed!

Swamp coolers have many advantages.  They are inexpensive to operate, they will drop the ambient temperature approx. 20 degrees, they add moisture to the dry air here, thus not only cooling, but providing needed moisture to the air in our typically dry climate!  They sound incredible, right?  As Lee Corso of College Gameday says, “not so fast my friend”.  A swamp cooler will do all those things I listed and for all but about 30 days of our summer work incredibly well, however they are typically considered vastly inferior to central air conditioning units.  We find that the vast majority of buyers from out of town have no idea what a swamp cooler is or has any idea how they really work or how to maintain them.  To sum it up, they don’t like and don’t want what they are not familiar or comfortable with.

This is not to say that a home with a swamp cooler is inferior, as my own home has a swamp cooler, but as more and more people move here from areas outside of Grand Junction the swamp cooler is becoming a dinosaur and is almost NEVER preferred by buyers over Central AC.  In fact, most of the time adding AC to an existing house is considered a significant upgrade and can absolutely be a difference-maker, especially to an out of town buyer.  We regularly have requests from buyers to look at ONLY homes that have AC. 

I believe that converting to central AC in your older home will absolutely be seen by future buyers as an upgrade and will prove to not only be a good investment but will lead to a higher sales price and increase the number of potential buyers who will look at your home.  Lastly, adding central AC will prove to be a creature comfort that you and your family will enjoy for many years, so adding it would be something I would encourage.  We don’t always want to do things or add features to our homes simply for a good investment or to get a good return.  Sometimes we should add them to increase our quality of life and overall home enjoyment!  In my mind, loving where you live is the most important factor to weigh!  Put it in and don’t look back, especially when all your friends who live in swamp cooled homes come over and comment on how nice and cool your home is compared to theirs.  That is when it will really feel good! 

Dave Kimbrough

The Kimbrough Team

How Do We Make Sure We Don't Pay More For A House Than It's Worth?

Dave,

We have been looking at homes, but have noticed that many of the homes we are interested in have a tax assessor value that is a good bit lower than the listed for sale price.  Is the tax assessor value what the property is worth or what does it mean exactly?  I'm thinking about making an offer on a property, but now I'm not sure I should make an offer if it is worth so much less than what they are asking for it.  We just don’t want to pay more than it is worth.

Janet,

Grand Junction          

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Janet,

Another great question, and one we have to deal with on a regular basis, especially after new tax evaluations hit your mailbox!  Let’s first look at how the assessed value is determined.  I went to the Mesa County Assessors website (http: //assessor.mesacounty.us) and found the criteria for how the value is established and Colorado law is very specific on how values can be established:

     1. Real property must be revalued every odd numbered year.

     2. The actual value of real property is based on its value as of the appraisal date, which is

         June 30th of the year prior to the reappraisal year.

     3. Residential property may be valued using only the market approach to value. In this

         approach, the value of the subject property is based on an analysis of comparable sales

         to predict the price properties would have sold for on the Appraisal date.

     4. The actual value assigned to residential properties is based on sales that occurred in the        eighteen-month period from January 1, 2017 to June 30, 2018. Those sales indicate the market conditions in various parts of Mesa County, and the market value of specific types of properties.  Note, five years of sales activity are analyzed for those types of properties that are few in number or of an unusual nature.

As you can see from the criteria above, my main take away is that values are established using sales from primarily sales that occurred from January 2017 thru June 30, 2018.  We are in the middle of an eight-year run of property value increases so you can expect property values in the summer of 2020 being higher than the property values used to establish the tax valuation you may have just received in the mail.  I believe it is also fairly safe to assume that property values will continue to move in an upward swing over the next few years, as I am bullish on our local economy and people from outside our area have a high desire to move to the western slope.  Also note, #3 above indicates that these past sales are used to “predict” prices and when you predict, you are less likely to be completely accurate.  Overall, the property tax valuation is a little like throwing darts…..not blindly throwing darts or throwing them in the dark, but safe to assume that more tax valuations will miss the bullseye than will hit it.  Please don’t take offense with my analogy if you are a professional dart thrower….. simply trying to hit the mark! (no pun intended) I just googled professional dart throwers and there is such a thing…. I’m talking to you Michael van Gerwen!

Getting back on track, I regularly tell our customers that the assessed value of a property is more about tax revenue than about actual property valuation.  The County Assessor has a herculean task of trying to establish values that are even “reasonably close” and frankly that office does an amazing job given the enormity of the endeavor.  In 2011 when the housing market was in free fall and assessed values were predicted using sales from the peak years of 2008 and 2009 we saw assessed values that were significantly higher than market value and we had just the opposite problem and the complaints were rolling in daily.  Right now you can be thankful that the value is based on actual values from at least 18 months ago. 

I hope all this makes sense because it is my recommendation to never use the assessed value to establish a market price for a home or any piece of property.  I rarely look at a property’s assessed value for any reason other than to accurately report the taxes due each year.  Stop paying attention to the assessed value as it relates to today’s market value as one has nothing to do with the other.   We are thankfully on the upswing and whenever market values are moving upward our assessed values are likely to be lower because they are established using older sales.  Happy house buying! : )  

Dave Kimbrough

The Kimbrough Team

When is The Right Time to Sell to Make The Most Money?

Dave,

My wife and I have been discussing whether or not we should put our home on the market. We know the average home sale price is high right now. We’d like to take advantage of the rising prices and cash in on the equity we currently have in our home but do you think the prices will continue to rise? If we wait another year could we get $10,000 or even $20,000 more on the sale? How do we know when it’s the right time to sell so we can get the highest value for our home?

Thanks for the advice!

John and Arielle, Grand Junction

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John and Arielle,

Knowing when the right/best time to sell anything is one of the hardest questions in the world to answer, but I will try!  Ultimately, if I could predict the best time for selling anything I would be super wealthy and writing this column from a white sandy beach on a tropical island with a drink in one hand and ……. Sorry, I was getting carried away there, back to reality….. Unfortunately, I am writing this column from my office late on a Wednesday night to the not so relaxing hum of office lights and forced air heat!   All kidding aside, the world is volatile and things can change quickly for the good and for the bad.  Right now, things are quite good.  We are currently in the best real estate market we have seen since 2008 and for that, I am very thankful!   

With that being said, I anticipate the market to continue growing across the board and prices to continue rising. I do believe that we will see some price settling in the next twelve months, but I am still surprised at how little inventory there continues to be, particularly under $400k,  that keeps putting upward pressure on prices.  Also, worth noting is that Grand Junction is now a destination place to live!   What is driving our market is no longer about any one industry, but by being an amazing place to live!  Peeps want to live here!   Somewhere about 2017’ish Grand Junction turned the corner from being a boom and bust cycle town that would ebb and flow with the oil and gas industries to being a place that people all over the country know about and have pegged as a super desirable place to live.  We do have many new subdivisions in process and there are hopes that new construction may help loosen up the supply and slow rising prices, but I am becoming more and more bullish on our real estate market as being on a long haul upswing that will be impacted by outside factors, but not nearly as likely to “bust” as it has before.  Keep in mind that this new construction will not stop rising prices, only potentially slow them a bit if it starts to fill some of the inventory void!  I will reiterate what I wrote about earlier this year, the secret about Grand Junction is out and people are going to continue to seek Grand Junction out!  Why not, it’s an amazing place to live. 

One last tidbit to consider.  If you are selling at the top of the market, then it is highly likely that you are also buying at the top of the market.  Buying and selling in the same market is somewhat relative…. If one house goes up 10% then it is likely the other one has gone up in a similar fashion!  That is not always true, but something to consider, depending on the differences in what you are selling and what you are buying.  I always recommend you try your best to maximize your price, but sometimes the “best” time is the “right” time for you and your family!    I hope that helps….

Dave Kimbrough

The Kimbrough Team