Are Owner Carry or Lease Options Still Available? How Do I Find Them?

Dave,  

Having the many up's and down's that comes with life and the decline of higher paid jobs, I find myself still wanting to stay here in the valley. I have lost everything due to poor planning. With that being said I still have my family and many, many assorted pets on a very small pension. I will not part with them and am looking for work. Renting and lease option seems to be out of the question and buying anything is a no go for 7 years. After living in a camper for 8 months, I have decided to cash out my 401k and look for land. My question is, where are the "owner finance or carry terms?" I know they are available, but most Realtors are not educated to the old school term. Should I just run my own ad and work a deal? Given the owner attitude of “my land has gold and overpricing” in most areas I would think this is a 50/50 win solution on both sides. Payment terms for them and a beginning for us.                               

Edward, location withheld

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Edward,

Life does have its ups and downs. Remember, it’s how you deal with the adversity in life that really does shine the light on your true character and it is clear you are a fighter! It appears that you have learned from your past “poor planning” and are working to right the ship for you and your animals. Living in your camper for the past 8 months is proof that you are making a significant effort to stay in the valley and you should be proud of hanging in there. Things will turn around, but it may take time and a plan. Sounds like you are now working on a specific plan in place. With your assorted pets, I am sure you are right that renting will prove to be very difficult, however, don’t rule out a lease option or owner carry.

There are opportunities for a lease option and owner carry, however, to really have a chance at either one, you will have to have a significant sum of money to put down. Generally, I recommend a seller receive between 10% & 20% down to get involved with a lease option or an owner carry situation. Cashing in your 401K may be the key that opens the door to the down payment needed. I do not agree that “most Realtors are not educated to the old school term.” Actually, I do think they are educated to the term, but there are fewer opportunities available to initiate owner carry terms. It is my experience, and please understand that my experience is limited to the past 13 years, that there are not a plethora of owners who are really interested in owner carry terms or lease options. It is VERY rare that I have an owner who is looking to solicit an owner carry opportunity. I believe most owners who are working with real estate agents are looking to SELL in the near term because they have other plans for where to use their money. You are absolutely correct, an owner carry or lease option scenario can be a win/win for both parties, as long as the owner is looking for income and not looking to get the total sum of their investment out. I also believe that running your own ad may be a very good idea.

“I think running your own ad “seeking owner carry terms or lease option” might prove more successful than you might expect. I find property owners who are interested in lease options or owner carry terms are not typically mainstream. ”

I think running your own ad “seeking owner carry terms or lease option” might prove more successful than you might expect. I find property owners who are interested in lease options or owner carry terms are not typically mainstream. They tend to have different investing and financial practices that fall outside of normal real estate agent practices. You might also seek out agents who deal with owner carry clients. There are agents who tend to have that kind of client. Just call the owner/brokers at different real estate offices and ask them which agents are most likely to work on those kinds of deals. They will know and help steer you to the correct people. 

I can feel your frustration and am sorry your journey is proving difficult. I am prayerful that you find the new beginning you are seeking and I am confident you will.

Dave Kimbrough
The Kimbrough Team

What do I have to disclose in my Seller's Property Disclosure?

Dave,

A few years ago we had some significant water damage that was done because our next door neighbor left his irrigation sprinklers running overnight and the water flooded his lawn and ran down into our yard and into our basement. We have discussed selling several times since this happened, but are just not quite ready! When discussing this with one of my friends, he said that I would have to disclose the flood when we do decide to sell. I am still not sure I agree with him, as the neighbor's insurance paid the claim and we did not have to file anything with our insurance carrier. Even if the flood was not our fault, was not due to any problem with our house and did not impact our insurance, do I still have to disclose it when we go to sell?

Jerry

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Jerry,

As common practice, I too do not always buy what my friends are selling, however, in this case, I am going to side with your buddy. I have found that the only thing worse than being wrong is being wrong and my buddy being right! All kidding aside, in my opinion, you do need to disclose the flood when/if you decide to sell your home, even if it was not caused by a defect or problem with your home.

In the state of Colorado, each seller is asked to fill out a Sellers Property Disclosure and it is designed to be and give a historical snapshot of your home to a prospective buyer. You should always fill it out to the best of your knowledge and not omit any significant event, even if it was caused by an outside event of which was not related directly to the home. Many problems are caused by outside events, like wind, hail, some fires, floods etc. Look at it like medical records. If you were in a bad car accident at one point in your life, it was the other driver's fault, but you were fully recovered, it would still prove prudent and valuable to your doctor to include this point in time in your medical history. Same is true for your house. The good news, in this instance, the event is easily explainable and apparently has not re-occurred, but most importantly it COULD re-occur and that possibility of re-occurrence is important to relay to a potential buyer. 

“Many sellers are afraid to tell about problems they have had with their home. It is quite similar to kids, no parent wants to disclose that they have had problems with their kids, but all of us have had problems and amazingly in spite of us parents, our kids grow up to be productive members of society even with a few bumps along the way.”

Many sellers are afraid to tell about problems they have had with their home. It is quite similar to kids, no parent wants to disclose that they have had problems with their kids, but all of us have had problems and amazingly in spite of us parents, our kids grow up to be productive members of society even with a few bumps along the way. Very few of us want to disclose that we have problems with our kids or our homes, but we all have problems here and there and it is okay. If you have owned a home for any real length of time and have not had any problems, then you are without a doubt in the minority. On any property disclosure you want to answer each question to the best of your ability and make sure that you provide how each transgression happened and most importantly, how it was repaired or remedied. The solution and fix is more important, in my mind, then the problem. Buyers understand that problems happen and almost always are fine with them as long as the fix was proper and professionally handled. 

The buyer is going to want to see that the problem has been remedied professionally and in the solution there has been some corrective action taken to prevent it from happening again, even if the neighbor is forgetful. This might include a French drain or some kind of grading between the two homes that would divert water out on either side of your home to the street. The bottom line, disclose. If you are wondering if you should disclose, then you probably should disclose. I am sure you can relate to this. If I am wondering to myself, should tell my wife, then I probably should tell her and deal with whatever the repercussions may be up front. It is always easier that way even if it does not always feel easier. It may not be on that same level, but I am sure you see where I am going with this. I hope this helps clear up how to treat disclosure.

Dave Kimbrough
The Kimbrough Team

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What are common closing expenses for sellers?

Dave,

We are currently in the process of selling our home and it just went under contract—yay! We want to know what to expect financially from this point forward. What are common closing expenses for sellers?

Thanks!
Cheryl, Palisade

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Oh my gosh, this is such a great question and one that I get ALL the time! As a seller you have the privilege of paying the sales commission you agreed to with your listing agent, assuming your home is listed with a Realtor. Costs associated with selling your home that are the seller's responsibility are varied, but you can almost always calculate an additional 1% if your sales price is UNDER $300,000 and .7% if your home is over $300,000. If you calculate it that way you will, almost always, come up with a slight overestimate of your closing costs. 

The most common cost that is overlooked is your property tax. What most people don’t fully realize, as I did not prior to becoming a real estate agent, is that our property taxes are paid in arrears. It’s probably something most folks just don’t think much about and it often times is a bit of a surprise. How it works is, the title company will pro-rate the current taxes from January 1 to the day of closing and you will have that amount debited on your settlement sheet. The two largest debits you will see (outside of real estate commissions and your mortgage payoff) will be the taxes and the title insurance policy. Title insurance simply indemnifies that the title to the property will be passed from you to the new owner in good standing and free of any liens. For a $250,000 home you can expect this expense to be in the $900-$1000 range. These costs are on a sliding scale based on purchase price.

The most discussed fee on the seller's settlement statement is often the charge for water & sewer. The bills for water and sewer, if left unpaid, can be held as a lien against the property and thus MUST be settled at the time of close to ensure the passing of a clean title (as discussed above). In order to ensure that the amount that is owed is covered, the title companies always hold out an amount significantly over (generally around $200) your typical water and sewer bill. This ensures there is enough to pay it off and they will refund the difference back to you shortly after close. This one always creates a fair amount of discussion about how you never have had a bill that high etc., but believe me they will refund you the difference in short order. Always remember that your other services like gas, electric, telephone, television etc. are your responsibility and you should call 24 – 48 hours prior to close and let them know you will be moving and the service will be transferring to a new owner on the date of close.

One last tip. Your mortgage statement always provides a payoff for you to reference, however, the day it is printed you start accruing interest so your payoff is always higher than what is printed on your statement. I always tell our sellers to just add one extra payment to the amount on the settlement statement and that will provide a safe payoff amount. In my experience when closing day comes people are happy they overestimated and get a little money back, rather than under estimate and have to go digging for that little extra! I hope this helps and by following these guidelines you should have a safe estimate of your closing costs. Congratulations on getting your home under contract and best of luck on your new journey!

Dave Kimbrough
The Kimbrough Team

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How Effective is Staging Your Home When Selling?

Dave,

We would love to get your opinion on if we should or shouldn’t stage our house while it’s up for sale. Our plan right now is to be completely moved out before our house goes on the market. We have seen all the shows on getting your home staged to sell and we’ve recently started to question if we are making the right decision.

We’ve heard that houses that are not staged get lower offers than house that are. Should we change our plans to completely move all our belongings before selling the house? Is staging a house really worth it? 

Shawn and Kathy, Fruita

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Shawn and Kathy,

Great question with many options and angles, so let’s get right to it. I have said it before, but I will say it again, I love to watch HGTV and the DIY Network, but unfortunately it is not “reality” television. Sure, their intent is to inform, but their primary goal is to entertain! I think it would be a good life practice to not assume or expect real life to reflect what you see on television! A little more real life and a little less entertainment might actually be more helpful and enjoyable in the long run, but I digress and am starting to really show my age…Ugh, you know when you get that “I’m becoming just like my Mom/Dad moment? Well I just had it! Okay, back to the task at hand, does a house show better furnished or unfurnished? 

It has been my experience that 80% of the time I recommend to home owners that their home will show better furnished, however this answer is somewhat dictated by your furnishings! The furnishing knife cuts both ways. I have sold houses where the furniture is so nice that it is actually a distraction to buyers. They can come away from the showing loving the house, but saying “my furniture is not that nice and the house will never look that good when we move in!” The buyers assume, and in some cases rightly so, that the cost to get it to look that good again will be too significant. On the other hand, when the furnishings are meager, old, worn out, super personalized or just plain ugly and out dated, the buyer often times can’t see past them and they distract from the positive features of the home. Many times in this instance, the house can take on the personality/condition of the furniture and leave a bad or less than desired impression. Being somewhere in the middle or on the nicer side is the place to be. 

“When you make the decision to show it furnished or empty, go with one or the other…don’t hedge and try to live in both camps.”

When you make the decision to show it furnished or empty, go with one or the other…don’t hedge and try to live in both camps. Generally I am not a fan of half staging, with the exception of when you have a difficult layout and furniture placement is not easily identified or you are staging a brand new home. A half furnished home brings a bevy of questions that have everything to do with the situation of the seller and little to do with the house. If the only furnishings in the house are a blow up bed, kitchen table, futon and 65 inch TV and Xbox it will invite lower offers than if the house was empty…half furnished homes show poorly and give off the vibe of a family or home in flux! A situation in flux can give the impression of desperation, even if desperation doesn’t reside there! The smell of desperation to a buyer is like the scent of blood to a shark…get ready to welcome lower offers and the longer an empty home is on the market, the stronger the scent becomes!

A fully furnished and lived in home will typically provide no indication of motivation and the same can be said with an empty home! With an empty home, the buyers may make assumptions, but any good real estate agent can quickly dispel any of the buyers’ preconceived notions of assumed motivation and get things back on a level playing field. I personally think empty homes provide the opportunity for buyers to envision where they will place their own furniture!  If they start placing furniture in their minds, you are getting closer to setting the hook. 

In close, focus on the basics but either stay in your home until you get a contract or completely move out! There are always one off situations where you just have to punt, but in most cases those are your best two options. Hope that helps!

Dave Kimbrough
The Kimbrough Team

Is Wallpaper Back in Style?

Dear Dave,

I’ve been looking into doing some redecorating on my house. It looks like the new up and coming trend is wallpaper. What do you think of wallpaper in a newer home? I’m not considering any of the patterns from the 70’s, but what do the people that you work with think of wallpaper? Is it easy enough for someone to remove if I go ahead and do it and then sell my house? I just want to be smart and not do something that will be a huge deterrent from my house when I decide to sell it.

Thank you – I really enjoy reading your answers each and every week!

Jaquie – Grand Junction, CO

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Jaquie,

Great question! You are right! Wallpaper is starting to make a comeback and is gaining quite a bit of traction in the housing market again. You know what they say, if you wait long enough it will come back and be popular again and I think that is where we are headed with wallpaper. At least to some extent. 

Keep in mind that wallpaper of any kind is a very personal touch to a home. The kind of wallpaper we are seeing gain in popularity is more on the textured side, not necessarily the pattern side. The old patterned wallpaper of the yesteryear will hopefully never make a comeback, however bringing in new textures can really be an awesome addition to any room or home. There are so many choices, but I have seen some wallpaper that look like different grasses and fabrics and they look incredible and really add a ton of value in making a texture statement instead of a color statement. If you want to see some really great wallpaper go to grahambrown.com, pintrest.com or houzz.com and prepare for the do-it-yourself urge. 

“Buyers are very open to wallpaper that makes a textural statement, as long as it is tastefully done. ”

Buyers are very open to wallpaper that makes a textural statement, as long as it is tastefully done. Remember, sometimes less is better so wallpaper on an accent wall or in a powder bath etc. can be plenty of statement and all that is needed to make the impact you are trying to achieve. I think some of the new wallpaper can make a positive impact on potential buyers if done correctly, but also remember keep it neutral in color and subtle in style. 

Removal can be tricky. Regardless of if it is patterned or textured, it can be difficult to remove so keeping it on the accent side of things will make it easier to remove if there is not as much of it. If potential buyers want to take it down, they can always do so after they purchase or request the seller do so prior to close. Let this be said, NOBODY likes to remove wallpaper, thus the reason wallpaper is a riskier proposition to paint! Consider your wallpaper installation carefully and thoughtfully and my bet is you come up with something gorgeous and people are going to love it. I say go for it and see if you can make your home sizzle with some new wall fashion!

Dave Kimbrough
The Kimbrough Team

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Should we install central AC in place of our swamp cooler?

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.”

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

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