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Selling Your Home With Water Damage

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 over the past few years, but are not ready yet, however one of my friends 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 neighbors insurance paid the claim and we did not have to file anything with our insurance carrier.  Even if the flood was no fault of our own and 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, Location withheld

Jerry,

As common practice, I too do not always buy what my friends are selling and to be honest with you, sometimes I am right and I enjoy being right, as it feels as though it is quite a rare occurrence! : )   The problem with only being right sometimes is that sometimes you are going to be wrong…  In this case your buddy is right.  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 drivers 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.  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 O.K..  If you have owned a home for any real length of time and have not had any problems, then you are without 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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The Shortcomings of ZILLOW & How it Effects Your Home

On February 29, Rascoff sold a Seattle home for $1.05 million, 40 percent less than the Zestimate of $1.75 million shown on its property page a day later. The gap between the Zestimate of Rascoff’s former property and its sales price has decreased only modestly since then. Zillow readily acknowledges that Zestimates can be inaccurate, but some consumers can still take them at face value, causing headaches. 

“ Zestimates are only a conversation starter for pricing a home, not the final word on its value.”
— Zillow Website

 

This shows the $1.75 million Zestimate of the property formerly owned by Zillow CEO the day after the home sold for $1.05 million. Bringing up the Zestimate of the property Rascoff recently offloaded will help him deal with the frequent pushback he receives from homeowners “who think Zillow is the magic 8-ball,” he said. ‘We missed’

Zestimates on Rascoff’s former home have certainly been overstating the property’s value, said Zillow Chief Analytics Officer Stan Humphries. “The fact that we missed and there are empirical reasons we missed — that’s a great conversation that real estate agents should have” with consumers, he said, citing the property’s irregular lot and location on a busy road as partly responsible for its Zestimate’s inaccuracy. But if the success of the transaction were judged by the property’s Zestimate, it was a failure. The home’s Zestimate was $1,750,405 on March 1, the day after the property sold for $1,050,000. If that Zestimate were accurate, it would mean the chief of the biggest name in real estate and the recent co-author of a book about “the new rules of real estate” would have sold his home for 40 percent less than it was worth.

Zillow puts the Zestimate’s national median error rate at 7.9 percent, meaning half of Zestimates nationwide are within 7.9 percent of a home’s sales price and half are off by more than 7.9 percent.  Zestimates can’t take into account “non-quantifiable facts,” such as layout design or lighting, and these facts can have much more of an effect on the values of luxury homes than less expensive properties.. Real estate agents can see how special features impact a property’s value, but the “Zestimate algorithm can’t know” and “at this point in time, it’s not designed to know,” she said.

So... when it comes time to either buy or sell a home, Zillow is a great place to start, but not to end. Like most online tools, Zillow is incredibly helpful when used properly and can quickly become a hindrance when relied upon too heavily. 

 

Sources: HTTPS://WWW.INMAN.COM

The Most Frustrating Thing...

Dave,

We recently, about a month ago, turned down an offer on our home that was contingent upon them selling their current home.  They asked us to take our home off the market for two months while we waited for their home to sell.  They had already had their home on the market and we decidedwe did not want to risk having our home off the market while we just waited for their home to sell.  We asked our realtor last week if they had sold their home yet and found out they did have it under contract, but have decided to purchase a different home.  

We are very frustrated and feel like they should have come back and put a contract on our home, as they said they would surely bring us another offer when their home was sold.   We just feel like we have been left at the alter and now are starting over.  What should we have done differently? 

 Jake and Laura, Grand Junction

Jake and Laura,

Your darned if you do and darned if you don’t, that is the lesson learned from contingent offers.  When we receive a contingent offer, it boils down to a calculated risk.  You have to work with your agent and determine, to the best of your ability, how probable it is that their home will sell?  If the buyer is coming from the Denver area, it is HIGHLY likely their home will sell quickly, so the risk is VERY limited, as that market is very hot! When deciding to take a contingent offer, it also is dependent on how good the offer is?  If it is a good offer, then sellers are generally willing to take on a little more risk.  As it is with every contingent offer, you must decide if the probability of their home selling outweighs the risk of taking their offer and waiting to see if their home sells.  Remember, you always have options.

Your first option, the option you chose, is to not accept their offer with a contingency and count on them coming back when/if their home goes under contract.  My experience is that few people come back after they have been spurned.  Remember, buying a home is an emotional process and you want to capture that buyer while they are emotionally invested in your property.  When you turned down their offer, they may have felt like they had been spurned and started to look around again at competing homes, in essence, looking for a new partner.  Bad analogy, I know, but you get my point.  I have found it a better option to find some common ground to work with them on, which indicates that you want to sell the home to them, but you also need them to recognize your need to continue trying to sell your home if someone else comes along and wants to buy it.

This leads us to other options, the 48 hr and 72 hr first right of refusal. This means that you continue your efforts to sell and if you get another offer, they have 48 or 72 hours, you determine the length of time here, to remove the contingency on the sale of their home.  If they can not remove the contingency, then you can sell it to your new prospective buyer.  Most buyers appreciate the fact that you, like them, are looking to sell your home and understand your need to take the first ready, willing and able buyer who will meet your terms for sale.  You have now shown them that you want to sell your home to them and they are likely to receive this response in a positive fashion.  They are now still emotionally connected to your home and feel like the next showing on their home may deliver a contract and get them into your home.  They are still invested and still working toward the goal of getting their home sold, so they can purchase yours.  Again, it has to make sense and it is a calculated risk.  

The key to everything is the ability to continue marketing the property and solicit other offers.  There are several creative ways to create a win-win for the buyer and seller and have everyone involved, agents included, working toward a common goal. 

Remember, you turned down their offer, there is nothing that says they can not change their mind and that is exactly what they did.  You ran that risk when you turned them down and played hard ball.  I do, at times, recommend taking a contingent offer, but often leave the seller with the contractual ability to continue to sell their home should they receive another offer and in my mind this is key.  Sometimes you have to be willing to take on a little risk, as long as it does not leave you out of the game.  I hope this helps and I am hopeful another offer is right around the corner.

Dave Kimbrough - The Kimbrough Team

Is INVESTING IN Landscaping a Good Investment?

Dear Dave, I have about $5000 saved up to do some landscaping around my house this summer. I'm trying to decide what my focus should be for my yard/house. I am only planning on staying in this house a couple more years, so I want to make improvements that add the most value.  I would really appreciate your advice on the most important landscaping elements in a yard - front and back. They both need work - I just don’t know where to start or where to focus with my funds.

Thanks, Bobby - Fruita, CO

Bobby,

The yard is one of the most overlooked elements of any home, when it comes to potential buyer appeal, so you are wise to pay it some attention and focus some of your resources on your yard.  A study done by the University of Michigan showed that buyers valued a well landscaped home by 11.3% more than a home with poor landscaping.  Another study done at Virginia Tech determined the value may increase by as much as 12.7% for a home with good landscaping vs one with minimal or poorly designed landscaping.  Here is one more number to ponder…. you can expect a 150% return on your landscaping investment.  That is what I would call good ROI! (return on investment) Regardless of what number is right and how much of your investment you can expect to get back one thing is very clear, all this data clearly points to the fact that your landscaping is VERY IMPORTANT!

Let’s be honest, $5,000 is not an exorbitant sum of money to invest in your landscaping, but if done wisely can make a big impact on your home’s value and overall appeal and easily provide you with a great ROI!  The old adage of, “go big or go home” needs to be in your rear view window, as we are going to be swinging for singles and doubles. Most of these things are not expensive, but will make a significant impact when done in conjunction with one another.

For your front and back yard we are going to mostly keep it simple.   Step one is to make sure your yard and beds are weed free and create cleanly defined lines between your grass and beds.  Cleanly defined lines make keeping your yard maintained much easier and are pleasing to the eye.  With your budget let’s go with the metal edging to help create those boundaries and keep your costs down, but make sure when you do it to edge nicely along the grass for a clean line. Also remember to create a clean edge around your walk ways and sidewalks.  Next, make sure to put down good weed barrier and add new rock to your beds to freshen it up.  You may have to remove what is there to lay down new weed barrier, but it is likely you can recycle the medium you remove and just add new to it.  Again, let’s go for the clean look, but go cost effective by using a small (1/2 – ¾ inch) river rock or some type of mulch.  This will look great and keep your costs down.  Next, add some pops of color to your flower beds or by using potted planters around your front door and walk ways.  Most homes lack good color in the yard and that is a mistake.  Color is what makes the world go round and using it wisely can really help make your yard stand out. 

If you don’t have many/any trees, don’t be afraid to do a little budget splurging on slightly larger trees.  I believe spending a bit more on a larger tree (15 gallon size) can help give your yard some dimension and you don’t have to wait as long to see some results.  Trees can also be great to help hide or obscure something that you don’t want to see.  They can be very good screens to create privacy. 

“Lastly, try to keep aside $2,000 (of your allotted $5k) to create something special.”

Lastly, try to keep aside $2,000 (of your allotted $5k) to create something special.  Creating an outdoor living or entertaining area is the “wow” factor you need to really take it to the next level.  It DOES NOT have to be expensive.  It can be a small flagstone or paver patio with fire pit or small water feature.   You could build a small raised party deck with some nice lighting that extends your patio and creates some back yard magic!   Don’t be afraid to get creative and use resources like Pintrest or Houzz.com to find cool outdoor patio or entertaining area ideas. 

Have a blast with it and send me a picture of before and after!  Hope this helps and it turns out great.

Dave Kimbrough - The Kimbrough Team

Have questions? Call us at 263-7355

How Our Economy Affects Real Estate in Grand Junction

Dave,

We have been pondering for some time the local economy and how it relates to real estate.  When we are driving around town it appears as though there are a lot of new homes being built.  I am a golfer and recently played a round at Redlands Mesa and was amazed at all the homes that are being built along the golf course.  We have been under the impression that the local economy was not doing very well, but with the number of new homes we see being built we are starting to reconsider.  I am curious why there appears to be such a disconnect between the apparent struggling economy and building? Is the local economy doing better than we thought?

Ben and Darla, Grand Junction

 

Ben and Darla,

Excellent question and not one that I am certain I can fully answer.   The dynamics involved are complicated and I am not completely sure I can adequately provide a fully factual answer, but I will do my best!   

The Redlands Mesa phenomenon is truly amazing, but not entirely unexpected.  Redlands Mesa has undergone a transformation that has seen lot prices decrease from values only available to the wealthy to values that are now attainable to the middle and upper middle class.  This has been crucial to the revitalization of that area as there is now some stratification in the pricing structure and opened the door to a much larger buyer pool and this has greatly encouraged building.  They have truly done a wonderful job partnering with quality local builders and really opening up the opportunity for people to build an “affordable” dream home nestled up against one of the best golf courses in America.

Forbes Magazine - 2015

Grand Junction At a Glance 

  • Metro Population: 148,600
  • Major Industries: Energy, Agriculture, Tourism
  • Gross Metro Product: $6.9 B
  • Median Household Income: $47,802
  • Median Home Price: $193,700
  • Unemployment: 5.1%
  • Job Growth (2014): 2.2%
  • Cost of Living: 8.9% below nat'l avg
  • College Attainment: 27.6%
  • Net Migration (2014): 260

Forbes List

See Full Stats Here

The number of building permits issued in the first quarter of 2016 is virtually the same as the number issued in the first quarter of 2015 and, in my opinion, construction is happening at a healthy pace.  To offer some perspective, the building permits issued in the first quarter of 2016 is 78% less than the number of building permits issued in the first quarter of 2007!  That is an amazing stat and unless we start to see more lot development the number of building permits will go down over the next several years.  In my opinion we are a couple years away from a lot shortage and if that comes to fruition another vital part of our local economy could fall on difficult times.  I don’t think there is a disconnect between the number of homes being built and the health of our local economy - actually I believe they are in stride with each other.

I am by no means an economic genius.  In fact, I failed Econ 101 my first year in college!  However, by my observation, our local economy is just treading water.  There are jobs being created, but these jobs are not high paying and these jobs do not provide a ton of upward mobility.  When workers move from one job to another, they are largely making lateral moves.  The good news is, there are jobs and unemployment numbers are still grinding downward, however, many people are under-employed and not reaching their full earning potential.  This kind of job climate helps fuel the home purchases under $300,000 and 83% of our housing market and new construction is happening in the price ranges under $300,000. (Q1 2016)  By my estimation, our local economy is not good and it is not bad….it is somewhere in between and honestly, I am thankful it is as good as it is.  Until we have more upper end job creation, our local economy will continue to be locked in neutral with some niche segments doing better than others, but overall job and economic growth will remain limited.  I hope this makes some sense and remember, it is just one man’s opinion.

By the way, Happy Mother’s Day to all the Mom’s!  Moms are the heart of every family and often times the unheralded glue!  Take time to call your Mom today and thank her for putting up with you, your siblings and your Dad!  Without our Moms, none of us would be here, so we should all be VERY thankful! 

Dave Kimbrough

The Kimbrough Team

Grand Junction, Colorado's Top Real Estate Team