“By every measure, Tracy Shaffer is the dream broker, the best of the best. As it happened, at the time we were selling our town home, Tracy was going through a very difficult period in her personal life, but was able to put her needs aside to support ours and those of the buyer, representing both both sides of the table with intelligence and grace. Who could ask for anything (or anyone) more?” -Susan Viebrock, Telluride, CO
“Tracy Shaffer is the best! She is the best! We have bought and sold 4-5 times with her. She is professional, kind, super sharp, and on top of every detail. I trust her professionally and personally. No regrets ever. If you have a property to sell or are looking for one to buy, call her. She is an unbelievabye hard worker, absolutely professional, ethical, and fun to boot. We love her!” -Kelly Perez
You want to sell your house, right? And you’d like to do that quickly and for the most money possible, right? Here in Denver, where there is very low inventory and buyers compete for properties, our hot market won’t be kind to a seller who doesn’t have his act together. Buyers are savvy, patient, and will pay for what they find value in but they won’t plunk down their life savings for just any old thing. Avoid the following mistakes and you’re on the way to the next chapter of your life.
1. Clutter, Grime, and Odors. DEAL WITH IT.
Living in our homes, we get used to things and we like them that way. All the family photos and bowling trophies may be family treasures but to a buyer trying to imagine themselves at home, too much information is a turn-off. This includes the way your house smells and how clean it is. And I mean deep clean. If you’re already overwhelmed by the thought of moving, it’s worth it to hire someone to come in and clean. Corners, cupboards, ovens, showers, grout, even windowsills are sometimes neglected in our daily routine. We have what I call an ‘acceptable level of mess’, which is different for each of us. If a very qualified buyer, Miss White Glove, falls in love with your kitchen but is repulsed by the grease under the vent hood, she’ll do one of two things: get over it, or get on to the next showing. Buyers can overlook if your home isn’t “Pottery Barn Perfect” or you have some minor (or major) renovations, they may even feel drawn to take those on. But there’s no reason it can’t be clean.
2. Seller is Home During Showings. TAKE A HIKE.
I know you’re busy and these showings are putting a cramp in your style. Plan for this and treat yourself to some time off. Go to the movies, spend the day with friends or head up to the mountains for a hike (or a weekend). It is inconvenient, keeping the house clean, doing laundry at midnight and emptying the cat box twice a day, but you’ve got to give yourself the best opportunity to sell. Tempting as it is to stay and chat with potential buyers about the many wonderful features of your home, it is not a good idea. Your buyer needs the time and space to fall in love with your home and that won’t happen with you lurking around. If you happen to run into one another, smile and make a quiet, hasty retreat. Let the real estate agent show your home and don’t answer any questions. The Colorado listing agreement states that all negotiation shall be done through the agent and there’s a good reason for this. Oversharing can weaken your bargaining power. So zip it, flip the lights on, put the toilet seats down and take a stroll.
3. Failing to Complete Disclosures. CAVEAT EMPTOR, BABY!
Being upfront about any issues with your home will save you time, money and face. You may not want to mention the time the firetrucks showed up or the time you flooded the basement by running the bath while vacuuming, but if you don’t… Mrs. Kravitz will. Disclosures provide security for both the buyer and seller; both want to feel good about the deal. If you don’t disclose information, chances are it will come up on the Inspection Report, breaking trust between parties and tainting the transaction. There’s nothing worse than having the buyer’s agent call me about an issue that should have been disclosed or having a buyer call me after closing to tell me what the neighbor said about her new dream house. Lack of disclosure plants doubt in the buyer’s minds and complicates negotiations if they feel they’re not being dealt with fairly. Better to just lay your cards on the table from the start.
4. Refusing to Negotiate. MAKE THEM AN OFFER THEY CAN’T REFUSE
The real estate transaction is complex. It is both a business deal and a human transaction; emotional, potentially stressful, full of moving parts. A great Realtor should not only be adept at negotiating; it should be her strong suit. But an agent can only do as their client directs. I advise mine to keep calm, to stay open, and understand that both parties want to feel they’ve won even if it stings a little. The price you ask and the price they offer are not as important as the one we can agree on. Negotiation doesn’t stop when you both sign the contract, it continues for the entire process. Resolving inspection issues, dates and deadlines that may need to be moved, surveys, appraisals- these may need tweaking, rarely do they need arm twisting.
5. Overpricing the Home. WHERE’S THAT OFFER I CAN’T REFUSE?
Selling a home is a business transaction (didn’t I just say that?), but a home is also an emotional commodity. Unlike a product, a hamburger for example, you cannot just slap a $20 price tag on it and call it good. Commodities markets are driven by supply and demand; your house is worth what a buyer is willing to pay for it. Though buyers and sellers have different emotional attachments to homes, they also have different financial ones. What you may attribute as valuable, your buyer may not hold sacred. Pricing a home is more art than science—data driven art. The location, home’s condition, and comparable sold properties determine current market value. Your Realtor will provide you with the data you need to determine the best price for your home to sell in the least amount of time.
6. Limiting Market Exposure. BUT WAIT, THERE’S MORE!
During the housing crisis, Realtors were working hard to sell homes as sellers waited nervously, hoping to avoid making another mortgage payment. To many sellers we weren’t working hard enough. Now that the Denver real estate market is high again, the perception is that we just slap a “For Sale” sign in the front yard, place an ad in the real estate section of the local newspaper and wait for throngs of buyers to beat a path to the door. My job is the same no matter what the market, it’s the timeline that changes. There iFulls a strategy to getting a home in front of as many buyers as possible for maximum exposure and most of that is online. Open houses, direct mail marketing, virtual tours, MLS input, agent networks and social media are some of the things real estate agents use to sell your home quickly. Given most of us have the same toolbox (and there are more), you want to make sure your agent knows how to use them and select which would be the best for your specific property. Ask questions when you interview a Realtor: who do they think is your buyer? What do they think is the best way to catch their attention? What kind of agent network and/or social media presence do they have? Are they set up for mobile platforms? How are they different from any other agent?
I’m happy to answer these questions for potential clients, it gives me a chance to show off 😉
The last seven years have seen a surge in the metro Denver real estate market as record numbers of buyers look for homes, which in turn has caused prices to jump. The strength in the market has been so pronounced that people are beginning to ask “Are we in another bubble?” It’s a reasonable question given the horrendous experience of the housing crisis, and while no one can ever predict the future with certainty, I see no evidence that we’re heading for a dramatic downturn in the real estate market any time soon. Here’s why:
1. Even with the continued increase in metro Denver home prices (up another 8 percent in the past 12 months) the average inflation adjusted PITI (Principle, Interest, Taxes, and Insurance) payment made in metro Denver is actually BELOW our 35-year average. This means that while prices have steadily risen, buyers are still able to afford their monthly payments, providing plenty of room for continued home price increases.
2. The number of transactions relative to the population of metro Denver is just about at the 25-year average. At the peak of the bubble in 2006 the number of home sales was about 20 percent above the historical average. When we see the number of closed transactions well above our historical average that’s an indication of an overheated market, as it was in 2006. The number of closed home sales is actually DOWN 12 percent in the past year due to the low inventory. No sign of a bubble here.
3. In 2006, many of the deals were closed with low or no documentation mortgages (“liar loans” or “no doc loans”). Today, mortgage underwriting standards are among the toughest they’ve been in decades. This prevents unqualified buyers from purchasing property, which mitigates the chance of the market overheating (fewer buyers means fewer purchases means less chance of the market frothing into bubble territory like it did in the past).
4. Because of relatively high home affordability it’s a lot cheaper to buy than rent in our market. This would not be true in a bubble. For housing price affordability to return to the average level that we saw in the years between 2000 and 2004 either home prices would have to increase an additional 35 percent or interest rates rise to 6.6 percent. Neither is going to happen any time soon.
5. The imbalance between buyers and sellers we’ve seen recently in our housing market (too many buyers/not enough homes for sale) is due to a lack of inventory, not illogical/unrealistic/unsustainable demand from buyers. “Much of the price increases we are seeing are the result of rising demand among investors and homebuyers for a still-limited supply of homes for sale,” said Anand Nallathambi, president and CEO of CoreLogic. This imbalance is a logical correction from years past when we had too FEW buyers in the market. This is how markets are supposed to work, always regressing to the mean over time.
6. Rising mortgage rates will help to temper the possibility of a bubble as well (they are still near 50-year lows but are expected to rise someday). “History shows that a rapid rise in interest rates tends to have little correlation with home prices. Rather, rising rates are more likely to contribute to a decrease in home purchase volume,” wrote Mark Palim in a Fannie Mae commentary. So the positive side of a rise in mortgage rates is that it will reduce the number of buyers and therefore lower the chance the market will rise out of control and end up collapsing in a bubble.
Click on the monthly market snapshot, the inventory of metro Denver homes for sale continues to fall; it’s down another 5 percent from a year ago. Since the inventory is still extremely low (about 5,520 homes on the market where about 18,000 is a balanced market) I am all but certain the demand will still exceed the supply for the next several years and prices will continue to rise for the foreseeable future. No bubble on the horizon yet… Stay tuned!
If you agree that we’re not headed for a bubble any time soon what does this mean for you as a buyer? I think it means you should consider buying a home IF it makes sense for you to do so. Are you running out of room at home? Expecting a baby? Have an awful commute? Want to live in a nicer neighborhood? Looking for a better school district for the kids? There are a lot of great reasons to move. But don’t buy a home to speculate on the market; buy because it’s time for a new home. Call me anytime to discuss what your options are and how I can help you find a wonderful place to live.
We have been discussing the incredible strength in our housing market. If you’re looking to sell your home this should be very welcoming news! The inventory of homes on the market is at an all-time low and prices are up. Call me and I’ll be happy to run a complimentary Comparative Market Analysis on your home to let you know what it might be worth. It’s great information and costs you nothing.
The most recent “Metro Denver Area Residential Rent and Vacancy Survey” shows the great news continues for landlords. According to the report:
“The overall vacancy rate for the metro area for the fourth quarter of 2015 was 3.1 compared to 3.9 percent for the previous quarter, and 1.5 percent for the fourth quarter of 2014. It was 2.0 percent in the fourth quarter of 2013, 1.7 percent for the fourth quarter of 2012, 2.1 percent for the fourth quarter of 2011, 2.0 for the fourth quarter of 2010, 5.5 for the fourth quarter of 2009, and 4.9 percent for the fourth quarter of 2008.”
In the U.S., more millionaires owe their wealth to real estate investments than any other single source of income. Today’s market could not be better for long-term buy –and-hold investors. Call me to find out more.
Everybody loves Zillow. I love Zillow. I love how excited it gets buyers and sellers when they see a home they love or what a neighbor’s house is selling for; a useful tool in many ways, for better or worse, it empowers the consumer. I look at Zillow to see what my clients/potential clients are taking as accurate information… and then I do my homework. The #Denver #realestate market is moving so quickly that even agents and appraisers can have a hard time keeping up. Public record algorithms don’t have the ability to distinguish the differences in the quality of one property from the other, upgrades, location, or if there’s a crack house next door. Algorithms don’t call other agents to inquire about that “Coming Soon” sign or have the latest data on solds as it takes some time to record.
The Los Angeles Times recently published an article that lays it out quite clearly. Though a “Zestimate” can have a low margin of error, it can also be alarmingly high. Imagine a scenario where you’re meeting with your perspective agent thinking that your home is worth 26% more than what it will really sell for.
Sellers, armed with the Internet, often have an idea in their heads about their home’s value. When I pull comparable properties, show them what the list vs sold prices are and how many days on market it’s taken those homes to sell, they may find a different story. Sometimes the news is good, based upon my data, their home may be worth more than they think. Other times it can be a let down.
Buyers burn the midnight oil searching Zillow then send me a link to their dream home. When I hit the MLS at 7 a.m. most often I find that this dream home is under contract… or sold three months ago. If you’re looking to buy a home, I’ll send you to REColorado, the consumer website linked to the Denver Matrix MLS I use so we can work together efficiently. It’s updated throughout the day, has great home search capabilities and saves me time looking for your real home, not the one someone’s already moving in to.
All this to point out that you now have access to a lot of information about my business. A lot of it is helpful and a whole lot of fun, but none is as accurate as hiring a professional; one who specializes in finding the right home in the right neighborhood that suits your needs. If you’d like an “Exact-i-mate” about what your home might sell for in today’s Denver market, give me a call I’d be glad to sit down with you and show you your market value and why.
As the clock ticks toward year’s end, it’s time to review the 2015 real estate market.
When someone asks me how the real estate market is, the cocktail party answer is that it’s been a very pleasing 12 months and future looks bright and shiny. Because the economic news is good our Denver Metro real estate market is projected to stay strong but not overheat. I’ll share some of the metrics I use to evaluate the market and understand it better, describing what 2015 looked like and where I think we’re headed.
Market strength–2015 was an extremely strong seller’s market. The market strength peaked in the spring when the bottom dropped out of our inventory and multiple offers were all the rage. Frustrating for buyers who felt they had to give away so much to stay competitive, the good news is that the market reacted appropriately and became more balanced as the year progressed. With prices on the rise, sellers were motivated to sell as we approached the fall so the market cooled with the start of school and the weather. It is still a strong seller’s market, but far more in balance. I expect 2016 to continue along this line and see no sign of a major imbalance that could lead to any sort of ugly peak and crash. Sellers should get a good price for their homes and replacement properties should not be as hard to find.
Buyers– Real estate website Trulia says that buying an average home in Denver is a whopping 38 percent cheaper than renting a home! For the average home, the interest rate would have to skyrocket to 11 percent for renting to become cheaper than buying, meaning that it is currently MUCH more affordable to buy than to rent. Even with current prices and current rents, interest rates would have to nearly triple to make renting more affordable than owning. (Call me if you want to talk about this.)
Sellers-Can’t say this enough: the most important thing to prepare your home for sale is to get rid of clutter. This includes furniture. You may have learned to live with that cherished armchair stuffed into the corner but a professional stager will often times whisk away half of your furniture. The house looks so much bigger for it, leaving space for a buyer couple and their agent to tour the home without bumping into each other, and space for their imaginations to make it their own. You don’t have to go “Stager drastic” but take a hard look, be objective, and see what you can live without. Painting always pays for itself and statistics show that springing for a staging company is often a good investment.
Rental Vacancies– The rental market is stronger than it has ever been in metro Denver. The vacancy rate for 1- to 4-unit properties is an extremely low 2 percent. That’s a drop from the already 4.7% we’d been experiencing for the past few years. On top of this, rents are rising faster than ever, up 30% in the past three years. With rents equaling a mortgage payment, we’re seeing more renters making the decision to buy. Why live waiting for another rent increase, tough competition and another application process without building any equity? Many homeowners who lost their homes in the downturn and have been renting, are becoming eligible to purchase once again. This is great news for the market and will certainly lead to more sales in 2016, though the influx of buyers insures a continuing seller’s market.
Interest rates– No one knows exactly what interest rates will do in the future but my best guess is that they may rise a little in 2016, but only a little. Remember that the Federal Reserve has control over only short-term, not long-term interest rates. Even if the Fed raises rates, that doesn’t directly affect the 30-year home buyer interest rate you are concerned with. Long-term interest rates are affected by the bond market (as bond prices decrease, interest rates increase) which, frankly, is not predictable. Understand though that interest rates are at near 50-year lows so they are highly unlikely to fall any further. All we know for sure is that someday they will go up.
The Economy– No matter what you may hear in the months leading up to the election (places hands over ears), right now the metro Denver economy is very strong. This is fueling our terrific real estate market and the rising population of our city. The unemployment rate is extremely low, about 3.5 percent. Inflation will stay in the range of 1-2 percent, our population is rising at a rate of 50,000 people/year and consumer confidence continues to rise. Nothing can be better for the housing market than a strong and steady economy.
Mortgage -The single most important number for a home buyer is their FICO score. For good or bad, your FICO plays a major role in your ability to finance your home purchase. Your credit score is a snapshot taken by the three leading credit bureaus, TransUnion, Equifax and Experian, to help lenders determine what sort of credit risk you are. Your FICO is a number between 300 and 850 and is calculated by a complex algorithm assessing your past credit history. Most home lenders will consider a score over 700 to be excellent while scores below 600 are considered poor. The better the score the more credit will be extended, at better terms, with a lower interest rate. The best credit terms are extended to consumers with scores above 740. Therefore, it’s critical to understand what your FICO is and what you can do to improve your score. When I work with buyers I help them understand the factors affecting their score so they can work to improve them. I can’t think of a better investment in your future than to spend a little time working on your FICO score.
Here are a few tips I give my clients:
1.Don’t max out your cards, try to keep them under 50% of available credit. Running high balances can severely impact your FICO.
2.Continue paying your bills on time.
3.Don’t apply for new credit or cancel an old card because length of credit helps.
4.Pay down high balances.
5.Dispute and resolve any inaccurate items in your credit report.
6.Invest in a credit monitoring company to track the changes to your score.
I’m frequently asked where the real estate market is headed and when we will get back to some kind of equilibrium. The truth is it’s extremely difficult to accurately predict the future but here’s what I know: Right now we are experiencing one of the strongest seller’s markets in our history and we’re a full six and a half years into this market recovery. The reason is simple: we have much more demand for homes (buyers) than we have supply of homes (sellers). What’s fascinating to watch is the dynamic build on itself. It looks something like this:
1.Buyers make offers on homes and continue to lose out to higher offers.
2.Buyers get increasingly frustrated and begin to get more aggressive with their offers.
3.The momentum builds on itself until we see what is occurring today, with multiple offers on a propertythe norm rather than the exception.
4.The multiple offer dynamic almost always bids prices higher than the original asking price.
5.The buyers that lose the bid learn from the experience and become more aggressive on their next offer.
6.Then back to Step 1, until the buyer bids high enough on a property to finally get an offer accepted.
The result of course is the tremendously strong seller’s market we have experienced for the past several years. And this seller’s market is not going to change any time soon, at least not until we get back to some kind of balance in the market between buyers and sellers. I don’t see that happening for at least several more years. In the meantime, if you’ve thought about selling your home, now might be a great time to find out what the market is like in your neighborhood and see what your home is worth. It’s almost certainly worth more than it was just a few years ago. Drop me a line and I’ll put together a professional Competitive Market Analysis on your home so you have the data to make the right decision.
Another question my potential sellers often ask is if they sell today, can they find a replacement home in time to move? In a market like ours this is a very good question. Fortunately, there are a number of things savvy sellers can do to take advantage of the seller’s market and put themselves in a good position when looking for their replacement home.
Here are a few:
1.First and foremost, work with an experienced agent to write a strong, professional offer on the home you want to buy. In a dramatically competitive market like we have now, weak, poorly written, unprofessional, and bad offers just aren’t taken seriously. There is both an art and a science to writing a strong offer. Call me and I’ll explain more about how to write an offer that has a great chance of getting accepted.
2.Add a contingency clause to your contract to buy another home. The clause would say that you will close on the home you are purchasing once your own home sells. The problem with this is that it somewhat weakens your offer as many sellers don’t want to accept a contingency when they can sell quickly to the next buyer. But occasionally we do run across a seller that is in no hurry and is happy to wait for the buyer’s home to sell.
3.Lease the home you just sold from the buyer for a period of time while you are looking for your new home (this is called a lease back). Some buyers do not want or are not able to move into their new home immediately and this permits them to earn rent from you for the period of time you are shopping for your next purchase, a win-win situation. 4.Look into a new construction purchase. Builders are building as fast as they can in this market to keep up with demand and there may be inventory of completed or soon-to-be-completed homes that could suit you. 5.Arrange to stay with family or move into short-term rental housing until you find your next home. While not a perfect solution I believe it’s far better to inconvenience yourself for a short period of time than to settle for anything less than your dream home!
“Denver apartment rents rising three times the national average”
This was the Denver Business Journal’s Sept. 2 headline. Denver rents have increased another 7 percent in the past year, which is three times the national average of 2.3 percent. And given the continued lack of rental inventory, rents are expected to continue increasing at a strong pace. Sooooooo…. 1.If you’re a renter it might be time to consider looking into buying a home to get out of the rental market madness! 2.If you’ve ever thought about buying a rental as a long-term investment now might be the time to learn how to purchase a safe, cashflowing property. Interest rates are still near record lows and rents havenever been higher, a wonderful combination for any real estate investor.
Mortgage rates continue to hover at near-record lows. For homeowners looking to upgrade to a larger, better home, low rates combined with low home inventory are making this a great time to upgrade to a larger home with very nearly the same monthly payment. We have several recent examples of clients selling their current homes and getting into a $40,000 – $50,000 more expensive home with the exact same monthly payment. Please give me a call or send me and e-mail and I’ll do a free analysis to see if this might be a good scenario for you to take advantage of.
From Page 4
4. The Investor Real Estate Market: Denver is still a great place to invest in real estate. The fix and flip market is strong for those who can find underpriced homes to buy and repair. They’re out there but it takes tools, patience, and work to find them. Once you get one fixed up, selling is the easy part because of the lack of competing inventory. The buy and hold market will continue to be extremely profitable for long-term investors. Interest rates and vacancy rates are still near record lows and rents continue to rise – a record 10.8 percent per year the past three years. It’s not difficult to buy a rental property in today’s environment and put it on the path to be paid off in 12-15 years. Just think how your life would change if you owned a couple of rental properties free and clear! For building long-term wealth it’s tough to compete with rental property ownership. That’s the one thing that will never change. CLICK ON MAP TO ENLARGE
Need more info? Boy you are a real estate geek! (and I love it) CLICK LINK for the metrics from Matrix. 15-0705 DSF Data CITY – Copy
If you would like a personal real estate consultation, have any questions about the market, your home’s value or need more specific information about your neighborhood please give me a call.
Until next month… use your sunscreen!