Tips for Downsizing Your Home

Dave,

We have been living in Grand Junction for nearly 12 years and when we moved here we had our 3 children living at home and our lifestyle required much more space, inside and out, then it does now that they have moved out. We are in our late 50s and have a large home on several acres and we need to downsize our home and land, as it has become way too much for us to keep up with. First, is this a good market to down size in? Second, we are struggling with where to begin. We have so much stuff that has accumulated over the years that the process is very daunting. Any words of wisdom you could offer would be greatly appreciated.

Thanks.

William and Barb, Grand Junction    


William and Barb,

Downsizing can be a very daunting task that can seem overwhelming as you sit and look at everything that has to be done. I would suggest to create a game plan and timeline for making your move. Break it down and put a realistic timeline on the items that need to be completed and then mark them off as you get them done. This timeline will help make the process not appear so daunting and will give you steps to complete and when you complete them. This will also allow you to see your progress as you mark off the tasks and this will serve as mini rewards as you mark of each step. That being said, it still can be quite overwhelming. Hang in there!

My view on timing, when you buy and sell in the same market, then all things are relative. When your home goes down 10%, so does you neighbor and visa versa.  There is no doubt that 10% of $400,000 is more than 10% of $200,000 and this is probably where you have heard the side of the story that it is a great time to move up, but not necessarily a great time to move down. The question you must ask yourself, how long will it take for the market to come back up? And am I willing to keep slaving away on the large house and land or am I willing to cut ties and make a serious lifestyle change? A quality of lifestyle change is typically worth the trade off of waiting for your property to come up in value, but only you can make that decision. After you have decided if the time is right, the next steps are the one’s that can take the wind out of your sails.

First, assess your current and future space needs. Walk through your home and ask yourself questions about all your belongings. Do you use your exercise equipment? How often do we eat at the dining room table? How many times have we used the sitting room in the past year? If you have a collection of 300 books, do you really need to collect them? Or better yet, are you going to read them again anytime soon? Same can be said for movies, etc... Many times, much of what we have accumulated is kept for those “just in case” moments. "Just in case” moments can lead to a never ending amount of clutter that needs to be thinned out, because “just in case” moments do not come around very often. We keep things around "just in case", or hoping that their presence will eventually encourage us to use them. For the items you really have a hard time getting rid of, make an agreement with yourself and put the items in storage. If you don't need or use them within 6 months, give, sell or throw them away. I bet you find that most of your stuff you do not need. That is when you will realize your space requirements may be much smaller than you originally thought.

Go out on a home viewing tour and establish if there are homes currently on the market that will meet your new “downsized” needs and living requirements.

After you have downsized the amount of stuff you have or have a good grasp on what stays and what will go, you need to start looking at replacement homes. Go out on a home viewing tour and establish if there are homes currently on the market that will meet your new “downsized” needs and living requirements. A good rule of thumb, we use, is to go out and view homes and if you can find two or more homes that you would be happy with, then it is reasonable to anticipate you can find a home you will love, once your home goes under contract.

Remember, control the things you can control and try not to eat the cow in one bite! You need to pace yourself and making a game plan with realistic goals will help set you up to succeed and make the process as enjoyable as it can be. I will also warn you, once you start getting rid of your unused stuff, it can be addictive and fun. Have fun with it so you can look back on it as a rewarding experience and setting up goals and crossing them off leads to a positive outcome! Hope this helps.

Dave Kimbrough
The Kimbrough Team

Most valuable upgrades in new construction homes?

Dave,

My husband and I are buying a new construction home and are very excited to build a house we love. We’ve decided on our lot and are about to meet with our builder to decide on some major aspects of the home. Our question for you is what upgrades should we go for? What holds the most value?  High end finishes vs larger square footage?  I’m sure our builder will also have an opinion, but we’d love to hear what you think as well!

Thanks,
Becca, Grand Junction


Becca,

new-construction-home

Great question! There are many aspects to look at when deciding what lot to choose and which floor plan will best fit your family. Remember to start with the basics and work from there. By basics I mean start with which floor plan will work best. 

When choosing a floor plan remember to stick with a few common features that will help retain and increase future value. Some simple things that I believe are here to stay are floor plans with a great room concept design and feature raised or vaulted ceilings, split bedroom concept (master bedroom on one side and secondary bedrooms on the other side of the house), large kitchens, luxury master baths and a 3 car garage. If you are lucky enough to incorporate all these into your floor plan, consider yourself blessed! If you can’t get them all, you will need to prioritize which of these features are most important for your family. Also remember that today’s open concept floor plans live larger than their square foot size so don’t be surprised if a smaller plan lives larger than its actual size. If you are able to find a smaller plan that lives large you can use some of the savings and splurge a little on your finishes. After you have chosen your floor plan, stick with more basics by focusing on how to best position your home on the lot.

Keep in mind that you will boost your long term value if you position your home on the lot leaving maximum space along the garage side to be used for RV parking.

If you have options of how to best position your home on the lot you will want to focus on how to maximize back yard, privacy and RV parking. Keep in mind that you will boost your long term value if you position your home on the lot leaving maximum space along the garage side to be used for RV parking. This is an easy one to miss, but if the lot allows enough room to make RV parking make sure you take advantage of it, as it can be a make or break feature for some buyers. Lots are getting smaller and pushing your home forward on the lot can help create a few more feet in the back yard and even a few feet can make a big difference.  After you have conquered the basics of the lot and floor plan, focus on the finishes!

new-construction-home-2

Picking the finishes for your home is the fun part and this is where you will give your home some personality. When you start picking finishes ask yourself how long you are planning on living there? If you plan on this being your long-term home then you might pick finishes that focus more on what you want and less on what will prove easier to sell when the time comes. If you are planning on being there a few years and then moving up or potentially moving out then you might stick closer to a conservative middle ground than on the edge of new trends! Timeless finishes are wood and tile floors, granite counter tops, neutral carpet and wall colors (maybe with a splash of color on an accent wall). Hard to go wrong with any of these and they are all for maintaining and enhancing future home value. Most importantly have fun with the process and choose things that you love!

Lastly, for all the Mom’s out there enjoy your day! For every person reading this column, take time to thank your mom for all she has done. Remember, without her you would not be here! Happy Mothers Day!!

Dave Kimbrough
The Kimbrough Team

Who gets to keep the earnest money?

Dave,

My neighbor’s home recently was under contract and was supposed to close last week, but we found out it didn’t. Apparently about a week before closing they were notified by their real estate agent that the house did not appraise for the price they were under contract for. The buyers were not willing to obtain another mortgage company or get another appraisal, even if our neighbor paid for the new appraisal. We were really surprised, and so was our neighbor, to find out that the buyer did not even have to forfeit the earnest money. I thought that if the buyer did not close, they would lose their earnest money? If the buyer does not close and they still get their earnest money back, why do you even have earnest money in a contract?

Thanks Dave,
Tom, Grand Junction


Tom,

The story you described happens more often than you would think and the “what happened to the earnest money?” question is almost always certain to follow! Unfortunately the “what happened to the earnest money?” answer is always very disappointing to the seller and it typically comes as a big surprise that not only will they not be keeping it, but it is going to be returned to the buyer. Sellers beware, in Colorado earnest money does not mean what you think it means. I think you pose a great question, “Why do we even have earnest money?”

Earnest money is basically considered good faith money that the buyer typically provides to the seller when they present a contract to purchase.

Earnest money is basically considered good faith money that the buyer typically provides to the seller when they present a contract to purchase. If the buyer and seller come to agreeable terms on a contract, then the earnest money should be held by either the real estate brokerage or a title company until the time of closing. When things go smoothly (most of the time) this earnest money is used as part of the buyer’s funds to purchase at the time of close. It’s when things don’t go smoothly…they can get complicated in a hurry! Let me make one thing clear about earnest money and Colorado real estate contracts, and as far as I am concerned it is a good rule of thumb to use, unless the buyer’s actions are egregious and ALL of the contingency dates and deadlines in the contract have passed the buyer will almost ALWAYS receive the earnest money back!

earnestmoney

Colorado real estate contracts are written with the primary premise to protect the buyer and provide the buyer ample opportunities to figure out exactly what it is they are buying and exactly how they are going to obtain the funds for their purchase. Buyers generally place a contract on a home that they love. They imagine raising their family there, having weddings, prom nights, Thanksgiving dinners and Christmas mornings under the tree in their new home. Buyers typically place contracts on homes they love and when it does not work out they are also very disappointed. Also, keep in mind that when things don’t work out, it is not typically by fault of the buyer or really anyone’s fault. There are many moving parts to any real estate transaction, especially those that involve a loan, and there are plenty of opportunities to hit a “snag” and sometimes those “snags” are too much to overcome.  

The moral of the story here is to not be surprised, as a seller, when you do not get to keep the earnest money if your transaction does not see the closing table. About the only time a seller will receive the earnest money is when ALL of the dates and deadlines have passed on the contract and the only date remaining is the closing date. If the buyers back out after all dates have passed, then that is when they will likely lose their earnest money! Here is hoping that you never have to have to ask the question, “who gets to keep the earnest money?” but if you do at least now you will know the answer before you ask!

Dave Kimbrough
The Kimbrough Team

Can a seller still back out after we agree to his counter offer?

Dave,

We recently made an offer on a house and the seller sent us a counter offer that we agreed to, but then we received word that he had changed his mind and was going to sell the home to another buyer. We feel like he made a deal and he should have stuck to his word and had to sell it to us. We feel we lost out on the perfect home and we are now struggling to get in the mood to find another home. We have lost our oomph.

Dale & Nicole, Grand Junction


Dale and Nicole,

country-house

No doubt you are feeling “wronged” by this sellers actions, but it may have well been within his rights to not sell you the house, even after a counter offer was given. When the seller made you the counter offer, I am assuming, that it was in writing. A seller has the option to withdraw a counter-offer any time prior to your “accepting” the counter offer in writing and delivering it to the seller's agent. If your acceptance was in writing prior to the counter-offer being withdrawn and was delivered to the seller agent, then you would have a binding contract on both parties. If this was the case the seller should honor the contract and in the state of Colorado, close the transaction with you as long as you abide by the dates and deadlines of the agreed upon contract.

If any part of this offer/counter-offer process was done verbally, then you would have some significant gray area. Verbal offers and counter-offers are often used by agents throughout the process of negotiations, but when doing this you open the door to many, much more significant issues and misunderstandings that often times lead to problems. If you only accepted verbally or the counter offer was made verbally, then I would say that you do not have much of a case. Without written and signed contracts, enforcement becomes a larger issue and inevitably it comes down to he said/she said. You would need to weigh the cost/benefit of attempting to hold the seller to a verbal commitment and I believe that would be very difficult to achieve.

Things do not always work out the way we think they should and often times in negotiations people change their mind on an ongoing basis, I see it every day. 

Things do not always work out the way we think they should and often times in negotiations people change their mind on an ongoing basis, I see it every day.  The best rule of thumb is to do everything in writing and be prepared to respond promptly and make sure you respond in writing. Communication is difficult, even under the best circumstances, this is part of the reason why we have contracts and we do our best to make sure all negotiations are done on paper. Contracts should spell out the terms and conditions and remove interpretation or changes of mind from the equation.

Please remember this is not legal advice and I always recommend you speak to an attorney and see if you have any legal grounds for recourse, he/she will be able to steer you in the right direction. Don’t lose hope because of this set back, doors open and doors close and maybe an even more perfect home is right around the corner. Keep the faith.

Dave Kimbrough
The Kimbrough Team

What exactly is title work?

title-work

Dear Dave,

We are in the process of selling our home and will be purchasing a new one. Right after we listed our property for sale, we received title work from our agent on our home. Can you explain what exactly title work is? We were told that we need to review it, but what should we be looking for on the property we are selling? When we purchase, what should we look for on the title work for the new property – anything different we should look for or the same stuff? Thank you for your help.

Dennis, Grand Junction


Dennis,

This really is a great question and a part of the buy/sell process that is far too often glossed over. It is glossed over, because most of the time people and agents do not know how to answer your question thoroughly and with command of the specifics of what you are looking for. I am very lucky to work closely with Bob Reece, President of Advanced Title, who is one of the very best real estate experts I know and knows title work inside and out! I have relayed your question to Bob, to ensure you get the best possible explanation!

"Title work" is really the title commitment and the documents that are referenced in the title commitment such as protective covenants. The commitment outlines the current status of title interests in the property such as the name of the owner(s), any lender and other interests such as easements holders, and the commitment gives sellers and buyers the opportunity to review the title to the property before the closing occurs. The seller should compare the deed with which they acquired ownership to the property with their name(s) as it appears on the title commitment to make sure it is the same. A similar comparison for the legal description is essential. The third area of the commitment are the Exceptions to Coverage that lists various protective covenants, easements, agreements, reservations, etc. that affect the property. These items should compare favorably to the exceptions that appeared in the title policy that was issued when the seller originally acquired the property. And, by example, any easements granted by the seller should also appear as an Exception to Coverage on the title commitment. Any discrepancies found by the seller should be disclosed to his real estate agent as soon as possible and prior to closing so a buyer becomes fully aware of the matters that affect the property being purchased.

A buyer would be wise to review a title commitment in similar fashion; to make sure their names properly appear on the title commitment as found under the real estate contract and on any lender application; that the legal description matches the one found on the seller's acquisition deed; and to review the documents referenced as Exceptions to Coverage to make sure they understand any obligations, restrictions to usage or third-party rights that affect the property about to be purchased.

Your rights and the rights of others should be spelled out in your title work and thus leave few things, hopefully, to chance.

As Bob intimates, your title review is a very important part of the process, as it lays out virtually everything you need to know about your property and the property you are going to purchase. Your rights and the rights of others should be spelled out in your title work and thus leave few things, hopefully, to chance.  It is always sound advice to ask questions about ANYTHING you do not understand.

I hope this helps and remember if there are any discrepancies make sure to bring them to the attention of your agent or the title company that has provided the title information so they can be addressed and remedied if need be. Best of luck selling and buying!

Dave Kimbrough
The Kimbrough Team

Home updates with the best resale value

FloorandPaint

Dave,

We are considering selling our house in a few months and have done some research online about what home updates will get you the best return when selling. There are mixed opinions in the articles we’ve read. We don’t want to pour money into updating a part of our house that will not increase our home’s value—especially since we won’t live here any longer to enjoy it.

What home updates do you suggest to your clients when they are getting ready to sell their house? Do we need to consider big projects or will small things—like painting—make a difference?

Becky, Fruita


Becky,

Super great question! It is one of the most frequent questions I get and the reason I spend at least one column per year addressing which home improvements provide the biggest bang for the buck. After all, who wants to do upgrades that don’t pay off? NOBODY, but you must remember that not all upgrades or home improvements are created equal! Listen, if you spend big money on a cigar room, wine tasting enclave, commercial kitchen or home dance studio you can’t blame anyone but yourself when your return on investment is non-existent. Spending too much on over personalized upgrades will never pay off a big return, if any at all. However there are home improvements that do provide a great return on investment.

The two home improvements that will generally create the largest bang for the buck return and are always the first two I discuss with people are flooring and paint!
Flooring

The two home improvements that will generally create the largest bang for the buck return and are always the first two I discuss with people are flooring and paint! In my experience, over 15 years and literally thousands of homes, buyers have the most positive reactions over flooring and paint and the reaction is universal to price range. It does not matter what price point you are talking about, buyers love the smell of new carpet and new paint and remember buying a home involves all the senses and smell is a very influential one. For example, and heaven forbid, you have blue, sage or mauve carpet your return on investment will be over 100%! If you have 4 bedrooms and each one has been painted a different color of the rainbow, your return on investment will be over 100%. These are easy improvements to make a decision on. Do not procrastinate that kind of improvement, just do it and you will be glad you did. 

kitchenupdate

There are also other easy and cost effective home improvements. Next to flooring and paint, new light fixtures, plumbing fixtures, doors, door knobs and hinges also provide a great return on investment. In the grand scheme of things all these improvements are also quite cost effective and will not break the bank, however they will provide great return on investment. If you have a 70/80’s vintage home and have the old dark stained wood doors, replace them with white 6 panel doors (around $100 each at Home Depot) and behold the transformation! Give that dark dingy hallway a bright and light feel! While you are at it, remove the brass door knobs and brass hinges and take it a step further. Same goes with light and plumbing fixtures, costs are not huge and the rewards are awesome.  Lastly, don’t neglect the outside of your home. Outside home improvements are also cost effective and provide a great return on investment.

If you want all the latest and greatest on home remodels and improvements go to Remodeling.com and their cost vs. value report for 2016 and get the skinny on all things home remodel and how much you can expect to get back on your investment. This is a great resource that also breaks things down regionally so you can see what is most important in our neck of the woods. Hope this helps and best of luck on your home's facelift.

Dave Kimbrough
The Kimbrough Team

Move the unpaid balance of one home loan over to the loan on a new home?

big-house

Dave,

When we moved here in 2007 and purchased our home for $243,000 and refinanced in 2008 for $276,000 and currently owe about $255,000. We think our home would sell in the neighborhood of $250,000, which leaves us with about a $20,000 short fall, when we factor in the costs to sell. We are not in financial distress, but would really like to move to a larger home that would better accommodate our family. 

We have saved up enough money for our down payment on the new home and were planning to have the amount we were short on the sale of our home transferred over to our new home. We have been told we can’t do that and must have the money to cover the amount we are short at the time of closing. We do not have the extra money available to cover the loss and would like to move that over to our new home, as we can afford the higher monthly payments. Is this possible? Or are we just stuck where we are? We do not want to wait to move into another home if there are any alternatives. 

Thanks.

Danny and Colleen, Grand Junction


Danny and Colleen,

It does appear that you may be stuck. It is true that you can’t just move the unpaid balance of one home loan over to the loan on a new home. Your loan needs be settled at close, so the lien can be released to allow transfer of title over to the new owner. It does seem that it would make sense, since you can afford the monthly payments, to allow a reasonable amount to transfer over, but that is just not the case, your current mortgage must be paid off in full and released at close.

There may be other options. If you have any other tangible assets that can be used to collateralize the short fall, that may be an option. If you have any other property that has an equity position, you may be able to look at refinancing and pulling some of that equity out to cover the short fall on your home and get your short fall covered. Another option is looking into your retirement portfolio. If you have a 401k, you may be able to borrow from yourself and then pay yourself back with interest. In this case you can borrow the funds from your retirement account, look out to see if there are any penalties, and then pay yourself back over time and give yourself an option to get out of your existing home and make some money for retirement at the same time. 

If you are stuck, then I make the suggestion to ride it out and work on paying down your principle debt and as the market continues to improve, meaning prices are moving up, you are working to reduce your debt basis down and hopefully speed up the time table for moving out.

If you are stuck, then I make the suggestion to ride it out and work on paying down your principle debt and as the market continues to improve, meaning prices are moving up, you are working to reduce your debt basis down and hopefully speed up the time table for moving out. You can also spend that time making some improvements that are cost effective and will result in added value in an attempt to speed up your homes appreciation as compared to the general market. The biggest mistake I see in cases like this are people just loose hope and let their property start to slide in appearance and upkeep and it has the opposite effect of what I am pointing out. Making modest and cost effective improvements can help bolster your eventual selling price and if you work on reducing your principle debt, you may be able to move faster than you thought possible. You just need to be determined and don’t get side tracked with what you can’t do and focus on what you can do and create a plan to get out of your current undesired situation.

Don’t get discouraged, get determined and make a plan to get your debt down and bolster your value and you might get in that new home sooner than you thought possible. Hope this helps, but sorry I did not have a more immediate and timely solution. Best of luck.

Dave Kimbrough
The Kimbrough Team

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Houses in our $225k price range are moving so fast! What can we do?

cute-house

Dave,

We are currently looking for a new house here in the Grand Valley. Our budget is around $225,000 and it seems like every time we find a house we want to see, it’s under contract before we can even schedule a showing! We just got our house under contract and are feeling the pressure to find something new pretty quickly. What’s the deal with houses in our price range moving so fast? Do you have any advice on what we can do to find something we like before it goes under contract?

Thank you so much for your help!!
Mackenzie & John, Grand Junction


Mackenzie & John,

Wow! Your observations are absolutely correct! The segment of the market that you are searching in is moving at a very brisk pace and the competition can be fierce! I had a property that I put on the market this week and had 3 offers on the first day and the winning bid was significantly over our asking price. I sure did not see that coming! However, situations like this are happening with more and more regularity so as a buyer, you must be ready and willing to put your best foot forward right out of the gate. Don’t be afraid to compete!

These are several techniques to help you up your game in this increasingly more competitive real estate market. 

There ARE some simple things that you can do to help move your offer up in the pecking order when the offers are presented to the seller!

  1. Be willing to offer more than asking price! I have seen many an offer lost over $500 or $1000. If you really want the property and there are multiple offers, go 1-2% over asking price and watch your chances soar! If the home is $225k, offer $229k and my bet is you get it.
     
  2. Offer more earnest money than what the seller is requesting. Earnest money is often times an overlooked negotiating tool that absolutely DOES mean something to a seller and can tip the scales if the offer prices are similar.
     
  3. Be flexible with the closing and possession date. This will show the seller that you are willing to work with them and make the transition fit their needs.
     
  4. Be willing to cover your own or at least part of your own closing costs. Over 80% of the offers we see contain seller paid closing costs. Eliminating these closing costs indicates to a seller that you are a stronger buyer. After 15 years and thousands of contracts negotiated, it is a fact that most sellers don’t like paying the buyers' closing costs.
     
  5. Do not ask for personal property or things that the seller is not offering as inclusions with the property. If they have not included the nice new looking refrigerator, don’t ask for it. If you find their lawn furniture comfy don’t try to throw it in, go buy your own. I have yet to find a seller who looks upon request for personal property with a favorable eye.
     
  6. Be willing to waive your inspection contingency! If you do this, it will be clear to the seller that you are making a serious offer and have serious intent to purchase the home. This is a last resort move, however, it is a doozy if you have confidence that the property is in good condition.

These are several techniques to help you up your game in this increasingly more competitive real estate market. Notice that none of these are high dollar techniques or anything really fancy, but I promise they will make a difference and if you combine 2 or 3 of these in the same offer you will probably have an unbeatable combination. 

Remember sometimes it takes a little courage, faith and risk to get what you want so don’t let fear or hesitation hold you back from making things happen. When you craft your offer with your agent, look at it through the eyes of a seller, be willing to think outside of the box and create a win/win for both parties and I bet you have a new home in no time at all. I’ll bet the next time you submit an offer, it will be FUN! Good luck.

Dave Kimbrough
The Kimbrough Team

 

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