With Publicly Available Price Data And Listings Online, Why Pay High Real Estate Commission Rates?

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Hi Dave,

When I started the process of selling my house on the front range, I could not find any agent who would reduce his/her commission in order to compete for my listing. They all demanded the same 6%. Now if I went into three different grocery stores, and all their different items were exactly the same price, then wouldn't I be justified in believing that some improper price-fixing was going on?

Instead, I listed my house with a "flat fee broker" for $300 who put it on the MLS. I still had to offer 3% to buyers' agents, but I thought this was fair, since buyers want the help and confidence from a broker who works exclusively for them. Ironically, the eventual buyer found my house on the public MLS listing without assistance from his buyer's agent!

Bottom line is that the transaction went thru flawlessly, I got my listing price, and I saved $7,000 by not needing an expensive commissioned listing agent. Why, with all the publicly available price data and listings on the internet, do we still have to pay these very high real estate commission rates?

Best,

Al, Montrose


Al,

Great question!

I will tackle it the best I can. First off, let me congratulate you on a successful sale on the front range and your relocation to the western slope! I am confident you will find the Montrose area not only beautiful, but also find the people very welcoming. It is a wonderful area. Let’s get right to it - not all agents charge the same commission rate. Interesting that you could not find any agents (on the front range) who would reduce their commission to a level you might have found acceptable. I know many who charge variable commission rates, even in my own office. Honestly, it’s just not very hard to find low commission rates if that is what you are looking for. I also find it interesting that you use the word “demanded” instead of “charged” or “requested”.

I don’t hear of many agents that “demand” a fee.  In our neck of the woods, we are all “just applying for a job”.  I do not think making demands while interviewing for a job is a proven path to success, but maybe that’s the way they do it over there. I will assume that most agents have a going rate of commission that they charge, and I will also assume that their rate is independently determined on their own, as is the way it is done at our office. My experience in commission variability certainly does not make a case for any type of price fixing, as you insinuate. It does not matter what product there is to be sold, there will always be less expensive options for those who rank price as their top determining factor! But price is not the be all end all for everyone…. at least not yet. 

“There are many reasons to use an agent and there are many ways that agents can help you make more money.”

There are people who value quality of service, negotiating expertise and transactional experience to help ensure smooth sailing through the process even when the process (and personalities) get difficult. There are many things that come into play that are often forgotten or overlooked when comparing agents or whether to use an agent or go it alone. I think it’s great that you are happy with your outcome, but is it possible that you could you have received an even higher price for your home and made even more money, by using an agent that provided accurate pricing and expert marketing? With proper marketing could that agent have created a competitive environment where multiple buyers potentially bid for your home, thus driving the price higher and making you even more money?  Could you have received a higher price by using your agent’s expertise in staging and getting your home dialed in to sell and therefore maximizing your home’s value? Could you have made more money by having an agent that not only helped you negotiate through the inspection process, but had access to vendors who could have saved you money with any required repairs? Could an agent have helped you sell faster, thus making you more money by reducing your carry costs by selling quicker (mortgage payments, utilities, etc.)? These are just a few of the questions that often time get ignored by those looking to make a case for not using a real estate agent to help them sell their home. As you can see, there are many reasons to use an agent and there are many ways that agents can help you make more money.

As for my experience of being a consumer (just like you), I tend to appreciate the difference in quality of services rendered and these things, many times, outweigh cost (for me) when deciding to purchase or not. It’s clear from your experience that nobody is forced to pay “very high real estate commission rates.”  Everybody has a choice to hire an agent or not. Clearly people sell their home on their own every day, but many like the confidence of knowing they are in experienced hands navigating what often time proves to be a treacherous process. I see agents make their home sellers money every single day and I know great agents offer great value.

Dave Kimbrough

The Kimbrough Team

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Can We Require Our Listing Agent To Inspect Our House After Each Showing?

Hi Dave,

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This may sound like someone just complaining but it actually is more serious than that. Our home has been listed with a reputable firm for four months. Whether or not our house has sold by mid‑July, we will be relocating to Denver to start new jobs. The concern we have is that after leaving the house during a showing, we frequently come back to find a door unlocked, lights left on and occasionally our bathroom used. With us no longer in town, can we require our listing agent to inspect our house after each showing? Unfortunately, we do not have a relative or a friend nearby that we feel comfortable asking to oversee, or burdening them with our property. This issue is concerning now but was even more so when our house was being shown during winter with freezing conditions. How do you deal with these problems?

Thank you, 

Gayle and Tom, Grand Junction


Gayle and Tom,

This is a common problem and a very real concern as it is too often for our sellers that they come home after a showing and find exactly what you describe.  The simple answer is sell your home, but I, as much as anyone I know, fully appreciate that sometimes it is easier said than done. 

First, I must point out that from time to time all showing agents make mistakes and overlook details like locking doors and turning off lights after they leave for a showing. I will admit that one time, as careful as I try to be when showing a house, we went in through the front door and out through the back door and I forgot to lock the front door and actually left the key in the front door lock!! Luckily the showing agent was extremely forgiving and showed me quite a bit of grace, but as good as my intentions were that day, I failed to show the attention to detail and respect for the seller’s home that I should have. My point is, it happens to the best of us, but will not happen to me again! Should it happen, no, but does it happen more often than it should, yes.  That being said you have hit on a couple of points that could help alleviate your concerns.

It is very reasonable to request your agent check up on the house after showings. This may be difficult for your agent to manage, depending on how busy he/she is and the frequency of showings. If you are getting 3-4 showings a week, this can be more difficult, but if it is 1-2, then becomes a much more manageable. Most agents want to make the selling experience as trouble free for their sellers as possible and thus are typically very quick to accommodate their seller’s needs, if at all possible. Do not be afraid to ask your agent for their help, that is what they are there for. 

You have options, explore them. First and foremost, ask you agent and his/her company to help you solve the problem and alleviate your concerns, as I am sure you will find them very resourceful and helpful in finding a solution you are comfortable with.

 You mentioned, you did not have any friends or family nearby that you felt comfortable asking for help, but I would consider a reassessment of your friends and family and re-think who might be able / willing to help. I understand you may not have close neighbors, but any neighbor or friend who has kids (teenagers) who would like to pick a few extra bucks each week for checking in on your house, may be just the ticket. As I recall, teenagers are eager to earn a few extra bucks, but I must admit there may be a generational gap between then and now. : ) Young people today do not seem as money motivated as I was when I was younger! You might even check around at church, as many times the youth group, etc... have folks who are looking for odd jobs and extra sources of income. As I have mentioned in this column before, you may see this as a burden to your friends or family, but believe it or not there are many people who love to help. There are also two types of house sitters, those who would live there while you are gone and watch over the property and those who you can hire to come out once or twice a week to check things over. 

You have options, explore them. First and foremost, ask you agent and his/her company to help you solve the problem and alleviate your concerns, as I am sure you will find them very resourceful and helpful in finding a solution you are comfortable with. Here’s to praying for a worry free move and your home selling soon!

Dave Kimbrough
The Kimbrough Team

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Does The Type of Retaining Wall Change Resale Value?

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Dear Dave,

Now that spring is upon us and summer is fast approaching, we are getting some projects lined out for our property. We have an area that needs a retaining wall, 25 feet long and 4 feet high, and we would like some advice on what might be the best route to take. We have access to railroad ties but we aren’t sure if those will have as good of resale value for the property as a rock or stone retaining wall. What are your thoughts on this?

Much Appreciated,

Jim and Ruth - Loma, CO


Jim and Ruth,

Again, many issues to uncover and consider here.  First, you are thinking resale and I always love it when people think resale!  What you do to your home while you live there will significantly impact the value of your home either positively or negatively.  By focusing on resale, it does not guarantee anything, however it will help ensure your actions have a positive impact on your bottom line when you do decide to sell. 

A retaining wall can be a definite value ad to a property from both the function side and the aesthetic looks of our landscaping. The most important thing, in my mind, is to have it done by a professional, so it looks like it was done by a professional. Case in point, I added a pond to my property five years ago and around ¾ of the pond we had a boulder retaining wall that went from ground level at a 90 degree angle up the side of the pond to the top edge. It looked awful! I had a visitor ask me one time, “Why did you build an elephant watering hole?” Yikes! Needless to say, we did not feel very good about our “pond”.  This spring, we hired a landscape professional, Keith Lowdermilk of Lowdermilk Landscaping, to re-do some of our landscaping. While he was looking over the job, he asked if he could “re-do” our retaining wall around our pond. He thought he could make it look better. We said, “Absolutely!” After all, it was a total eye sore and we don’t even own an elephant! Long story short, he completely rebuilt the retaining wall around our pond and now it is a highlighted feature of our landscaping rather than something we were trying to hide. The cost was ridiculously reasonable, especially considering the end result. He used the same boulders we had and simply re-stacked and reshaped the contour and the finished product is amazing! The moral of the story - don’t be afraid to hire a professional!

“Regardless of the medium used, railroad ties, boulders, or rocks, I think it can be a valuable addition. “

Regardless of the medium used, railroad ties, boulders, or rocks, I think it can be a valuable addition. Try to pick a medium that is in line with the style of your home. If you have a more country or cottage feel, then maybe a rail road tie wall would look best. However, if your home is newer and is stucco and stone then maybe something with boulders would look best. From a pure cost perspective, if you have the inside track on some cost savings on railroad ties, I would suggest you follow that route. As I learned, spend a bit extra and go with the professional to, at a minimum, help you design the wall, but potentially also install your wall. 

Do it right the first time and it will really pay off and look great! Remember, not everything is about resale - you are going to have to look at it for many years and if it is done right you will look at it as a feature and not an eyesore. My bet is you (and your back!) won’t regret it. Hope this helps.

 

Dave Kimbrough
The Kimbrough Team

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Why is there such a big increase in my property valuation and taxes this year?

Real estate investment

Hey Dave,

We just received the property valuation notice for our new house. The current value is $71,000 higher than the previous year. Certainly, the current property value they have listed is lower than what we recently paid, but is this jump in value reasonable? It's just a little freaky thinking about our bills getting larger, but maybe that's just how it goes?

We still love our new home, but were just surprised to see such a significant jump. Thanks again!

K., Grand Junction


K.,

Great question.

Since all the new property valuations hit everybody’s mail box in the past couple weeks, (they went out on May 1, 2019) we have had had several inquiry’s just like yours. You can feel some comfort/consolation that you are not the only person that has had questions about the increase in property taxes and valuation. What happened is the county had not really done a thorough re-assessment of property values for several years so it was time for it to happen again. With the recent surge in the overall real estate market it was to be expected that valuations would increase, but its always a bit startling when it actually hits your monthly payment.  

The evaluation period used to establish the new property values was Jan 1, 2017 – June 20, 2018. Keep in mind that since 2012 our property values have been on a steady increase, but specifically 2017 and 2018 saw median home prices climb nearly 13% over the 18 month period. 

The evaluation period used to establish the new property values was Jan 1, 2017 – June 20, 2018. Keep in mind that since 2012 our property values have been on a steady increase, but specifically 2017 and 2018 saw median home prices climb nearly 13% over the 18 month period. This 18 month period saw the most significant 18 month increase since the market peak of 2007/2008, so seeing all our property valuations increase is hard to argue. Speaking of arguing, you do have the right to protest your property valuation. You can go down to the Assessors Office (544 Rood Ave #2) and speak with them about your property value. Make sure you bring with you information that supports your estimation of value. There is no guarantee of change, but at least you will get the opportunity to make your case! 

Look on the bright side, because of the down market between 2009 & 2012 you might have caught a little break as values struggled and did not show any increases. Remember that rising tides lift all boats so we are all sharing in the increase in property values that will be generating more property tax money for the city and county! One last silver lining, according to Investopedia.com Colorado is still on the “lowest 10 states for property taxes” and nationally low as compared the rest of the United States. Unfortunately taxes are just part of the program and as long as values continue to rise, you can expect them to continue to increase! Hope this helps. 

By the way, Happy Mother’s Day! If you have not called your Mom today to thank her and tell her you love her, stop reading and pick up your phone! Remember, without our moms, none of us would be here so when you think about it, we really do owe them!  We should do it much more often, but at least today stop and honor your Mother…she deserves it!

Dave Kimbrough

The Kimbrough Team

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How to choose the right agent for your Grand Junction real estate goals

Realtor Showing Hispanic Couple Around New Home

Hello Dave, 

Let’s assume that I have done my homework and I have decided on a Realtors office based on brand name recognition, market share, aggressive marketing, reputation and other factors. Now what? Is there a way that I can pick an agent within that company based on their success, professionalism, enthusiasm, abilities, etc.?

There are good, better and best (most productive) in any office. How can I decide who or which company is better for me to list my home with? 

Thanks,

Dave, Cedaredge


Dave,

I could write a book answering your question, however, I am going to do my best to not be overly verbose or opinionated and stick to facts and try to be as objective as possible. First, I applaud you for doing your homework! For most people, their home is one of, if not their largest investment and it always shocks me how little “real” homework people do when choosing an agent or real estate company. If you stop and think about it, trusting such an investment with someone who does not have a proven track record just does not make sense however, people make that choice every single day! All of the qualities you listed in your question are important when evaluating agents and companies.

Brand name recognition, market share, reputation and other factors are all key elements in choosing a real estate company and evaluating those factors should allow you to narrow down your choice in the real estate company you choose. 

Brand name recognition, market share, reputation and other factors are all key elements in choosing a real estate company and evaluating those factors should allow you to narrow down your choice in the real estate company you choose. You mentioned aggressive marketing and I suggest you use that element of evaluation as one you use when evaluating agents, not your real estate company. The reason I suggest this is that each individual real estate agent markets their properties differently. No two agents do things just alike and to ensure your agent of choice has an “aggressive marketing” plan you MUST evaluate every aspect of how they will market your property and the vision they have for YOUR specific marketing plan.  How an agent presents and prepares your marketing plan will tell you all you need to know about your potential for success and their abilities.

When you evaluate the agent’s specific marketing plan you will learn a lot about their professionalism, enthusiasm and track record of success…or lack thereof. My suggestion would be to choose your agent on all the aspects you have listed! Trust me on this one, the level of marketing expertise and understanding displayed is likely a VERY strong indicator of your chances of a positive outcome. Just putting a property on the MLS does not cut it anymore! They should have a strong plan across many mediums like internet, social media, agent to agent promotion, direct to consumer programs, newspaper, radio, television and more. If they have this in place, you can bet they are enthusiastic about their job and work at it as a profession, not a hobby or way to collect some extra vacation money. Search for someone who is full time and HAS A PLAN for you and your property and does not simply try to lure you with the “high price” candy!  Luring a seller to list by providing a high price is the best way to take the focus away from a real marketing plan.

If the agent checks the boxes listed above, then I can almost guarantee they are productive and achieve results on a high level. Really, who doesn’t want a top level agent working on the sale of their home? I would pray that nobody ever hires an agent based on an average marketing plan or expecting an average result. Don’t settle! Follow some of the selection methods I have listed and you will find the best agent in any office or town. It is just like anything else, the cream rises to the surface and typically it’s pretty clear who performs and who doesn’t. Remember, success does leave clues. Don’t take the decision lightly as choosing the right agent or company can have a significant impact on your success or lack thereof! Best of luck.

Dave Kimbrough
The Kimbrough Team

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Will a New Roof Improve Resale Value?

New Roofing Grand Junction Real Estate

Dear Dave,

We are looking at putting a new roof on our home this summer and I wanted to get your opinion on different materials.  I typically see shingles or metal roofs, what is your opinion on which of those is best?  Are there any other materials that you would recommend that might be better? 

We will be retiring and selling our house in a few years, so we want to get our money’s worth.

John and Kate, Grand Junction, CO


 John and Kate,

When making home improvements it is always wise to consider your return on investment prior to making any selections or firm decisions. However, selecting a new roof and basing your decision on return on investment can be a tricky proposition. One thing I have learned over the years is, there are a few basic characteristics every home buyer expects as a given when purchasing their home and having a “decent” roof is one of those expectations. Buyers expect, and rightly so, that the roof will be in good condition with a minimum of 3 years remaining on the anticipated life expectancy.

Because it is a basic expectation for any buyer that the roof be in good repair, you can assume that very few, if any, buyers are going to be willing to pay significantly more for the home because the roof is new or newer. 

Because it is a basic expectation for any buyer that the roof be in good repair, you can assume that very few, if any, buyers are going to be willing to pay significantly more for the home because the roof is new or newer. They will appreciate that your roof is in better condition and it may help sell your home faster or help it beat out another competing house, but as long as the life expectancy is more than 3-5 years don’t expect to reap any real tangible monetary benefits. That being said, you do have the opportunity to impact the price of your home, monetarily, by replacing your roof with a different material or texture that will impact your home’s appearance.  

Buying a home is an emotional experience and homes that have a unique appearance or unique characteristics certainly can get a leg up on the competition during the sales process. Consider using a standing seam metal roof or a thicker architectural shingle for your next roof!  Metal roofs provide a fresh look and are becoming very popular. If your home lends itself to mixing the surfaces, you can create wonderful street presence that will help you stand out from the other homes that are for sale and even other homes in your neighborhood. You can also provide a pop of color, but don’t go too crazy with the color. A thicker architectural shingle can also look wonderful and provide some depth where none previously existed. These thicker shingles generally are used when replacing shake shingles, as they help maintain some of the original look. You can also go the way of a tile roof, but be careful that you do not over build your neighborhood or over improve your property. 

There are options out there to dabble with some new looks, however note that these options will be more expensive and less budget friendly than a standard 30 year architectural shingle. Be mindful of your budget and anticipated return and don’t be afraid to ask for other professional opinions prior to making the leap on your next roof. Hope this helps and I bet it turns out great!

 Dave Kimbrough
The Kimbrough Team

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Is there still a market for homes on larger acreage even though most newer homes are in subdivisions?

Large American beautiful house with red door.

Dave,

We live in a semi-rural area on two acres, but several subdivisions are going in nearby. My husband is concerned that it will decrease the value of our home and property. I know that you say there is "a butt for every saddle." In your experience, is there still a market for well-kept homes on larger acreage even though most of the newer homes are in subdivisions?

Dan and Donna


Covered front porch of theold craftsman style home.

Dan & Donna,

Great question! Yes, there is “a butt for every saddle” and yes, I do believe there will always be a market for well kept homes on larger acreage! Sprawl will happen and with higher density developments you create affordability (at least that is the thought) and our area needs as much affordable housing as we can get, but ultimately there will always be those who desire “elbow room”.  What many new subdivisions lack is elbow room, privacy and enough space for RV parking! The one caveat to my answer here depends on how close the new subdivisions are to your property and how dense the density?

If the new subdivision borders your property or it is very close (within easy sight) and the density is higher than 4 homes to the acre, then there is a fairly strong chance that it may have a negative impact on your property value. If “nearby” means down the road a quarter mile etc…then I would suggest you worry not and just enjoy living there! There will always be a market for well kept semi-rural properties on two acres!  Famous last words…

Dave Kimbrough
The Kimbrough Team

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Should we turn our rental home into an Airbnb?

Beautiful Living Area with Coffee Table and Couch of New Home.

Dave,

We own a rental property Downtown and close to CMU. The lease is up soon (when college lets out) and one of our friends asked if we had thought about during it into an Airbnb instead of finding another 12-month tenant. They’ve certainly got us thinking! It’s a great location and we think we’d get quite a bit of traffic. Do you have many clients purchasing investment properties to use as Airbnbs? In your opinion what are some of the pros and cons of switching over from yearly leases?

Mike and Lynn, Grand Junction


Mike & Lynn,

I think it’s a great idea! Doing an Airbnb or VRBO can certainly be a very lucrative way to go and potentially prove to be much more profitable than a renter on a 12 month lease. We certainly have clients to look to purchase homes/rental units with the specific intent to use them as Airbnb or VRBO and many of them have proven that they work amazingly well, but they do take a bit more of a hands on approach than a traditional rental property. 

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If you use the VRBO or Airbnb website to schedule bookings etc. the interface is pretty seamless, however, it does take time to interface with each client who comes and goes. With the amount of traffic, new people coming and going on a day to day basis, that is generated you have to be aware that problems will arise.  The key  does not work, the pilot light went out, they are lost and trying to find out where to go, they arrive a day late, arrive a day early etc. Things happen and when they do many times you are the one they will need to reach out to. Also coordinating the cleaning of the property between renters takes attention and a bit more hands on effort. There are property managers for Airbnb’s and VRBO’s and I have heard they are very useful for cutting down the hassle, but they will take about 20% of the nightly rate for their management fee. If you don’t have property management in place, just expect that you will have to be aware of all the coordination of arrivals and exit, maintenance, cleaning and everyday issues that just happen. 

Also keep in mind that one of the keys to success we have seen is having a super “cute” property in a great location.

Also keep in mind that one of the keys to success we have seen is having a super “cute” property in a great location. Location and electronic presentation on the websites (along with great reviews) will all dictate your profit or loss! It’s not a quick buck model, but if you take the time to learn how to do it right it can be fun, rewarding and financially beneficial!    

Dave Kimbrough
The Kimbrough Team

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