Outdoor Living Features with Excellent & Poor Resale Value

Back yard house exterior with spacious wooden deck

Dave,

We want to do some outside renovation to our home this spring/summer and are considering all of our options. In your experience, what do you think people value the most in outdoor living spaces?

We’re considering all options, from a built in BBQ, to a hot tub, maybe even a pool. We enjoy being outside in our wonderful Colorado weather and want to look ahead to when we sell our home as we undertake this project.

Thank you for your input.

Todd and Lacey - Fruita, CO


Todd & Lacey,

I think any improvements to your outdoor living area will be beneficial and be a selling feature when you eventually sell your home. Most important I would suggest you evaluate your lifestyle and the family activities that you enjoy most and design your new outdoor living space to fit what your family enjoys most. 

Circular Fire Pit

This question is with perfect timing, I was just speaking with one of our builders this week about outdoor living spaces and how valuable they are to consumers. This value is magnified in our location, because of the wonderful weather we enjoy 8 months of the year (virtually all 12 months this year!). An outdoor deck or patio with pergola and built in BBQ or fire pit can be a neighborhood gathering area and the spontaneous parties with friends and family will provide memories that can last forever. This kind of upgrade is very valuable and fairly cost effective in the grand scheme of things and generally found to be of added value to most any home buyer. Hot tubs and pools can be much more polarizing.

If you are considering a hot tub remember they are often one of those, “we can take it or leave it items” for most buyers. It is my experience that a hot tub generally does not move the needle very far in either direction when it comes to perceived value. A pool is one feature that is VERY polarizing. If you are going to put in a pool, do so for your own enjoyment. Do not add a pool looking for a large return on your investment down the road, because it is likely not going to be there. People are either pool people or they are not…it is that simple. I do find that pools are becoming more valuable and sought after by consumers, but it is a specific subset of them, not the majority. As I discussed this week with a friend of mine, your general return on a pool is 50% max, and that can go up or down depending on the price of your home.

The bottom line is this, whatever feature you decide to install will hopefully be with your family’s enjoyment in mind and the time you spend using it will further your relationships and really what more could you ask for!

The bottom line is this, whatever feature you decide to install will hopefully be with your family’s enjoyment in mind and the time you spend using it will further your relationships and really what more could you ask for! Sometimes we do things that might not make financial sense, because they are done for pure enjoyment and there is nothing wrong with that! Life experiences and memories made are what these features are all about! Have a blast this summer and enjoy whatever you decide to create!

Dave Kimbrough
The Kimbrough Team

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Numerous Showings, Great Price & Feedback, But No Offers...What Gives?

Dave,

Our house is priced right, it has received great feedback, great staging on the reviews and 19 showings in 2 weeks. No offers…what now?

Art, location withheld


Suburbia in Fort Langley, a historic village in the Fraser Valley of British Columbia

Art,

AWESOME question! First, hats off to your real estate agent…19 showings in 2 weeks during Christmas and New Year is incredible. You should really take a minute, if you have not already done so, and thank them for their work. I am honestly a little afraid to print this question as some of my clients may wonder what I am doing wrong and wonder why they are not getting 19 showings in 2 weeks. Generating traffic during that 2 week period is not easy! That being said, you have a couple options and some things to ponder.

It is clear from the traffic that your home shows well and is appealing to online home buyers, so you can feel confident that the online pictures are doing their job. It is also clear that your price must appear very reasonable, heck even a pretty good deal, or you would not have the revolving door syndrome that you are currently living through. I do wonder if you have had any 2nd showings? If you have, then that would change things a bit…for the better. It sounds like your feedback has been very good, bordering on complementary and that is typically a wonderful sign. From what limited information that has been provided, everything pretty much smells like roses and if EVERYTHING smells like roses you would have received a contract, right?

Statistically speaking a home seller should receive an offer after somewhere in the neighborhood of 10-12 showings, on average. I have always evaluated our listings using about 12 showings as the bar for an offer, but sometimes as few as 8 or as many as 15 depending on the feedback. From your feedback I would say you are right to be pondering your next step. I have heard this said, and I have since repeated it many times, you can control three things in real estate….condition, marketing and price. After those three things, there is not much you can control in the home selling process so I would do my best to focus on those three things and let everything else sort itself out. It sounds like your home is being marketed properly or you would not have had 19 showings. Your home must be in good condition or you would be hearing things like “deferred maintenance”, “dirty”, “cluttered” or “needs a little TLC”. It is clear you are not hearing this, so the condition of your home must be very good. This leaves price as the only other thing you can control!

Ugh…the dreaded price discussion. I know…you said your house is priced right! Typically knowing what little you have told me I would battle you on this, but honestly with 19 showings in 2 weeks over Christmas and New Year, it must appear to the consumer to be “priced right” or they would not come like lemmings marching to the cliff. If it’s in good condition, it’s showing 1.5 times a day over the slowest 2 weeks of the year and is “priced right” why is it not selling? Actually that is a very good question! I would guess that you have a specific property feature, whether it be floor plan obsolescence, too many stairs, a busy road, un-kept/ugly neighbor, barking dogs from neighboring yards or whatever odd thing you can think of that is holding your home back and ultimately none of these are easily fixed. All of these items boil down to one of two things…price or patience.

At this juncture I would encourage guarded patience and if you have had one or two second showings, I would feel even better that you just need to find the right butt for the saddle.

At this juncture I would encourage guarded patience and if you have had one or two second showings, I would feel even better that you just need to find the right butt for the saddle. If it’s a busy road, then you need a buyer from a big city. If it’s barking dogs, you need a dog lover or someone hard of hearing.  If it’s too many stairs, you need people who see stairs as a fitness aid. I hope you see where I am going. You just need the right butt for your saddle and sometimes it just takes a little more time than we would anticipate or want. If you do not have the time or the patience, then adjust your price and get it sold!   My bet is you are not very far off and your buyer is closer than you may think. Hang in there a bit longer and I bet you find the perfect fit for your saddle.

Dave Kimbrough
The Kimbrough Team

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2018 Predictions for the Grand Junction Real Estate Market

Dave,

I know you have answered this question before, however I would love to hear your answer—so hopefully I’ll be the one to ask it this year. What are your real estate market predictions for 2018? I’ve seen several news stories throughout the year that new construction in the valley appears to be booming. Do you think it will continue in 2018? What other market trends do you think we’ll see?

Cheers to the New Year!
Doug, Grand Junction


2108-real-estate-predictions

Doug,

Cheers to the New Year is absolutely right, but also cheers to last year! 2017 was the best real estate year we have seen (in number of sales and total sales volume) since 2008! It is hard to believe that 2008 is nearly 10 years in the rear view mirror…I remember in 2010 lying awake at night and wondering if the misery would ever end, but end it did and the future of the Grand Valley is bright! 

A quick recap. In 2017 we consistently saw sizeable market gains (price increases) and low inventory levels in the under $350k housing market and much of this upward push was driven by new construction. When all the final numbers come in, we will see construction numbers come in at least 30% higher than last year and the majority of the new homes being built are in that under $300,000 price range. Don’t be led to believe that all the partying was done under $350,000, we even had some fair to modest gains in the higher end homes (those between $400-$700k). The inventory of homes over $700k is still moving slow with few buyers really working those upper end price points. Keep in mind that I believe there is a “trickle up” effect in our housing market, meaning as our market gains strength in the lower end price ranges it will slowly build up the higher priced homes over time. The upper end will come back, but only as the strength in the market is built and sustained from the bottom up. We also saw the demand for investment properties, residential or commercial, really build some solid momentum and this segment continues to remain very active with good properties in high demand.

In 2018 I believe…

  1. We will continue to see the entry level price ranges (under $300,000) remain very strong with low inventory levels that require buyers to be very aggressive and competitive when buying. This segment of the market will remain strong as our jobs and wages fuel these entry level price points.
     
  2. We will see the upper end home market continue to post modest increases and gain incremental sales growth year over year. As more people move in from booming markets, they will be willing to open up their pocketbooks for nicer, more expensive homes.
     
  3. We will see new construction play a larger part in the market as we are on the cusp of having a robust inventory of lots. These lots will emerge from the development process between July of 2018 and July of 2019. While lots are hard to find now, choice will soon be much more plentiful with ample choices for buyers. I believe this will lead to a leveling off of lot prices and hopefully will open up some new home opportunities below $200,000. We need more affordable housing options. 
     
  4. We will see the demand for investment properties remain strong! As the stock market surges to a new record level every month, many investors will seek a safer haven and I believe that safer haven will be real estate. 
     
  5. We will see interest rates climb a little, but will still be between 4.5 & 4.75% by year's end and have little to no impact on the housing market.
     
  6. We will see that the secret of the Western Slope is getting out. Our area is going to get more and more popular! As big cities boom and people become exhausted with all that large metro areas entail, the lure and appeal of a slower pace of life paired with an incredible outdoor lifestyle will prove too attractive for many to pass up. Like in the movie Field of Dreams, build it and they will come…trust me, they will come!

I realize I am not stepping out on a very high ledge, but ultimately I believe our immediate future (baring some unforeseen world event) is very bright! We are blessed to live in one of the best places I have ever been. Every time I go on vacation to somewhere “amazing”, I come home and realize that we live somewhere “amazing”. The word is getting out. Buckle up and enjoy the ride!

Happy New Year,

Dave Kimbrough 

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Would converting my garage to another living space increase my home's resale value?

garage-conversion

Dear Dave,

I own an older home, built in the 1980’s. I’m doing some upgrades this spring and am considering adding on to it. I recently saw a home that was a similar age and when they remodeled they turned the 2 car garage into a living room and opened up the adjoining wall into the house.  Something like this might suit our needs perfectly.  What are your thoughts on this? Is it good for potential resale or would I be better off leaving it as a small garage and not adding living space.

Thanks - I would appreciate the advice.

John - Grand Junction, CO


converting-my-garage-space

John,

home-resale-value

This one is a tough one. If you need extra living space, it does not get any more convenient or inexpensive than to convert the garage to a new living room or couple of bedrooms. Keep in mind that the conversion does come at the expense of valuable resale space, the garage. I am one of those who believe the garage is sacred space! Where would one put his duck decoys, bikes (motor of pedal), ATV’s, kayaks, canoes, dog kennels, gun safes, hunting gear, tool boxes, work bench etc.? I am sure you see my point. A garage, especially here in Western Colorado, is valuable space and hard to replace. Oh, and I nearly forgot, you might even have enough room to park your car!

For resale purposes I am of the belief that the conversion will generally cost you money and not increase your value. That being said, if you convert and add 2 bedrooms and go from a 3 bedroom home to a 5 bedroom home, you might find someone who has a large or blended family that has a specific need for the extra bedrooms. In this specific scenario I could see the possibilities of the conversion adding value.  Outside of this specific situation I think the loss of the garage outweighs in cost and function the addition of added living space.

The last thing to consider is to go ahead and make the conversion, but do so in such a way that you will be able to easily convert it back when/if you sell in the future. By doing this you will have a cost effective addition and keep the flexibility to convert it back easily. This is a common practice and is easy to remedy when the time comes to sell.

As you can see, I am a fan of garages and believe that having a garage is an important and valuable feature.

As you can see, I am a fan of garages and believe that having a garage is an important and valuable feature. I will close with this, if a conversion will fit the needs of your family perfectly, then go ahead and do it and enjoy living there with the added living space. Converting and then converting back in the future will surely be less expensive than selling and buying. If the rest of the house fits your needs, just convert and do so in a way that leaves you the flexibility to easily convert back if needed. Hope this helps!

Dave Kimbrough
The Kimbrough Team

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Should We Add a Basement to the Home We're Building?

Grand Junction Real Estate Advice

new_construction.jpg

Dear Dave,

We are making plans to build a home in the next year. As you know, there are so many decisions to make as we go into this process. As we are considering builders and building plans, we are trying to make a decision on whether or not to have a walk-out basement in our new home.

Do you consider a basement to be a good use of building costs? Do you think it is a good idea to have a basement or not? We have options for what type of basement to have, just want to know what your opinion is on this.

Thanks for the help!

Don and Linda, Grand Junction, CO


Don and Linda,

Trust me, there are more decisions to make than you can possibly imagine! The commitment to building is high, but so are the rewards. I have been through the process many times and often times the number of decisions to be made can prove to be overwhelming, even for the most prepared. Of all the decisions, to have a basement or not to have a basement may prove one of the easiest!

From a cost perspective, I believe it is hard to find a more cost effective place to add living space than a basement. A basement can prove to be a valuable asset for anyone who needs to inexpensively expand their living or storage space, but can also provide a wonderful and inexpensive option for a woodworking shop or hobby area. Basements are very popular features to most home buyers (something to consider for resale down the road), however don’t expect to get the same value from your inexpensive downstairs living space as you do from main floor or even second story finished living area.

naomi-hebert-188183 (1).jpg

It is a VERY common mistake to assume that living areas below grade are valued at the same price as their above ground counterpart. Unfortunately, that is NOT how it works. Generally speaking, you can assume that the added value of basement square footage is no more than 50% of the above grade value. This means that if you have 2,000 square feet above grade that is valued at $175 per square foot, your below grade value is likely in the $75-$85 per square foot range (even if it is of the walk-out basement variety)…NOT $175 up and $175 down. Most people think all levels are valued the same, but when it comes to establishing value - below grade living space is just not as valuable as the space above ground level.

To answer your final question, I personally believe basements are a valuable addition to most any home and will be attractive to the majority of future home buyers.

To answer your final question, I personally believe basements are a valuable addition to most any home and will be attractive to the majority of future home buyers. It’s a great way to pump up your living space, while remaining budget sensitive. I say, “go for it!”

Lastly, Merry Christmas to everyone! What a wonderful time of year to focus on friends and family and take time to invest in those closest to us. What I love most about Christmas is the generosity this holiday inspires in people and that the act of giving is pushed into the spotlight. Not to be cliché, but when I stop and think about it, I honestly wish every day could be like Christmas!

Dave Kimbrough
The Kimbrough Team

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Investment Property Strategy: How Many Properties Should I Buy?

Grand Junction Real Estate Advice

Dave ‑

I have about 150K that I am wanting to invest in a rental property. I was all set to find my property and my realtor suggested that instead of buying the property with cash, that I use that money to buy several properties which I would have smaller mortgages on.  I really don't like the idea of taking on any mortgages but I want to make the most of my money. What is your advice? 

Jarred, Grand Junction


Apartment building

Jarred,

Great question! I will start by applauding you, looking to purchase investment properties right now to diversify your investment portfolio is a great idea!

To assess which is the best route for you and your family, you must determine what your long term goals are and how much risk you are comfortable with. I do not believe there is a right way and a wrong way to purchase investment properties, just different ways. There are two ways to look at the purchase of your properties and that is either to purchase with cash, which is the route that presents the least amount of risk or purchase with a mortgage which will introduce some limited risk. 

To make a cash purchase makes great sense, because it creates an instant income source. If you need to quickly generate income, then a cash purchase is the best way to proceed. When you purchase with cash, and therefore have no mortgage, you also remove the risk of market rent fluctuations, because you can easily “go with the flow” and adjust to any potential rent changes. Also, with no mortgage you should be able to easily weather a month or two without a renter. If your risk tolerance is low or you need to generate month to month income, cash is your way to go.

On the other hand, if you take your $150,000 and put $75,000 down on two properties then you have doubled the long term investment potential of your $150,000.

On the other hand, if you take your $150,000 and put $75,000 down on two properties then you have doubled the long term investment potential of your $150,000. This should still “cash flow” nicely for you and allow you to have room if there are rental market fluctuations. This will allow you to take advantage of the favorable market and also take advantage of low interest rates that remain historically low. You will be somewhat leveraged, but if done correctly and thoughtfully, and as always with the help you’re your accountant, you should be able to create a wonderful long term return with a little, but limited risk. Make sure to plan it out, be deliberate, but be ready to act when the right thing comes up!

The best thing here, you are taking positive steps toward your goals, thinking things through and are willing to look at all the angles to make an informed decision! Reaching for your goal, is the first step in obtaining it! Great job. Feel free to call if you need further information.

Dave Kimbrough
The Kimbrough Team

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Would owner financing on the sale of our home benefit our retirement portfolio?

Dave,

My wife and I wish to sell our home and retire to Arizona. We are in a position that we would  consider doing “owner financing” when we decide to sell. Our money market investments are a lousy return and doing owner financing with the sale of our home appears to us as an opportunity to earn 4% - 6% with minimal to moderate risk. The way we look at it, if the buyer fails to make the payments, we simply get the house back and reassess our options. Is this right? What experiences, good or bad, have you had with sellers who have done an “owner carry” with the sale of their homes? Any advice would be appreciated, Merry Christmas.

Jim and Marybell, Grand Junction


owner-financing

Jim and Marybell,

Great question! The move to Arizona sounds like an excellent idea, as we near the dog days of winter. Please remember, I am not a financial adviser and will only be providing an opinion that is based on my personal experience. Should you decide to move forward with an owner carry on the sale of your home, I would urge you to discuss any ramifications with your financial adviser or accountant. If done correctly, this can be wonderful addition to your retirement portfolio.

There is no doubt money markets are not a high yield investment, actually they are a terrible rate of return at this point in time, but they are very safe, with virtually no risk. Money markets also provide you a high degree of liquidity that you will not receive if you do “owner financing”. Prior to stepping into an owner financing option with your buyer, you should first consider how important liquidity is in your retirement plans. Also, consider the fact that you will still have a home in an out of state location and this can prove difficult and burdensome, even under the best of circumstances. Let’s assume that you decide this is the route for you, then I can say the success of your owner carry sale is determined by the terms set up at the time of sale.

owner-financing

You need to decide on an interest rate that will work for you. As I am sure you are aware, current interest rates are hovering around 4%, so I would expect it realistic to get somewhere in the 5.5% - 6.5% range. You also need to decide if it will be an interest only payment or if some of the monthly payment will go towards the principle amount owed. To make things cleaner, I would suggest an interest only payment with a balloon on the full amount owed.  After coming to terms on the interest rate, you need to decide what length the loan will be, more often than not I see a 3-5 year balloon. You can get your attorney to help you work up the note and deed of trust that will spell out the exact terms of the loan and where the payments will be made, what happens in the case of default, etc. Accuracy on this document is of vital importance.

The last detail, but the most important, is the down payment.  The owner carry deals I have seen be successful are the ones where the buyer puts some “skin in the game”, meaning that they bring a substantial amount of down payment money.

The last detail, but the most important, is the down payment. The owner carry deals I have seen be successful are the ones where the buyer puts some “skin in the game”, meaning that they bring a substantial amount of down payment money (10-20%). The down payment encourages the buyer to stay in the deal and gives you some cushion should things not work out as anticipated. The down payment acts as your insurance policy. Another option is to charge a higher interest rate with lower down payment and this will provide you with more monthly income, if the highest rate of return is your primary goal. With this tactic there is more risk, but you get a greater rate of return. In the back of your mind, always be prepared and understand what will need to be done should your new buyer fail to perform at some point down the road. Prepare for the worst and pray for the best! : )

All things being equal, owner carry terms can prove to be a wonderful vehicle for income and quite possibly could fit in perfectly to your retirement plans. Set it up right and it should provide a good source of revenue! Merry Christmas.

Dave Kimbrough
The Kimbrough Team

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When can buyers take possession of a house after closing?

Large American beautiful house with red door.

Dave,

I recently sold my home and before and during the closing the buyer stated they would give me a few extra days to even a week to move out after closing. The day after closing they showed up looking to move-in and informed me a locksmith would be showing up at 4:00pm to change the lock. Needless to say I was still packing the small stuff and the new owners stood in the living room hovering over me the entire time.

I called my Realtor and was told that technically I had until 11:59 pm if I wanted. My Realtor then called theirs and told them to leave but they just went outside and hung out there. I do have to mention that I let them come over a few times so they could measure for windows and things during the process and I feel like I accommodated them. I feel like they should have done the same and let me finish packing, which was done by 6pm.

What are your thoughts about this?

Chris K., Grand Junction         


Chris,

I am sorry to hear about your experience, but I can assure you that you are not the only seller who has suffered the fate of the helicopter buyer trying to take possession of their new home after closing! It can be SUPER stressful and no fun for all parties involved.

I am confident you can chalk this one up to the often overlooked, possession date and time of possession portion of the contract to buy and sell real estate. Just for kicks let’s just add in a little poor communication for good measure. Seems like most things that go wrong have a smidge of poor communication sprinkled in, so we will just make the assumption that this situation was no different. It is my experience, and I have been guilty of doing it myself, that everyone has such a keen eye on the closing date that the possession date and time of possession fall out of focus and are left with little attention until they create a problem. 

time-of-possesion

Every contract has a specific field for closing date, possession date AND time of possession. In your case it sounds like you had possession until 11:59 pm of the day of closing (either written in the time of possession portion of the contract or that section was left blank). The unfortunate part of this situation is the above referenced “smidge of poor communication” or lack of buyer understanding about when they could take possession. Most Colorado contracts that I deal with have the possession time read “at closing”, meaning that when you close the house and the money has arrived then the buyer is the new owner and takes possession at that time. If that field is left blank and no time is designated, then it defaults to 11:59 pm (per the portion of the contract that specifically references the definition of “a day”) the day of close.  This appears to be similar to the circumstances surrounding your contract. 

It is my guess the buyer did not realize when they were contractually able to take possession and assumed that it would be at close OR they were not informed that you had until 11:59 pm on the day of close to get out, before they were to take possession.

It is my guess the buyer did not realize when they were contractually able to take possession and assumed that it would be at close OR they were not informed that you had until 11:59 pm on the day of close to get out, before they were to take possession. Either way, the circumstances were not ideal and uncomfortable.

I will also note that it is VERY typical for a buyer to want to come back to the home they are purchasing and measure for window blinds, refrigerators, televisions, beds etc. They would likely not see this as you “accommodating” them, but that they were just making preparations for purchasing your home and gathering needed information. I am sure they did not view it as putting you out in any way.

You are right, it would have been great for them to just leave and come back at a later time, but they may have not had anywhere to really go. This is one of those times to just handle the situation with class and an opportunity to show some grace! Most of the time the stress of the situation and the lack of communication tend to make these issues larger than they really are. I totally get your frustration, but it’s a great opportunity to look at it from another perspective and consider what could be done differently next time in order to prevent the same thing from occurring again! On the bright side, you did give them possession 6 hours early!  : )

Dave Kimbrough
The Kimbrough Team

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