Are Pre-home Inspections a Good Idea on Older Homes?

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Dave,

We will soon be selling our home and looking to downsize.  We have lived here almost 15 years and are the second owners.  We have taken good care of our home and have kept up on routine maintenance and also fixed any items needed over the years.   Our home is older, built in 1976, but has been well taken care of.  We are considering a Pre-home inspection, as one of our friends intimated that it might be a good idea.  Your thoughts on pre home inspections?  Thanks.

Dwight, Grand Junction



Dwight,

 

On face value it sounds like you could go either way.   Your friend is right, it can be a really good thing and offer you, the buyer, and the real estate agents some peace of mind that the home is in good condition and free of any major problems.   The decision should be based on your knowledge of the home and how likely you believe it is that a problem may come up during the home inspection period. With any home built in the 70’s there is a reasonable chance that quite a few items will come up on the home inspection, not because you haven’t taken care of your home, but because it is old!   Generally I think it is a good idea, based on the age of your home, but it will set you back $300-$400.  This may be a very small sum in the long run, if it prevents a deal from falling apart.

One major thing that a pre home inspection will do is likely bring any “deal killers” to the surface before you get your home on the market and under contract.  If you do find a significant issue up front this will allow you to get it resolved prior to putting it on the market and getting it under contract.  There is no doubt in my mind that many things that happen during and related to the inspection period, after a home goes under contract, are blown way out of proportion and have as much to do with leverage, emotion, fear and lack of knowledge than the problems that are discovered and their remedies.  Once a For Sale sign goes up in your yard, regardless of what anyone says, everything changes and everything gets magnified, especially in a market where buyers can be difficult to find.

There are two things that I think are a great idea, regardless of the age of your home.    If you are currently on a septic system, I highly recommend you have your tank pumped and inspected prior to putting the home on the market as this serves not only as great preventive maintenance but will also put a stop to any potential septic issues before they generally get started.  Also, have a Licensed heating and air conditioning professional come and give your heating and cooling systems the once over and provide a receipt for a clean bill of health.  Septic systems and your homes mechanical systems (especially heating) are two items that many home inspectors single out and recommend buyers have those evaluated by Septic and HVAC professionals.  It is good preventive maintenance and eliminates the potential for a conflict of interest to have those things checked out ahead of time.   One more thing, if you have any question or doubts about your roof, have that inspected also.  Roof inspections are generally free and will bring any potential issues to light and notify you in advance if your roof is at the end of its expected life. 

I recommend a pre-home inspection if you have ANY concerns about a “deal killer” issue that may come to light.  If you have no concerns about that, then I would not do one.  If you do have concerns that there may be an issue there, some little nagging hunch, then I would pull the trigger on one and not even think twice about it.  You know your home better than anyone and if you think you need to have one done let me know and I will be happy to recommend a few that will do a great job!  A pre-home inspection is not for everyone, but maybe it should be….. I am finding myself rethinking the issue as I write this column.   Thanks for the thought-provoking question.

 

Dave Kimbrough

The Kimbrough Team

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What Is The Best Way To Estimate The Value of Our Home?

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Dave,

We are thinking about selling our house, but we would first like to know how much our home is worth. We’ve seen a few websites—like Zillow and Truila, just to name a couple of them—that say they can estimate the value for us, but we aren’t sure if they are reliable. We know you’ve been doing this for quite a while and trust your advice. When you are selling a house how do you determine if these web sites are a reliable source for establishing the value of our home?

Tom, Grand Junction



Tom,

 

I love this question!   For the purpose of this answer we will focus on Zillow as it is by far the most used and relied upon real estate web site.  Zillow is, in my opinion, the best of all the real estate web sites at marketing to the public and to Real Estate agents.  It has established itself as the “go to” web site for helping the public not only keep track of local and national real estate trends and homes for sale, but has also been effective at instilling the perception that it can help you establish a value for your home.  The Zillow.com home valuation tool is called a “Zestimate”. 

I encourage you to go to Zillow.com and click on the FAQ, frequently asked questions, and scroll down to the “How accurate is the Zestimate?” and click to open.  What you will find is what very few know or ever venture to find out.  Here you will find out how good their marketing has been.  The marketing has been so good that the public has willingly flocked to a product that is almost wrong more often than right.  In the terms of statistical accuracy a “Zestimate” is virtually worthless.  What Zillow.com is admitting, in the fine print, is that their Zestimate is not overly accurate.  Actually, statistically speaking it is amazingly inaccurate!  There are too many variables, that don’t have to do with measurable and quantifiable characteristics, to allow a computer to provide an accurate statistical analysis on a home’s value.  Lets dive into some of the specifics!

When the Zillow website states that the Zestimate is accurate within 5, 10 or 20% keep in mind that can potentially mean a PLUS or MINUS percentage number!  In other words, IN COLORADO, if an “off market” (meaning the home is not currently for sale) home zestimate is $400,000 you can figure that value is correct within 10% ($360k - $440k…. an $80k spread) only 68.4% of the time… that means that 31.6% of the time they are even more inaccurate!  In Colorado the Zestimate gets it right to within (+ or - 5%) only 43% of the time!  This means that if you are on Zillow and your home is NOT on the market, the value provided by the Zestimate can not be considered accurate… its more of a poor guesstimate!  On the bright side…. If we look at the Zestimate numbers of “on market” homes the numbers are much more reliable. 

Zillow’s accuracy numbers in Colorado for “ON MARKET” homes (meaning a home that has been listed for sale by a real estate agent or for sale by owner) the accuracy increases significantly (90% are within +/- 5%) and are much more reliable.  Why such a dramatic increase in accuracy AFTER a home goes on the market?  This is because they have a local real estate agent establish a market number so the Zestimate can react accordingly.  In their own FAQ’s they site that after a home is listed that their algorithm incorporates new listing data to provide “valuable signals” about the homes eventual sales price!  I find this statement funny….. the new listing data or “valuable signal” is an accurate list price established by someone with local market knowledge!  

Overall, I would say that online valuation modulators are not a reliable source to establish a homes value.  At Zillow.com it goes on to say that a “Zestimate is a good starting point as well as a historical reference, but it should not be used for pricing a home.”  The very best way to establish your homes value is to have a local real estate professional (or two or three) out to view your home and help you establish a proper market value for your home based on neighborhood home sales and what those numbers indicate that a buyer is willing to pay for similar homes!  These quick computer tools are novel and potentially useful to gauge the overall market temperature, but that may be the limit of their usefulness at this juncture.  No doubt there will be many that work to improve the AI in an attempt to better hone property values, but that day has yet to arrive. 

Hope that helps,

Dave Kimbrough

The Kimbrough Team


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What Is A "Pocket" Or "Off-Market Listing"?

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Hi, Dave.

Great columns. I always learn a lot. Can you explain exactly what "pocket" or "off-market listings" are, how they work, and how a buyer can tap into that segment of the market?

Thanks.

Bill F., Grand Junction



Bill F,

The under used, but often successful "pocket listing"! One of my favorites! A pocket listing can be a sellers best friend and is something that we certainly use an awful lot each year. In fact, we will sell a dozen properties each year by utilizing the “pocket listing” status. A pocket listing is a listing that is not advertised and may be withheld from the multiple listing service until such time you are ready to go public with the sale of your home. With a pocket listing your listing agent can promote it to their peers and colleagues and will typically do so through word of mouth. If you go this route, you always run the risk of word getting out, but your chances of keeping it quiet are exponentially greater. A pocket listing can be a successful way to flying under the radar and still getting your home sold in a timely fashion and getting a jump start on selling before you are ready to put the sign in the front yard. If you go this route, I would suggest you be prepared to move as the results are often times quite good. 

The pocket listing is a great way to get your property exposure on the “down low” and buyers are generally excited to see these properties as they feel like they are getting a sneak peak at it before everyone gets a chance.  It’s a great option for those who dread the showing process or don’t want the hassle of showing after showing for several weeks. The traffic flow is often sporadic at best, but using this method allows you to hunt and peck for candidates that are most often much more targeted and many times pre-screened to help increase the chances they are a fit!  Keep in mind that a pocket listing may not always be the best option.

The pocket listing process does not provide the best environment for competition and multiple offers as the selectivity of who knows or has access can limit the big rush that many times occurs when a new property hits the market. This means that getting multiple competing offers that may drive the price up above the listing price is not common but getting an offer at the list price is a likely outcome because you can leverage the early access angle. Access to these properties is often times just being in the right place at the right time!  Many buyers are often frustrated when they see a house has sold before it even hit the market and feel cheated that they did not get a chance to view it.  One way we help our buyers get access to the ‘off, but on market’ properties is networking with other agents and e-blasting (email blast) to all the agents about what kind of property we are seeking! It’s amazing how many properties turn up when we e-blast for a buyer’s need if properties on the market at that time don’t fill the bill. 

I would encourage you to hook up with a real estate agent and have them start networking and e-blasting your specific property needs and see what turns up after doing so. You have to turn over every stone and sometimes turn them over time and time again to find just the right place! It does not always happen, but it sure can be an effective way to discover special/unique properties that are ready for sale, but just not in plain sight! Looking off the beaten path is sometimes where the best trails are forged! Looking in ways and places not everyone is looking is sometimes where real gems are found. Have a wonderful Sunday and thanks for your question.

Dave Kimbrough

The Kimbrough Team

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How Can We Remain Open To Higher Offers Without Losing The Buyer?

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Dave,

There are four siblings involved in trying to sell a house. The Realtor has it listed a price that two of us feel is too low. His hope/plan is to have an offer at the open house the day the house is listed. It seems like this will trigger an aggressive buyer to either offer this lower list price or an even lower lowball offer.  Can we hold out if an offer is less than the list price? So, this is the flip side to your article "Making an Offer Before the Open House." How can we remain open to higher offers without losing the buyer?

-Jake (area withheld)


Jake,

Okay, there are several angles to the question and answer. First, good luck with the four siblings “trying” to sell a house! I have found over the years that trying to get four siblings, or fewer for that matter, to agree on anything if quite difficult. I come from a family where I have three older sisters and as you can guess unanimous agreement is as rare as a Yeti sighting! That being said, I believe the strategy of your real estate agent is a bit risky…by putting all his (your) eggs in the proverbial open house basket!  For the purpose of this answer, I will assume that the home in question is being sold locally, as we do from time to time get questions submitted from outside our area and the location was not included with your question.

For anyone who has read this column for the past four or five years, you will know that I am not a huge fan of the traditional open house! Why am I not a fan of the open house? Simply put, they are not impactful at generating offers on the house being held open. Does this mean that they don’t work? No, it just means that in our market they are not very effective at creating a feeding frenzy type of atmosphere. I know, I also watch HGTV and see the open house frenzy at the end of each episode of Flip or Flop, Good Bones or Hometown. (BTW these are about the only kinds of shows, outside of football or hockey, that we watch at the Kimbrough house!) Unfortunately, I have just never seen it work this way… they call it reality tv, but it is far from any reality I have ever seen. Again, this does not mean it will not work, just means that the statistical chances are not high! If this magic open house does not work and you do not receive any offers at all or the offers you receive are from “low ballers” (any time I hear the word ballers I think of The Rock) you can certainly hold out for a higher price from another buyer on down the line. If you do receive an offer at your asking price and you do not accept, there may be some potential issues with agent commission being due, but that’s a question for a completely different column. The last part of your question is kind of like having your cake and eating it too!  How can we hold out for higher offers and not lose our low-ball buyer? This answer is also simple…you can’t!

I have heard my mother say it many times…you are either pregnant or you are not! As it relates to real estate, you are either under contract or you are not! You cannot, at least no self-respecting buyer would allow you to shop their contract, be under contract with one buyer and still soliciting offers from other buyers that may be higher and then just go kick your current buyer out of bed! It just does not work that way…or maybe it does in some weird “reality” tv show! You need to list the home for a price you are willing to sell it at and then market it to solicit offers. An angle that we will use from time to time when we think there may be an unusually high demand for a property is to put it on the market and then hold any and all offers for a period of 5 days. This allows more than just an open house to take place, it allows a fair amount of market saturation to occur and the generation of traffic and interest in hopes to accumulate several offers where you end up with buyers competing for the property. At times this works great, but it works best when the property is unique, in a high demand price range or in a high demand area. 

Ultimately you can look at this as any family would when there is dissent in the ranks…two of you are going to be right and two of you are going to be wrong! Sometimes being right is the only consolation you get!

Hope this helps.

Dave Kimbrough
The Kimbrough Team

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Advice For Those Getting "Locked Out" And How Good Are Comparables In Naming Your List Price?

Dave,

I always look forward to your advice and try to file it away for future real estate transactions.

Today's advice for the folks that get "locked out" early in their search, neglected to advise them to find a realtor who gives them an alert the minute a home in their price range goes on the market!!

Also, how good are comparables in your neighborhood for naming your listing price?

Thanks for sharing your knowledge.

Cheers,

Janet, Grand Junction

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Janet,

Thanks for reading my column! I am blessed to have many loyal readers who enjoy it and I am very appreciative of your support and your question. 

You are right and I appreciate the reminder, because I did fail to mention one of the most important aspects of finding a good agent to help in a home search. In an active market, like our market now, making sure you have an agent that has you on, what we call a drip campaign, is vital. A “drip campaign” is imperative to any buyer who is seriously looking to be competitive and find the best properties first! When you are enrolled in a drip campaign, you will be immediately notified when a property that meets your criteria hits the market. This is how you beat other buyers to the best new properties! Now, when it comes to determining your list price, better not ignore the house around the corner.

I consider comparable sales from the same neighborhood the most important comparable properties when determining a properties list price.  Generally homes in the same neighborhood are the strongest comparable properties because they were built around the same time, many by the same builders and most likely used similar finishes and floor plans.  What price similar homes in the neighborhood are selling for are typically your most accurate predictor of what your home will sell for and the ones I look for first!  Of course you have to take upgrades or significant remodels into account when looking at each property and determining how they comparatively stack up.

Lastly, I love that you signed your question, ‘Cheers’!  Just such a friendly and positive way to sign off … I love it. Thanks again, Janet.

Dave Kimbrough

The Kimbrough Team

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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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