Factory Home Pricing in a Custom Home World

Many years ago, I was one of those agents that immediately jumped on the bandwagon when it came to trying to fight off big firms like Zillow and similar platforms from taking over the real estate industry, because I was afraid that my clients might begin to see the value in a one-size-fits-all kind of shop. Luckily, for me, my clients are smarter than that and I don’t feel as if I have lost any business to those platforms as my clients see the value in the services I provide.

Until my husband and I decided to put our own home on the market in 2018 though, I hadn’t truly realized how much these platforms affected our entire economy, and we were in for a rude awakening; especially when we realized how much they affected our own household economy.

In April of 2018, when running the Comparative Market Analysis (also known as a “CMA”) for our own custom home, after some adjustments, comparable “sold” listings gave my home a value of $910k. Keep in mind that, with a custom home, there are never exact, and sometimes not even close comparables. That’s what “custom” means, right? Nobody else’s home in the world is just like yours. Additionally, we lived in a neighborhood with no HOA and we had some neighbors who cared less than we did about their property, but I had adjusted for that too. Furthermore, because I was the homeowner and potentially biased, I had several other agents run CMA’s for me who came up with similar values to mine, so when we listed our home in the MLS in April 2018 for $888k, I felt like that was a fair price. And, while we could be leaving some money on the table, I felt like it was more important for me to find the right buyer and thought the lower price may allow for multiple offers. In fact, the agents who toured our house that first week thought so as well; all of them telling me that they were sure we’d have multiple offers within days. No such luck.

A few months into our listing, one of the agents who had shown the house to his buyers left feedback saying that they thought I should check in to see what Zillow was showing for a value on my house as that “forced their buyers in another direction.” I had checked Zillow before we ever listed, noting that in February 2018, they gave it a value of $628k and in March of 2018, they raised it substantially to $938k. That’s a $310k difference in less than one month! That’s the value of another home entirely! Why would I even acknowledge any values they showed when they were so far off before I ever listed the house? After speaking with that agent whose buyers went elsewhere, I was surprised to find that, after the big jump in March, Zillow had brought the value all the way back down to $647k (a difference of $291k in just over 3 months). That’s when I started going back in Zillow history and keeping tabs on my “Zestimate,” as Zillow calls it.

When I went to their website, I found that they had their information incorrect in several fields. They showed our house with incorrect finished square footage, without a finished basement, missing a bedroom and a bathroom, and only having a 3-car garage vs. 4-car garage. They didn’t give any credit to the fact that we had updated the entire house in 2018 from when we built it 16 years prior, nor did they give any credit for the large lot size, the RV pad and hookups, the landscaping, waterfall, pond, fencing, etc. Thus, just as I had suspected back when I jumped on the bandwagon against this idea of robot-pricing many years ago, they were comparing my CUSTOM home to TRACT homes, never taking into account any of the upgrades, special features, or lot size. They were pricing my completely CUSTOM home as if it were built in a factory with all the same materials, square footage, bedrooms, baths, etc. when NOTHING about my house was even similar to what they showed as “Comparable Homes.” Sadly, between their misinformation, among that of other sites, the TRUE comparables were never even shown and the value of our home plummeted in what was considered a rising market. Everyone who had ever been in our home was flabbergasted at what we ended up selling it for… $171k UNDER list price at $717k!

While this type of pricing may work for mobile homes, townhomes, and condos that are all EXACTLY THE SAME (are there ever really homes that are EXACTLY the same?), you will see in the data below that, on a CUSTOM home, these types of platforms are sabotaging our market. Continuing to support these types of services will only reduce values in ALL markets. As a buyer, one might think this is a good thing, but if you ever want to sell your home, this type of robot/computer-based pricing will only hurt your bottom line.

Month Year Zillow Zestimate E-Property Watch Collateral Analytics Ownerly.com Homes.com Listed/Sold Price
December 2016 $672,000 $646,718 off market
January 2017 $713,000 $649,080 off market
February 2017 $716,000 $651,480 off market
March 2017 $677,000 $653,945 off market
April 2017 $656,000 $656,400 off market
May 2017 $646,000 $658,775 off market
June 2017 $632,000 $661,198 off market
July 2017 $623,000 $663,519 off market
August 2017 $620,000 $665,805 off market
September 2017 $616,000 $667,993 off market
October 2017 $618,000 $670,082 off market
November 2017 $622,000 $672,055 off market
December 2017 $620,000 $674,006 off market
January 2018 $624,000 $675,995 $526,000 off market
February 2018 $628,000 $678,007 off market
March 2018 $938,000 $680,081 off market
April 2018 $920,000 $682,145 $765,000 $888,000
May 2018 $847,000 $684,130 $879,900
June 2018 $646,000 $686,144 $849,000
July 2018 $641,430 $688,043 $530,000 $820,000
August 2018 $647,463 $689,908 $696,000 off market
September 2018 $759,334 $691,708 $799,900 $799,900
October 2018 $755,912 $693,438 $763,800 $765,000 $750,000
November 2018 $757,112 $695,079 $703,000 $759,700 $749,900
December 2018 $758,475 $780,093 $743,700 off market
January 2019 $752,820 $788,000 $736,600 $760,000 off market
February 2019 $742,693 $788,000 $748,800 $739,900
March 2019 $736,953 $788,000 $745,300 $735,000
April 2019 $726,447 $788,000 $731,700 $725,000
May 2019 $723,871 $788,000 $723,000 $717,000
June 2019 $724,458 $712,000 $720,600 sold 5/6/2019
July 2019 $721,789 $709,172 $720,000 $720,600 $696,000
Zillow Zestimate E-Property Watch Collateral Analytics Ownerly.com Homes.com Sold Price
Low Point: $616,000 $646,718 $696,000 $720,600 $526,000 $717,000
Had we trusted these computer-based websites, even after reducing the price substantially, we would have lost this much more: ($101,000) ($70,282) ($21,000) $3,600 ($191,000)
Value fluctuation during study: $322,000 $141,282 $24,000 $79,300 $239,000
Largest value change in shortest period of time: $310,000 $85,014 $7,000 $36,100 $239,000

As you can imagine, I am a huge believer in the human touch in all aspects of our lives; not just real estate. In sharing this information, my hope is that you can actually SEE the value a REALTOR® brings to the table when purchasing and selling your home. Sure, does it sometimes seem like the commissions we receive are larger than the job itself? In some cases, they may be. For an agent who does their very best to get you top-dollar for your home and handles all of the back-end research, management, and negotiations that most people don’t have time for an don’t even know need to be done, it’s usually worth every penny for the peace of mind that it was all done properly without anything coming back to haunt you after closing, thus making the transaction a win-win for everyone involved. Should you need an agent who puts your needs first, please give me a call. If I’m not the expert you need, I’ll be happy to put you in touch with the right one!

Roni Lambrecht

Colorado Independent REALTOR®, Agent ID: II100024534 / Office ID:M2005

CMRS, SFR, TRC, MCP, SCLC, CNSA, Notary Public

Cell/Text: 303-902-0121

Roni’s Real Estate Website: www.RoniLambrecht.com

“As you grow older, you will discover you have two hands; one for helping yourself, the other for helping others.” -Audrey Hepburn

Remodel or Move???

Of all the questions I receive as a REALTOR®, this is the one that is asked most often… “Should we buy a new house, or one that’s already been remodeled, or should we stay here and make this the house we always dreamed it could be?”

LAMBRECHT MSTR BATH B&A 3 There are so many ways to answer this question, both financially and emotionally, and all must be considered when trying to make the right decision for yourself and your family. Most importantly, you must figure out what’s motivating the thoughts of moving or remodeling in the first place. If the motivation comes from something short-term versus long-term, it may be best to stay put until you get past that short-term motivation. Once the motivation for change has been figured out, the next step is to begin answering emotional questions and dissecting your day-to-day life. Once that’s done, you’ll move on to financial questions.BENNET BEFORE AND AFTER 2

On a side note, if you have recently experienced a major life event such as a death in the family, divorce, job loss, etc., I would highly recommend you postpone any big plans until you honestly believe you’re in the right frame of mind to be making a big decision. For us, after losing our son, there has been a huge void that we’ve been trying to fill and, after four years, knowing that our void will never be filled, we’re making decisions in a more logical state of mind.

Emotional Questions:

  • Make a list of the things you love about your house; your neighbors/neighborhood, your location, how it functions for each season of the year, how you entertain, etc.
  • Make a list of the things you wish were different about your house; neighbors/neighborhood, location, function throughout the year, entertaining, etc.
  • Make a list of the general chores that are done to maintain your current home inside and outside throughout the entire year during each season. Now, go through that list and decide what you are willing to continue doing in this house and price out what it would cost to pay someone to do what you can’t/don’t want to do anymore. (Oftentimes, people want to move because they think it takes too much work to maintain what they currently have, not realizing that a move can cost far more than hiring someone to do those chores for you.)
  • Have you outgrown your space? Is it time to downsize or upsize?
  • Is there a way to de-clutter to create more space? Are there areas of your home that you don’t use at all, yet others you use all the time that could be larger?
  • Can you/your health handle your house being a mess for a lengthy period of time? (example: dust vs. asthma, OCD vs. long-term mess, etc.)?
  • Can you mentally and physically handle living in tight, dusty quarters while your house is being remodeled or can you handle de-cluttering, staging, packing, keeping your home spotless for showings, etc.?
  • Where will your pets be while work is being done on your house or for showings, should you decide to sell?

Financial Questions:

If you remodeled your home…

  • What would you remodel first, second, third…?
  • How much would remodeling cost?
  • Would you do it all at once, or a little at a time?
  • Would the cost of the remodel sustain itself in your neighborhood? (Example: Does it make sense to spend $50k to remodel your kitchen when your home is already the nicest home on the block? On the other hand, if this will be your “life house,” maybe it’s worth it for quality of life.)
  • Do you have cash to remodel your home?
  • If you needed to pull the equity out of your home to remodel by refinancing/second mortgage/line of credit, would you be able to afford your monthly payments and still have enough left over to live the quality of life you have become accustomed to? If not, what are you willing to give up to perform the remodel?
  • Are there things you can do yourself to save money? (Remember, if you are using a contractor and you tell your contractor that you are going to do something yourself, you need to make sure you have the time and resources to complete the project when you’ve promised it will be done as most contractors have strict schedules to keep and your lack of performance could increase costs or cause the contractor to go elsewhere for work.)
  • How much do you pay for property taxes and homeowners insurance now? How much would you be paying after the remodel? Why is this important? You want to make sure all the updates are included in your home replacement values just in case you need to file a claim on your newly remodeled home.

If you sold your home…

  • Is this the best time to be selling and buying? Remember the phrase, “Sell high. Buy low.” Can you leave this house and get everything you need within your budget?
  • What would your net proceeds on your sale be after all is said and done?
  • Would you make enough to pay in full for a new home or can you qualify for a mortgage, if needed?
  • How much do you pay for property taxes and homeowners insurance now? How much would you be paying on a new home?
  • What is the sales tax where you’ll be moving to? This is important when you’re making large purchases such as vehicles, or other purchases that you’ll have delivered to your home such as furniture, landscaping materials, groceries, etc. (As an example, we live in Unincorporated Douglas County and our sales tax is 4%, where most other places in Colorado are between 7.25%-8%. This could make a $2000 difference on a $50,000 car purchase.)

Of the many reasons for having me help you with your real estate transactions, John and I can also bid your remodeling project so that you have both sides of the story to help you make an educated decision. If you’re on the fence, please contact me. I’m happy to help!

 

Use the Tools You’ve Been Given:

SHAUNA KITCHEN BEFORE AND AFTER 2

Did You Know that a Home Buyer Can Be Held Responsible for a Home Seller’s Taxes?

 

According to FIRPTA, the Foreign Investment in Real Property Tax Act of 1980 (updated most recently in 2016), if a buyer purchases real property, such as a house, from a foreign seller, the seller should pay the 15% tax that could be due on the property at closing (usually escrowed for on the Settlement Statement). BUT, if the Title Company is unaware that the seller is a foreigner, the tax escrow may be missed. If it is missed and the seller cannot be located, or refuses to come up with the money, the 15% tax becomes the buyer’s responsibility.

The IRS states on their website, “In most cases, the transferee/buyer is the withholding agent. If you are the transferee/buyer you must find out if the transferor is a foreign person. If the transferor is a foreign person and you fail to withhold, you may be held liable for the tax.” Colorado’s Division of Regulatory Agencies is consistent with the IRS declaring, “In complying with FIRPTA, a buyer must withhold 15% from a foreign seller’s sales proceeds and send it in to the IRS within 20 days of closing.”

So, how does a Buyer go about finding out whether or not a Seller is considered “foreign?” Can you imagine the scenarios and how sellers could potentially be offended if you just asked them if they are a foreigner? There’s actually a simple way to handle this from the time the contract is written all the way up to the time of closing…

The buyer can ask for the seller to give them a Written Certification, under penalties of perjury, that they are not a foreign person. The certification must include the sellers name as it appears in title to the property, their U.S. tax identification number, their home address (or their office address in case of foreign entity). Additionally, as your agent, I would require this document be notarized. If the Written Certification is not acceptable, the buyer or the seller can also request a Withholding Certificate from the IRS. Be aware though, the receipt of that Withholding Certificate may take upwards of 90 days. With the speed of our market here in Colorado, 90 days can seem like a lifetime.

This is one of the reasons I choose to use First Integrity Title Agency for my transactions as they handle all of this for my clients. Not all title companies take the extra steps they do to make sure my clients are covered.

Just another great reason to have an experienced REALTOR® on your team!

If you’re looking to buy or sell in the Denver-Metro area, please call me directly.

Roni Lambrecht, Independent REALTOR

Cell/Text: 303-902-0121
Email: cci@comcast.net / Website: www.RoniLambrecht.com

Agent ID: II100024534 / Office ID:M2005
CMRS, SFR, TRC, MCP, SCLC, CNSA, 2016 S.M.A.R.T. Award Recipient, 2017 SMDRA Leadership Academy Graduate

More info can be found on this topic at: https://www.irs.gov/individuals/international-taxpayers/firpta-withholding.

How to Freeze Your Credit

With the Equifax breach, many people are asking how to freeze their credit, so thought I’d share the links here…
Just remember,you won’t be able to apply for any new credit in the future without first un-freezing your credit.

So, you’ve refinanced or sold your home and paid off your mortgage(s), at closing… What happens next?

Cancel Automatic Mortgage Payments (refi and sale)

If you had your mortgage payments pulled automatically from your account, be sure to cancel them with the mortgage company.

 

Cancel Homeowners Insurance (only upon sale of property)

Call your homeowners insurance company and let them know you have sold your property and to cancel your homeowners policy on said property.

 

Refunds (refi and sale)

The title company will send your payoffs to their respective mortgage companies. Once those mortgage companies receive your payoffs, they take approx 4-8 weeks to send you any refunds owed back to you…

Interim Interest Refund

Extra Interim Interest is often collected to make sure there is enough time for the payoff to get delivered to the lender (typically 2-7 days, depending on the time of year and holidays during transit). This could be pennies or a couple hundred dollars. It depends on how large your balance was, the interest rate, and how many extra days were collected for at closing.

Escrow Refund

If you had an escrow account with your mortgage company, you should also be receiving an Escrow Refund. The best way to know how much you should be receiving is to review your most recent mortgage statement and look for the Escrow Balance. That is typically the amount you will be receiving back from the mortgage company. The caveat to that would be if your insurance or property taxes came due after the title company ordered the payoff from the mortgage company.

  • In the case where the insurance was already paid, you would receive a refund from your insurance company for the prorated time you owned the property from policy renewal through the closing date.
  • In the case where property taxes were paid by the mortgage company and also paid on the settlement statement at closing (so title could ensure clear title to the property), the county will accept the payment from the first check they receive.
  • If that check came from the mortgage company, then the check from the title company will be returned to the title company and the title company will issue a refund to you. This can sometimes take up to 12 weeks as the counties return the checks to the title company so the title company can issue a refund to you.
  • If that check came from the title company, then the check from the mortgage company will be returned to the mortgage company and the mortgage company will issue a refund to you. This can sometimes take up to 12 weeks as the counties return the check to the mortgage company so the mortgage company can issue a refund to you.

 

Lien Releases (refi and sale)

When a mortgage has been paid in full, the mortgage company must issue a Release to be recorded at the county releasing the lien from the property. Once it has been recorded that the lien is paid in full, you will be mailed the original Release, as well as the original Note and Deed of Trust that you signed when you originally took the mortgage out. It is important to note that these often come in envelopes from a Clearing House and they look like junk mail, so don’t throw away any mail until you have received releases on each mortgage that was paid in full.

Should you have any questions on these processes, you can call your lender(s), or call me. I’m happy to help!

 

Warm Regards,
Roni Lambrecht

Independent REALTOR, Agent ID: II100024534 / Office ID:M2005

CMRS, SFR, TRC, MCP, SCLC, CNSA, 2016 S.M.A.R.T. Award Recipient

Cell/Text: 303-902-0121

Email: cci@comcast.net / Backup Email: DoItForDalton@gmail.com

Roni’s Real Estate Website: www.RoniLambrecht.com

“As you grow older, you will discover you have two hands;

one for helping yourself, the other for helping others.”

-Audrey Hepburn

 

How Does Real Estate Relate to Parenting?

Two people have made comments to me in the last month that they were surprised I was still doing real estate, as they thought that writing and releasing my book, Parenting At Your Best, meant I had left the real estate business altogether. Sooooooo…

I just wanted to clarify that, after 20+ years in this business, I am still a REALTOR® and I plan to help people purchase and sell homes for many years to come. That said, I would love to be the one you put your trust in when you decide to sell and/or purchase your next home.

Why would you choose me?

With continuous changes in the industry, it’s important to know that you’re working with an agent who makes your needs a priority, and one who is dedicated to education by being on the cutting edge of rules, regulations, and technology. As agents, we are only required to have 24 hours of Continuing Education in every 3-year license cycle (far less than what should be required, in my opinion). As your REALTOR®, I dedicate myself to a minimum of 8 hours of education per month (that’s over 260+ hours more education than a typical agent receives). Additionally, I have a history in several aspects of real estate as a loan officer, a loan processor, a loan closer, a title closer, a Notary, designing house plans, and remodeling; each of which feed into being a valuable resource for you; a REALTOR® who can see and sense more within a transaction than a typical agent.

More importantly, my clients needs really do come first. And, for those who ask how my parenting book relates to real estate, I can tell you that being a REALTOR® is, in many ways, like being a parent…

  • Parents want their kids to make great choices, right?
  • Parents give their kids every tool they could possibly need to help their kids succeed, right?
  • Parents review the pros and cons with their kids when they’re making big decisions, right?
  • And, parents always do what’s best for their kids, even when it’s not in their own best interests, right?

As your agent, I give you the education and tools you need to make the best decisions for you and your family. I always want what’s best for my clients, even if it means telling them to stay put and refinance instead of selling and moving; even when I’ve shown them 78 homes and they get a job transfer and decide to move out of state instead; even when it means I’ve spent hours and I don’t make a penny. I want what’s best for you and, if you choose to hire me as your agent,  I’ll prove that to you.

Should you have any questions, feel free to call me at 303.902.0121 or email me at cci@comcast.net.

I look forward to many successful years helping you thrive!

www.RoniLambrecht.com

“As you grow older, you will discover that you have two hands;
one for helping yourself, the other for helping others.” 
-Audrey Hepburn

Annual Escrow Disclosure Statements

Public Service Announcement Regarding Your Mortgage Escrow Account…

Have you ever received an Annual Escrow Disclosure Statement from your mortgage company and wondered, “What the heck is this for?”

Have you ever received a check from your mortgage company telling you that you had paid too much into your escrow account and they were giving you an “Escrow Refund?”

Have you ever received an Annual Escrow Disclosure Statement stating that your Escrow Account was short/had a deficiency and they were asking you to send them extra money?

In my case, all of the above has happened on my escrow account. Because I have been on the back side of the mortgage industry preparing loan documents for over 20 years now and I am only one of five Senior Certified Loan Closers in the State of Colorado, I had the knowledge to begin asking questions of my mortgage company and climb the ladder when I wasn’t getting the answers I knew I needed.

If this were you, would you even know there was a problem? Would you know what kinds of questions to ask? If you did, would you know if the lender was giving you correct information, or if they were just blowing smoke like they tried to do with me?

It is EXTREMELY IMPORTANT that you have good people on your team when you are buying, selling, or refinancing your home. They are the ones who know the backside of things, the things you shouldn’t have to know because you hired an expert to know those things for you… ME! Not to be pretentious, but I can almost guarantee you that there’s not another agent out there who can read and understand loan documents like I can, who can look at your documents when you close, or years after you closed, and know exactly what transpired and how to correct any issues.

That said, because of my expertise…

  • I did not spend the “overage” of $943.12 they sent to me.
  • I also did not pay the shortage of $1216.04.
  • I contacted the lender, went step-by-step through the Annual Escrow Disclosure Statement explaining to them in detail what my escrow payment should be. They agreed with me and said, “The escrow department really made a big mistake on this one. Sorry for all your trouble. I’ll get it fixed.”

What if I was just the average homeowner and I received that check and I spent it? And, then, later, when the mortgage company figured out their mistake and billed me for the money I spent, what would I do? I’m lucky I didn’t have to find out, but I will tell you… With all their errors, they wanted to raise my payment over $300 per month and they were doing it with my very next payment. $300 is a LOT of extra money to have to come up with every month. Could you pay that?

So, please, when you receive your Annual Escrow Disclosure Statement from your mortgage company (which you should every single year the same month you closed), review it to make sure you have enough money in your escrow account to pay your taxes, insurance, and mortgage insurance. BUT, if it comes along with a bill saying you have an escrow shortage, or you receive a refund check saying your account had an overage, PLEASE be sure to check with your mortgage company, your loan officer, or call me to review it with you. I’m happy to help.

By the way, when I need my air conditioner fixed, I call an HVAC expert. If I have a plumbing issue, I call a plumber. If you have a real estate question, please call me at 303.902.0121. That’s what I’m good at!