Mad River Valley Real Estate – 2016 Year In Review

As 2016 approached an end, it seemed like just about everyone I knew was happy to kiss this one good bye. We came off an awful 2015/16 ski season, the after-effects of which were hard on local businesses and outdoor enthusiasts alike. The fall brought lots of sadness to the Mad River Valley, and the ongoing drama of the presidential race did little to calm people’s nerves. From a purely real estate perspective, however, 2016 was a barn-burner, and there seems to be little on the horizon to indicate 2017 will be any different. As the presidential campaign came to a close, the stock market rallied into uncharted territory, with most major indices hitting all time highs, before flattening into an early 2017 slump. I’ve said it before and I’ll say it again, when the bulls run on Wall Street, good things follow in real estate, and we are riding the coat-tails of the second longest bull market in history. There is a natural tendency for investors to go conservative following a big run, and real estate has returned to top dog status as the best place to put your money in the long run. While median home prices nationally have returned to pre-crash levels, housing starts are half what they were in 2005 and foreclosures are at a 17 year low, easing fears that this is just another growing bubble waiting to pop. Combine this with a national glut in inventory, you have the makings of the perfect place to park your money as the outlook for Wall Street is a little less cheerie for 2017.  Optimism is...

4 things the Real Estate Industry can learn from Millennials

The millennials are growing up. Generation Y’s will start to hit 30 this year and that’s big news for the real estate industry. For the second straight year, this quirky, trendy, techno-savvy, hard-to-pin-down demographic will represent the largest group of home buyers in the United States, representing 32% of all home purchases. 8 years ago they didn’t even warrant a generational nickname, 5 years ago they were all but written off by the real estate industry as renters for life, or worse yet, voted most likely to live in their parents basement…… forever, endlessly searching the internet for the perfect job. Today they represent the lifeblood of the real estate industry, and more importantly the economy that sits squarely upon the mountain of debt that comes from those bankrolled purchases. Huh. So, if they are so crucial to the economy, certainly there are lessons to be learned. And there are. Buying a home is not romantic. The Millennials came into adulthood with the largest college debt load and the worst job market in history. They watched in horror as their parents lost the “American Dream” homes which they had spent their childhoods in, and vowed never to make the same mistakes. As this group has come of age their focus on home ownership has become as sharp as ever with special attention paid to economy and value, not bigger and better as their parents generation espoused. Instead of risky, zero-down, interest up loans, they are focused on saving to make significant down payments and smart business decisions. 38% of millennial buyers say they will delay their wedding in order...

4 Keys to Identifying Your First Home

Typically a first time home buyer will be limited most significantly by price. After all, it’s a first home and most young home buyers have not yet hit their prime earning years. This means income and savings will be a driving force in making the decision about what to purchase. There will certainly be compromises – ugly carpet, small living rooms, deferred maintenance and lack of garage to name a few. But having limited resources does not prevent a buyer from making wise choices and paying close attention to the key indicators of a wise real estate investment. Neighborhood – It’s been said that the only thing more important than location is location. Beyond that, location is pretty important too. Get my drift?  The place you buy is almost more important that what you buy in that place. Almost 90 percent of home buyers search online for real estate and identify properties of interest before they ever make an appointment to see a house. This is essential market research and tells you what is available in your price range. Take that a step further and do a drive around. Walk the neighborhood on a Saturday afternoon. Talk to the neighbors, ask about the schools, the roads, and town services. Drive up and down the street in the evening and see what it looks like in the evening. Are there people walking around? Are the neighbors friendly? Check things out and see if you can imagine yourself living there. If it feels wrong, you may have already answered the most important question before you even started. Schools – You may...

How to Break a Real Estate Contract (without losing your shirt)

We have all worked for buyers who got into a real estate transaction with the best of intentions, only to find that it was not the right deal for them. It may be the price they are paying, it may be unanticipated expenses moving forward, it may be financing, and it may be items that were uncovered during the inspection. It could be just about anything, but in real estate it’s almost  always about the money. And let’s be honest – the biggest responsibility that a Realtor has to his client when negotiating a contract is to protect them at all legal cost, and to make sure they don’t lose their money.   1. Protect yourself We have all read that “cash is king” and perhaps the best way to secure a property in a hot real estate market is to make your offer the most attractive. If you have the means, cash is a great way to go. But it does not mean you should get into a contract without protecting yourself, and this is the primary reason you should hire a Buyer Broker. There are good ways to make a great offer and there are bad ways to make a great offer and the worst way is to offer cash with no contingencies. Contingencies are your safety net and if you need to break a contract that contains no contingencies, you will forfeit your deposit. In a typical transaction that may be upwards of 10% of the purchase price. Furthermore, if a buyer breaks a full priced offer with no contingencies, the Sellers Agent still gets paid....

The Year In Review on the Mad River Valley Real Estate Scene

Overall 2015 was a very good year in the Mad River Valley Real Estate Market. Volume was up, prices were up and winter finally appeared at Sugarbush and Mad River Glen, following an extended hiatus. Yet numerous people still approach me and ask “how’s the market” and the expression on their face betrays the unease they clearly feel. I suppose it is natural to be skeptical, considering that the most tumultuous financial disaster in our nation’s history still remains vivid in our memories, and that disaster badly damaged much of the perceived equity many had staked in their homes. We still feel the after-effects, and will continue to feel them for many years to come. It’s difficult to feel entirely whole, even some time on. So I perform a healthy exercise when an imbalance appears between perception and my day-to-day observations in this market. To counter that inevitable skepticism, I went to the numbers and found some reassuring data that should make even the heartiest skeptics feel better. In fact there were 86 residential sales in 2015 which represents a 15% increase in sales volume over fiscal year 2014, which had been the previous high-water mark since the crash. Furthermore, the median home sale price increased from $284,500 in 2014 to $303,325 in 2015 – an increase of nearly 7%. More importantly this is the first time median sales of homes in the Mad River Valley have topped the $300,000 mark since 2008, when the median reached a pinnacle of $325,000. The 86 residential home sales represented the highest volume of sales since 2004, which was arguably at the...

3 Keys to a smooth Real Estate transaction

When you work as a Realtor, you are involved in all kinds of real estate transactions. There are easy buyers and difficult sellers. There are easy sellers and difficult buyers. There are unrealistic requests and there are outrageous holdups. And there are misunderstandings – sometimes lots of them. But most buyers and sellers don’t do this for a living so these hold ups, challenges and misunderstandings feel like a much bigger deal than they need to be. A good broker will help their client understand, but in the moment, it is hard for a buyer not to feel frustrated. So what can you do to ensure a smooth transaction?   Get pre-qualified before you start shopping – this seems obvious, but most buyers take it for granted.  The math is easy and most people know what they can afford because they are already paying rent. Furthermore, they can go online and find any number of free mortgage calculators, pop in the down-payment they can afford and an interest rate that seems about right, and instantly find a monthly payment that works for their particular income profile. However, buyers are frequently lulled into a false sense of security simply because they have saved a reasonable amount of money for a downpayment, and they earn enough to cover a likely mortgage. Yet knowing what a buyer can afford is very different from what the bank thinks that buyer can afford; and since the bank is taking on most of the financial risk, buyers have to play by their rules.  There are any number of things that can affect a buyer’s loan...

High Performance Homes

Sounds exciting, right? Well it is if you value efficiency in your life and believe that there are basic things we can do as human beings to decrease our footprint on this planet (oh yeah, and save money in the process). The vast majority of Americans will make the decision to buy their next car based on two numbers – the price tag and the Mileage Rating. Why should buying a home be any different? So I ask what’s hotter than a high performance car? A High Performance Home, of course. A High Performance Home is exactly what it sounds like. A home that has been built or retrofitted to maximize efficiency and minimize long-term costs. New homes are required to meet certain efficiency standards and those that become certified are registered on resnet.org, and the Home Energy Rating Score (HERS 0-200)  is the equivalent of the MPG sticker on your new car. Existing homes, with the help of a Dept of Energy approved Home Efficiency Audit receive a less complicated Home Energy Score (0-10). Both serve to tell you something about the efficiency of your home as cost of consumption is compared to energy use (or loss). Did you know that those ratings also have minimum thresholds that can qualify your home for an across the board increase in appraised value, when documentation is presented to the appraiser? Yes, it increases the value of your home. And banks are taking notice: there is tangible data from CoreLogic that homeowners living in energy efficient homes are 32% less likely to default on their loans, because they have more money...

Millennials are getting a bad rap

I’ve written myself that the Millennial’s are the bane of every Realtors existence; a generation seemingly content to remain in their parents basements or in a group rental in perpetuity, going with the flow and landing wherever the latest relationship or social-media based job opportunity takes them. These are just not the people looking for houses to buy. At least that’s what I believed. Someone recently suggested to me that it was the result of a generation of adults (my generation) coddling their children and never requiring them to make a decision, allowing them to drift and stay at home as long as they needed a soft landing from their latest failed attempt to get out of the house. Seemed harsh, but in an amusing way, somewhat logical. It’s a generation whose family structures consisted of, for the first time in history, more single-parent households than “traditional” households; a generation where nearly 83% of those traditional households had two incomes and struggled to make ends meet. It makes sense that these parents would feel slightly more guilty of the time they spent at work and not with their kids. Naturally those parent allow their kids more freedom, more leeway, a softer landing and more second chances. The Entitled Generation. But a closer look at the data tells a very different story. Research shows that 75% of Millennials interviewed saw home-ownership as a long term goal, and nearly as many felt that it was also a good investment. Of those interviewed, 65% said that they planned to purchase in the next 5 years, and only 16% said that they did...

3 Strategies for Making a “Sweet” Deal in a Competitive Real Estate Market

You found a home you want to buy, and now you are ready to make an offer. Immediately the Seller’s agent informs you that there are multiple buyers interested and that they are expecting multiple offers. It sounds ludicrous after the 5-year market adjustment of the Great Recession, but bidding wars happen in all sorts of markets. In the Mad River Valley real estate market that I call home, they happen practically every day. If your default is to panic, take a step back and breath deeply. The last thing you want to do is over-react to the very ordinary possibility that there are other people interested in the same property you are. There are plenty of innovative ways to “sweeten the deal” without turning a good deal into a bad one. 1. Money talks – If you have cash you should utilize this position to your fullest advantage. Financing contingencies create great uncertainty for Sellers because they control nothing and the outcome is weeks away, by which time the “losers” in a bidding war may well have moved on. If you have the solitary cash offer, you are immediately in first place. Just don’t balance that by making a crappy, low-ball offer. Alternately, if you don’t have the cash, you can still make an attractive offer with the most favorable terms. This is not the time to strategize with your broker about how “low” the seller might go. With multiple buyers interested there is an excellent chance that the property will garner close to full asking price. As long as you can afford the loan and the market supports the...

Tips for first time home buyers in the Mad River Valley (and beyond).

Tips for first time home buyers It’s easy for someone who works in the real estate industry to minimize the stress involved in the home buying process. After all, we do this for a living. We work in a world of legalese; of purchase and sale contracts, building inspections and contingencies. The language and processes are genuinely second nature. And for real estate professionals who work in tourist economies such as the Valley I work in, the purchaser’s can be just as experienced as their professional counterparts, buying and selling real estate on a regular basis, which can make those professionals poorly adapted to working with beginners. But for the homebuyer who is doing this for the first time, the process can be fraught with obstacles big and small, real and imagined. Because in most cases a home is the largest investment a person will ever make, it is not something to be taken lightly – but armed with the proper information, it can be a truly enjoyable and equally edifying process. Be the most informed person in the room – This may sound stupid, but many home buyers start the process without any real understanding of what they’re looking for. They don’t know what mortgages cost, they don’t know how to figure out principal and interest, they don’t know what closing costs are, they don’t know how much cash they need to put down. They just know that they are sick of paying $1200/month in rent when they can be paying towards ownership. But ignorance is not the path to success and educating yourself before starting the process will...

Cash-flow Real Estate Investing

There was a time not too long ago, when the consensus, long-term, safe investment was real estate. And there was really no close second place. Theoretically values always increased, so as long as you kept making the payments, you were going to cash out. Sometimes sooner, sometimes later, but cash out you would, virtually regardless of the property type. Fast-forward a few years and never has there been a greater disparity between that time, which seems so long ago, and the current state of the residential real estate market. While real estate values are actually on the increase for most of the largest demographic indicators, prices are still fluctuating here in vacation-land, and prospective investors are still watching with skepticism. Therefore, said investors bounce between the notion of moving forward and investing in a stabilizing market with great potential, and the risk of repeating the past, where values plummeted and fortunes were lost. Investors are getting better prices, but recent history has taught us that nothing is guaranteed, and despite plenty of strong evidence to the contrary the possibility still lurks that values could begin sliding once again. So there is a propensity to wait. Meanwhile, the Millennials are staying at home longer than any generation has ever before – eschewing independence for the security of their parents basement and eventually moving into a rental property rather than buying. Again, recent history has taught a new generation that the “american dream’ of home-ownership maybe wasn’t such a great dream. Or, to be a bit less cynical, maybe it just wasn’t for EVERYONE. Maybe the new “american dream’ is to...

Why Buy When I Can Rent (hint: so you can retire)

I think that there are, in general, people who are buyers and people who are renters. If you are predisposed to settle down, wish to establish roots in a community and inclined to invest and build equity towards a future, you already have an answer to this question. If you have not already bought, then you are probably just waiting until the right property comes along. If you like to go with the flow and land where the winds blows you, then maybe renting better suits your lifestyle. For me, I knew when I first moved to the Mad River Valley that I was going to stay here for a long time. The holdups were simple things – I was young, had plenty of time to get serious, and wasn’t sure whether I wanted a house, a condo, or a piece of land to park my Airstream on (I don’t own an Airstream, but I really want one). But it was also about money. While real estate in the Waitsfield, Warren and Fayston was relatively affordable, interest rates were outrageous – 9.5% at the time. It was, in fact, FAR cheaper to rent, even if I held no equity in that property. I could rent an apartment for $600/month whose equal would cost me $1200/month to buy. The numbers didn’t work. It was a temporary solution, but lower interest rates stagnant real estate growth and soaring rental rates over the past 5 years have changed that dramatically. Build a Nest Egg If you think of a home as an investment, rather than a place to live, you start to...

Understanding the language of real estate – what did that Realtor just say to me?

Real estate agents (we call them licensees, for reasons that will become clear later on) licensed in the State of Vermont are required to take 24 hours of Continuing Education courses every two years in order to maintain their license. The Vermont Real Estate Commission, which is made up of 3 real estate brokers, 1 salesperson, an attorney and 2 members of the general public, have established that this is a reasonable amount of training to keep Licensees and Brokers up to speed with the ever changing rules and regulations of our industry. The truth is, this is a bare minimum to someone just starting in the business. Like most rookie licensees in the beginning, I had just passed my real estate licensing exam when I started working in the business and I was exempt from any required  course work for two years (this is no longer the case). I did, however, take a Code of Ethics class right away, which the National Association of Realtors requires of its membership upon entering into their fraternity. It was a four hour course that could have been taught in greek for all I understood about the language they were speaking. So it occurred to me that if Realtors speak a different language, it’s possible that the consumers they serve could be as confused as I was, and perhaps it would make sense to provide a bit of translation. So from time to time I will do so, most notably as the questions arise in my day-to-day activities working as a broker in the Mad River Valley real estate industry. What exactly...

Mad River Valley Vermont Real Estate – Time to Refinance

We have been talking about historically low interest rates now for so long that homeowners and homebuyers have actually begun to take it for granted that they will remain historically low. Well, if you follow the news, you already know that the Fed will begin putting an end to that some time in June. If you have decent credit and a job, you might as well make the call to your friendly neighborhood mortgage guy and see what bounty awaits for your mindfulness. When I made that call I found that the savings over the life of my mortgage were over $50,000; thats a lot of cake no matter how you split it up, and it cost me next to nothing. When you work in the Mad River Valley real estate industry as I do, you speak with a great many mortgage brokers. And when you listen to what the good ones have to say, you can learn some very interesting things. You might even save a few bucks in the process. Case in point. I started receiving notices from the bank that owns my mortgage about 6 months ago. They were offering me exceptional,  good-looking, super-terrific opportunities to refi my current mortgage, and lower my monthly nut by increasingly significant numbers . Of course they were. I’m one of their best clients, right? It must be because of my exceptional reputation, my obsessive compulsive tendency to pay early and often, all the referrals I give that tiny local bank in the Citi. I’m not a number, I’m a name, for heavens sake. This is clearly my reward. Needless...

Bidding wars, are they worth it in the Mad River Real Estate Market?

I’ve never had someone walk into my office and say “lets go to war over this property” or “ let’s have a really nasty negotiation and put everyone involved on the defensive”. And the reason you never hear that is that no one really wants negotiations to be hostile. No one wants the person (or people) on the other side of the transaction to be on the defensive. It’s counter-intuitive and irrational. So what is the deal with bidding wars, and why on earth would you want one? To start, every Realtor has an opinion on this subject. There are some who love them and there are some that hate them. Those that love them generally enjoy the fight and feel as though they have performed their job to maximum efficiency. Those that hate them have probably been involved in one that went terribly awry, and the experience left them sitting alone at the table with more questions than answers – generally from their client.  Those that do not have an opinion on bidding wars have never experienced one, plain and simple. To answer the first question, though, you need to answer another, more revealing question: who benefits? A bidding war, by definition, is when two competing offers are presented on the same property, during an overlapping time period, thus allowing the opportunity for a competition between two buyers, resulting in a higher sale price for the property. In theory. So the short answer is that the Seller benefits by getting more money for their property. The Realtor benefits collaterally because his client does well and is generally happy...

Are you Nuts? (Pricing Your Property & other huge mistakes Sellers might just make)

Last summer I gave a pretty typical number of listing presentations and was passed over a pretty typical number of times along the way for other real estate offices. I listed some, I didn’t list others. This happens. Its part of the business. If I were planning to sell my home (and I didn’t do this for a living) I would certainly want several different opinions about the value of my home. Afterall, I am not selling a used car. Or a coffee maker. There are many things that factor into the value of a home and as a seller you owe it to yourself to listen and make the best decision for you and your family. However, be careful. There is ALWAYS someone willing to make you a pitch, and the best advice I can give a prospective seller is to listen, not talk during a listing presentation. You may just find out what your house is worth rather than find out that the Realtor you are about to hire will list it for just about any price that seems to make you happy. And if you just want someone to list it for the price that makes you happy, you might as well list it for sale on your own, because you have already tainted the two most important aspects of hiring a professional broker to sell your home; The Market Evaluation &  the brokers extensive knowledge in a complicated industry. Despite the complexity of the market, and the vast difference between a median $300,000 home and a $1,000,000 luxury home, there are some standards in the...

3 keys to a smooth real estate transaction

When you work as a Realtor, you are involved in all kinds of real estate transactions. There are easy buyers and difficult sellers. There are easy sellers and difficult buyers. There are unrealistic requests and there are outrageous holdups. And there are misunderstandings – sometimes lots of them. But most buyers and sellers don’t do this for a living so these hold ups, challenges and misunderstandings feel like a much bigger deal than they need to be. A good broker will help their client understand, but in the moment, it is hard for a buyer not to feel frustrated. So what can you do to ensure a smooth transaction?   Get pre-qualified before you start shopping – this seems obvious, but most buyers take it for granted.  The math is easy and most people know what they can afford because they are already paying rent. Furthermore, they can go online and find any number of free mortgage calculators, pop in the down-payment they can afford and an interest rate that seems about right, and instantly find a monthly payment that works for their particular income profile. However, buyers are frequently lulled into a false sense of security simply because they have saved a reasonable amount of money for a downpayment, and they earn enough to cover a likely mortgage. Yet knowing what a buyer can afford is very different from what the bank thinks that buyer can afford; and since the bank is taking on most of the financial risk, buyers have to play by their rules.  There are any number of things that can affect a buyer’s loan...
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