Buyer • Financing • Market Trends • May 11, 2020

Lost to An All Cash Offer?

by Craig Franek

Wow, the real estate market in Salt Lake County is hot right now. It may not be as crazy as the Bay Area, but it sure does feel like it. As of today, March 11th 2020, there are only 1,215 active residential properties listed in the county. That’s 44% lower than last year, and is just over 1/3 of the available market in 2015.

So why am I thinking about this right now? I hosted an Open House this weekend, and I knew it was a great house and lots of people were going to be interested in it. It was also priced perfectly by the seller and their agent to attract a buyer quickly. At the open house I met all of the people who presented offers and heard a little bit about their planned offer. Did I see their offers, no. So I am not 100% on all of the offer details, but I am sure everyone went in over asking, and I know the winning offer was cash.

I heard it all the time in CA “My offer was beat by someone bringing all cash to the table”. Now, I have now heard it from several people in SLC. Are you in the market and experiencing this? Well if you are here, I have some news for you. “You are not alone, but it is nothing new.” As an analyst by trade, I love digging into data to understand what really is happening. % of Single Family Home Sales Paid for in Cash

Would it bug you to know that purchases of single family homes using cash has not changed much. I was surprised when I saw this, and I hope this makes you feel at least a little better. With 9 of 10 still being financed in today’s market it really shows the importance of getting pre-approved, not just pre-qualified.

The next thing people financing should know, is that you are possibly ending up with a better deal than those paying cash. you pay more for a home when using cash

Based on our data here in SLC for single family homes, the median sales price for a cash offer home in 2019 was 7.5% higher than for those financing. This makes sense at the end of the day, because cash offers do not have the same appraisal requirements as loans. You should say to yourself, but wait doesn’t paying cash get you a discount on everything else in life. Yes! So, yikes!

For those paying cash, remember it is already attractive that you are paying cash. Do not end up paying more than you need, and if you want to pay cash, Dec/Jan seem to give you the best bang for your buck. One thing to consider though, it is not likely going to shorten your time to close, because the person you are buying from is likely paying for their next place with a loan. Lastly, if you are thinking about paying cash check out this Forbes article.

Let me know what your thinking. Would love to hear your thoughts. Email me @ craig@craigtheagent.com.

Data is from UtahRealEstate.com.

Home Improvement • April 19, 2020

Planning the First Renovation on My New Home

by Craig Franek

Outdated Basement Bathroom What was the last thing you procrastinated on? Or even delayed because there were more interesting or easier things to do? Well I have found the first major procrastination for my new 70s home. Our downstairs bathroom. It makes me cringe every time I think about it and almost every time I step into it.

It is not that it is a terrible bathroom. It just feels terrible; cramped, outdated, dark and smelly. It is still a functional design and almost everything still works.

So why do I feel this way? It is not my first bathroom reno, but there are a multitude of new things (career and kids) in my life and this is more complex because it possibly sets the design for all the other updates we plan to do. So where do I start. Lots and lots of investigating, analyzing and planning.

First, Investigate. Measure the room and the ones around it. Figure out where the supply and waste plumbing lines are located. Identify electrical items (lights, outlets, exhaust fans, etc.). Last find the HVAC vent. Knowing all of this helps with understanding how complex a renovation may end up being.

Second, Analyze. After taking a full inventory of what exists today, ask if it is functionally what is needed? Is it big enough and is it a standard layout? If it is, then things get a whole lot easier. It’s straight to planning and picking out the new materials.

If not, then you have what I do or at least what I think I do. And this is the point that I want to make in this section, unless you are really looking at what you have and what you need, you may end up spending a lot of money unnecessarily.

Finally, Planning. Like a lot of things, the key to a successful remodel is knowing what you need and when, getting things completed in the correct order and then finishing the components on time. This is where having a solid plan around your renovation will come in handy. You’ll easily be able to determine if your falling behind and if other adjustments need to be made to get you back on schedule or budget.

In the planning phase, you’re also checking with the local governments on any necessary permits, talking with the trades about scheduling work and getting estimates on cost/time and identifying your finish materials (tile, vanity, sink, shower door, etc.) In this phase you also really get a sense of what everything is going to cost and then can reassess what items are in your budget.

So is this what I really want? I am not sure yet. As you can see, this would require some real effort, and at least a plumbing permit will be required. Also, it may not happen for a while, but you will notice the addition of a bathroom. Like I mentioned earlier, everything around remodel this is complicated, and I haven’t brought up the fact that I will have to replace my septic tank before the city will issue a permit (but that’s a different post).

Yes, I’m still in the procrastinating phase. But now, at least I have been able to think through a few of the hard pieces, and maybe I do not need to change the current layout. Who knows though? This new one would feel grander at the end of the day though.

Anyway, thanks for your time. If you’d like to connect or share your thoughts, I can be reached via email @ craig@craigtheagent.com.

Also, a big thanks to Home By Me for providing free access to their home modeling software. It’s really easy to use and pretty need when you are reviewing the design in 3D mode.

Buyer • April 9, 2020

What I’m Looking for When I Buy a Home

by Craig Franek

One of the things a good real estate professional will do when they sit down with a new client is have a “Probing” session. During this conversation what we’re looking to uncover are “Benefits” of the “Features” that you’re looking for, to help you “Crystallize” on what’s important to you.

So, let’s explain with an example:

Say you’re looking for a 4 bed, 2 bath home with a 2-car garage in a neighborhood with good schools. These are all “Features” of a home, which are great starting point. However, they don’t really help an agent understand why they are important or what your motivations for wanting them are.

As your agent, I’d say “That is fantastic, can you tell me a little?” And here’s where it gets interesting because we start to uncover the “Benefits” of why these are important. “I’m married and we have 3 kids and we want each of them to have their own room. We’d like at least 2 baths, one in the Master and one for the kids. Oh, and I’d like all the bedrooms on the same floor, which if both baths are upstairs, then we need a ½ bath on the first floor for guests. And I’m now thinking it, if we have family visit from out of town, it would be great if they have their own space. Etc…”

And here is where we see “Crystallizing” begin. The client is beginning to picture their home and their true needs, not just where we started. Again, a good agent would prob into each of the areas that seemed important to really understand how to identify the right property for the client.

So what’s important to me when I’m looking for a home. Here was my list of features for the home I purchased last year. Want to try and guess the benefits in each of these and why they were important? I’ll cover a few of them after you’ve had a chance to review the list.

· Not on a corner · Not highway facing or having road noise · Not backing up to a hill · No steep driveway · No weird smells inside · Not too far from SLC

· No one looking down on house · No blond oak staircase railings · Flat Lot · Space for a garden · 3-car garage · Quiet neighborhood · Lots of windows for natural light

· Move in ready, but doesn’t have to be update or new · Near things like a grocery, restaurants & shopping · Mountain and valley views · Has a pool · Above the smog/inversion

· Cozy feel with deck/patio · Near a park, open space or hiking trails · Front and back staircase · On a winding road · Good sunlight, South facing, Morning sun

I know, there are some very specific and odd things on the list. And it doesn’t even cover the size or number of beds/baths. Where are those? Were they not important? Well the answer is yes and no.

For 2019, the average single-family home that sold in Salt Lake County was 2,697 square feet with 4.1 beds and 2.7 baths. That meant it was highly likely that any home we looked at would have been big enough for our basic needs, and the benefits we wanted were access to recreation, privacy, and convenience to things. Did we get everything on our list, no, and we’re OK with that because no house has everything.

· “Windy roads”? It’s just been our experience that curvy roads tend to have more architecturally interesting, older homes on them. They also tend to be quieter streets because it’s hard to drive fast down them.

· “Good sunlight?” Well we moved to Utah from Ohio where we only saw the sun on average only 176 days a year. That’s less than half of the time. Those aren’t partly cloudy days either, but full on grey. Note: SLC has an average of 222 sunny days.

· “No blond staircase?” This just means no colored stain was applied when it was finished. It was a way of finishing the floors in homes built/renovated in the 90’s and means to us, a type of home we don’t really like or that it was flipped by someone 30yrs who may not have known what they were doing.

So with all of this, I hope this article gives you some things to think about when you meet with your real estate professional next. I promise it will not only help you find the house of your “Real Dreams”, but it will also make their job of finding you the house much easier.

Thanks for your time. If you’d like to talk or send me your thoughts, I can be reached via email @ craig@craigtheagent.com.

Seller • March 16, 2020

Is Homie Good or Bad?

by Craig Franek

I had a colleague respond to me today, after I asked to catch up, with only the statement he intended to use “Homie” in his next real estate transaction. To say the least it was a little frustrating trying to figure out how to respond. Yes, I am a Realtor®, but I’m also a person and I’d like to think I’m at least a little interesting to talk with.

So after quite a bit of thought, here’s how I replied.

“Just to note, I’ve been trying to figure out how to respond to your Homie comment. I’ll try to keep it short.

1) As a colleague/agent, I want to fully support those around me in any interactions we have because I care about the relationship. For example: A person called me the other night to understand how Covid19 is going to affect their upcoming listing. I probably have spent 4hrs diving in to help with an answer. I don’t think Homie would do this, because the agent makes less than $1,500/transaction and they wouldn’t have time.

2) I’m not opposed to seeing someone listing with Homie. It’s a great alternative for some percentage of the population that is comfortable with the service they provide. I used a lawyer to buy a house once before I was a real estate agent. Looking back, I now realize how much work the Listing Agent had to pick up.

3) Read this article, I think it was well written and covers both sides fairly.

4) You’re not my target, it’s your network. You’re likely to buy/sell a home once every 7-10yrs, but you’re likely to know at least one person a year going thought the process.

Anyway, Thanks and would still love to connect if you have time.”

I truly believe there is a service level provider for everyone, and Homie is filling a gap in the market. But you have to be educated about your choice and I’m not sure everyone that uses them is.

I think this paragraph by Richard sums up the experience you should expect, and then you should decide if this will work for you.

“Although they (Homie) do provide some value, if you rely strictly on Homie for communicating and negotiating back and forth with the buyer, it will likely cost you the sale because of delays and what appears to be a general lack of engagement.”

I will say I’ve heard this exact same sentiment from buyer’s agents that have had clients want to purchase a Homie listed property. To note though, there are some really bad Full Service agents out there as well, and at least with Homie you get what you pay for.

A few final thoughts:

Offer a full Buyer’s Agent commission. As a buyer, you sign a contract stating you will pay your agent an agreed upon rate which may be offset by what is paid for by the seller. If there is a difference, the Buyer is responsible! When I remind a buyer of our agreement, do you think they still want to see a Homie home? It’s their choice, I’m just pointing out the facts.
Is everyone that lists with Homie happy? No. About 1 in 4, terminate their contract with Homie before their home is sold. This figure also doesn’t account for how unhappy many of their clients are that ultimately do sell with them. Are there happy one? Yes, and you can find their reviews on Homie’s website.
With 25% of all contracts failing to make it to settlement, do you have the time and energy to spend going through a process where your agent isn’t responsive?

Thanks for your time. Let me know your thoughts @ craig@craigtheagent.com.

Buyer • March 3, 2020

Winter Vacation Properties

by Craig Franek

Interesting title for a first post? Well, it’s one on the top of my mind, not only because I had a vacation property in Park City, but I spent Saturday showing properties to someone who was interested in at least the idea.

As an winter enthusiast, isn’t this how the conversation goes: “Man that was a great trip to XYZ Resort. I really love that place and it has to be the best skiing in the world. I wonder what it would be like to own a place there. I bet places there make tons of money on vacationers like me. I should buy something so I don’t have to keep wasting my money, it’s not like I want to ski anywhere else.” I know I’ve had this conversation several times, and I even had it again this weekend with my client about a different resort.

After being a vacation property owner, here is how I now think about it now and how I explain it to people that are interested in a winter vacation home.

Purchasing a vacation property isn’t like owning a full-time rental. You have to have a different mindset about them, because they typically don’t make money, and that’s not a reason you should be buying one anyway. You buy them because, 1) You have the money and 2) You’re committed to using it.

Here’s what what you should be thinking about when and if you do buy something:

– Is the area appreciating or holding it’s value over the long run?

– What do you have to have and what could you live with? Isn’t it always ski in/out?

– Is it going to have more than just a wintertime appeal?

– Will it have public transit for those guests that aren’t going to have a car?

– Can I rent it out long term if things change?

– Will it give my guests a great experience?

– Will I want / be able to use it for more than just one week a year of skiing?

– Will it cover at least the expenses of owning it (Property Management Fees/Tax/Interest/Insurance/HOA/Utilities)?

– Do I have the $$$ to cover the difference between what it costs and what it earns and am I OK tying that money up until I get rid of the place?

Anyway, these are just my thoughts on the subject. I’m sure there are plenty of other things you should be asking, and if you want to send me your list @ craig@craigtheagent.com, I’d love to review it.

Also the photo is copywrited by Peteyshead on Wikipedia.