New Construction vs. Resale Home Costs
One of the most interesting, niche market trends in the Summit Area over the last few years is the growing price gap between new construction and resale properties. Of course, newly built homes have always been popular for reasons that are not hard to guess - they feature current design trends, incorporate the latest tech, and feel pristine. But the question today is, will the cost of new construction ever not be worth it? While the price gap between new and resale is anecdotally apparent throughout the Summit Area - for example, new construction condos marketwide are selling for an average price 27% higher than resale condos - we’ll focus on two segments of the market with enough sales data for us to draw conclusions - single family home sales in Silverthorne and in Breckenridge. For purposes of this exercise, ‘new construction’ consists of homes built in the last five years. You can see that new construction and resale homes have followed the same sales price and sales volume patterns, but the difference in sales price is staggering. In Silverthorne last year, new construction cost on average 39% more than resale homes. This year, that number has jumped to 56%! That’s over a million dollar sales price gap. The number of new construction homes available for sale in Silverthorne this year has dropped significantly, therefore the number of new build home sales has followed suit. This drop in available inventory is surely behind this surge in value; indicating the demand in Silverthorne for new construction is as strong as ever. Year to date, resale single family home prices in Breckenridge are outperforming last years’ numbers by 20%. Meanwhile, new construction sales prices over the same period of time are 49% higher. The average value of a new construction home is a whopping 59% more than the average value of a home built prior to 2019. As noted in the graph, the percent difference in sales price between new and old homes in Breckenridge has been in the double digits since 2020. While the gap hasn’t quite grown exponentially in this sample, a price difference of this size is a serious consideration. To me, it begs the question - well, how much does a remodel cost? Conventional wisdom states that the ROI on buying a resale home and remodeling it yourself is not worth it, and in many conventional markets this is true. But after seeing the data we’re discussing here, I knew a deeper dive was called for. Today’s Homeowner created a fantastic, interactive graphic on home renovation returns in different markets around the country. Colorado as a whole significantly outpaces most of the country. If you break down the Silverthorne market in comparison to the metropolitan Front Range, most projects continue to outpace the national average even further. Unfortunately, Danny Lipford doesn’t include Breckenridge or other Colorado ski towns in his study. I think if he had, it could have skewed the whole conclusion. Again, new construction costs on average $1.55M more than resale homes in Breck. So does the average remodel cost $1.55M or more? Probably not. Honest estimations of remodel costs in high-end Colorado markets recommend budgeting $350/sq ft for a gut renovation. So let’s look at a luxury Breckenridge market example. 161 Dyer Trail is a 5382 sq ft home situated in one of Breckenridge’s most sought-after neighborhoods - The Highlands. This home is structurally sound with ski area views and a great lot, but aesthetically stuck in the ‘90s. It’s listed at $2,950,000, or $578/sq ft. Its new construction comparisons that have sold over the past year have an average price/sq ft of $1,105/sq ft. These new construction comparisons are stunners, to be sure, but they’re also further away from downtown Breckenridge and the ski resort, with north facing views. The new construction home for sale on the same street as our subject property - Dyer Trail - is listed for $6,250,000, or $1,315/sq ft. When you do the math, the conservative, high-end estimated cost of renovating this house puts the finished price per sq ft at $928. That’s a high number, but it’s still $177-$387 less than the newly built comps. That’s a $950k-$2m sales price difference. So let’s get back to our starting question. Will the cost of new construction ever not be worth it? In ‘suburban’ mountain towns such as Silverthorne, it’s hard to say. I think in markets like these it will remain a case-by-case basis. In resort towns like Breckenridge, from an ROI standpoint, I think it already isn’t. That’s a bold thing to say! But as the average sales gap between new and old continues, I believe those with the time, resources, and/or inspiration to take on a refurbishment can come out further ahead in the long run.
Breckenridge Investment Property: Two Examples With Big Returns
Because of my background in vacation rentals and property management, I get asked all the time ‘what is the best investment property in Summit?’ There are way, way too many nuances and factors to take into consideration for me to answer this question in one blog post, so instead, today, I’m going to talk about two of our current listings and explain what makes them two of the greatest investment opportunities on the Breckenridge market today! When people say they are looking for an ‘investment property’ in the Mountain Region, they are usually referring to one of two approaches. The first approach is one that’s gained a ton of attention in the last decade - finding a rental property that will generate rental revenue, and (in a perfect world) a passive income. The second approach is finding a property with untapped equity opportunity, and investing in the appreciation gains over time. The properties I’m highlighting today are great examples of each tactic. First up, we’ll start with our fantastic listing at 465 Four O’Clock Road! Sundowner Condo W1 For years and years, I have been singing the praises of one-bedroom condos with great locations from the rooftops. Generally speaking, one-bedrooms have the best return-on-investment (ROI) in town, and if you’re looking for a true, short-term rental property, this is where it’s at. The Breckenridge vacation rental market is flooded with two and three bedroom condos - about 75% of the condo matrix in Breckenridge is of this size. Per Breckenridge’s short-term rental rules, a two bedroom condo can sleep eight people and a one bedroom can sleep six. While a two or three bedroom condo is appealing to own for most folks in order to comfortably house their family or friends, from a rental guest’s perspective, the extra two sleeping spots are rarely worth the increased nightly rate. And we haven’t even touched yet on how many visitors to Breckenridge only need one bedroom to begin with! One-bedroom condos will always have lower operating costs - lower sales prices, lower HOA dues, lower utility bills, and lower insurance rates - all while out-earning their two-bedroom counterparts on average by anywhere from $10k to $35k per year! Sundowner Condo W1 is a fantastic rental property not only because of its size, but also because of its location. The Four O’Clock neighborhood in which Sundowner is situated is honestly my favorite Breckenridge Rental Zone 1 neighborhood. Sundowner is four blocks to Breck’s historic Main Street, on the free bus route, two blocks from the town’s hiking and biking trail network, steps away from the Upper Village pool and hottub complex (membership included in the HOA), and two blocks from the Snowflake Chairlift, which has all of the convenience of the larger base areas of the Breckenridge Ski Resort without any of the chaos. All of this translates into big checkmarks on your rental’s Airbnb and VRBO listings that will naturally boost the property’s visibility and desirability. While of course our listing isn’t the only great one-bedroom in Breckenridge, our sellers are currently grossing over $50k per year in short-term rental revenue, and their 4.9 star superhost Airbnb listing is included in the sale. The property is being sold fully furnished and turnkey, so its next owners will be walking into an established and profitable business. The walk-in pantry and lockable 5x8’ storage closet are just the icing on the cake with this one!. 161 Dyer Trail This stately gem is pretty much the polar opposite of a one-bedroom ski condo. With impressive bones and an unparalleled setting, this 5,300 sq ft estate presents a rare opportunity to redesign a legacy home in one of the most coveted neighborhoods in Breckenridge. 161 Dyer Trail is one of the older homes in the Highlands at Breckenridge - which means significantly more square footage than the Highlands homes built in the last decade, and an undeniably better lot that is closer to Main Street, completely private, and with unobstructed Breckenridge ski resort views. The property is in great shape, but as a home built in the late 90’s, it could benefit from some updates or remodeling. Because of that, this home is priced well below what other homes in the Highlands neighborhood of this size are selling for. Now don’t get me wrong - HGTV is not the real world, and a ‘reno’ or a ‘flip’ this is not. In the Summit Area there is basically no such thing as a ‘flip’ and I would never recommend our market to someone in that investment space. This also isn’t a rental property candidate, as it isn’t located in an area that allows short-term rentals. Rather, what makes 161 Dyer Trail an investment opportunity is the expected appreciation over time plus the equity-building opportunities that will come from undertaking aesthetic updates. The location alone is a sound investment, since there are fewer and fewer buildable parcels in the Town of Breckenridge, and the Upper Blue River Basin is inching closer to full build-out. Redevelopment is the future of new construction in the Colorado High Country. If a new owner was to take on some straightforward projects at this property, they would immediately see that added value. If a new owner were to complete a full remodel - let's say at the (very doable) cost of 500k - current market analysis suggests this property could then sell for about 1M more than current asking price, for a 500k return. This estate is a legacy property in waiting. A discerning investor will see the chance to both capitalize on yearly appreciation and equity returns, and - even better - get to enjoy time at their mountain dream home. Stocks and bonds are great and all, but you certainly can’t count on them to help you beat the I-70 traffic to the mountain on a powder day! Nowadays, the term ‘investment property’ comes with quite the negative connotations. I understand why that is, but the reality we’ve come to realize is that everyone looking to purchase Real Estate is looking to make a good investment. The advice I’m sharing here is not meant for corporations or venture firms (which don’t have a presence in our market anyway), but rather meant for anyone who’s considering buying property in the Summit Area. If you have questions on either of these great properties I’ve highlighted today, want to learn more about other opportunities in our area, or hope to dial in your Real Estate search with the help of a pro, I’d love to talk. Reach out on the form below, or give me a call anytime! *Advice is provided as an opinion of the author, and specific results are not guaranteed.
Vacant Land Scams: What They Are & How To Protect Yourself
Whether you own land, or are looking to buy land, read on for some advice on how to spot fraudulent sellers or listings, and protect yourself. In today’s world, fraud is regrettably everywhere. The world of Real Estate has not been spared, and the last two years have seen a significant uptick in vacant land scams in Colorado. The good news is that word has caught on about how these scams operate, and Realtor boards and title companies in the High Country are better prepared to prevent them. Whether you own land, or are looking to buy land, read on for some advice on how to spot fraudulent sellers or listings, and protect yourself. What Are Vacant Land Scams? First up is understanding how exactly these scams work. ‘Land scams’ are when a scammer lists a property they do not own - either with a Realtor or as a For Sale By Owner - in the hopes of selling it through a legitimate, remote closing and collecting the funds. The scammers primarily target vacant, unimproved land, because there’s nothing to inspect, little to no access issues, and these types of property have a higher chance of a ‘clear title’. A ‘clear title’ means that there are no liens against the property (like a mortgage) that would increase the amount of signatures and identity checks needed to successfully close on the sale. While remote closings have been a boon to legitimate buyers and sellers in the last few years, fraudsters are able to exploit lax notarization guidelines and the lack of in-person contact to successfully impersonate property owners. Many times, scammers hire Realtors to list the property to add a layer of legitimacy to the scheme. In the worst cases, these fraudulent sales are fully executed - meaning Buyers unwittingly pay the scammer for the property. While the Buyers would receive a deed to the property, once the scam is uncovered, ownership would revert back to the previous owner. How Can You Spot A Fraudulent Seller? While high tech crimes have become more sophisticated, luckily, most scammers have not. As a Buyer, you will not be able to speak to a Seller directly, but you can ask your buyer’s agent to vet the listing agent’s experiences with the Seller on your behalf. Here are some telltale signs that a Seller may not be who they say they are. They primarily communicate via email or text. If forced to be on a phone call, they will use bad connections to obscure accents. They use a Google Voice phone number, often out of Los Angeles or New York City. They are in a hurry to sell - watch for listing language like ‘motivated seller’ or ‘priced to sell quickly’! They price the property well below market value to attract Buyers willing to move quickly. If you see land being sold for a price that seems too good to be true, it probably is. There are no 'For Sale' signs on the physical property. They were referred to their listing agents by Realtors in other markets, or via a lead generation website (like Zillow), and their listing agent has never met them in person. Obviously, not all sellers who are introduced to their Realtor in these ways are scam artists, but if other things aren’t adding up, this can be a red flag. They overplay that they are ‘traveling’ to hide the fact that they are based overseas. They refuse to use a remote notary they did not choose themselves. When asked, they will not share their photo ID or other identifying documents with Realtors or Title Officers. As An Owner Of Vacant Land, How Can You Protect Yourself & Your Property?* While there are no guaranteed ways of preventing a land scammer from targeting your property, there are a few things you can do to stay informed and to safeguard your property. One of the easiest things you can do that I recommend to all of our land clients, is to set up a Google alert for your property address. This way, if your property is listed on any MLS or listing site such as Zillow, Redfin, or Trulia, you’ll be one of the first to know. If your address on tax records is different from your informal address (example: vs. 0011 CR 1176 vs. 11 Heeney Road), set up alerts for both. If in the Summit Area, contact each of our local Title Companies to identify yourself and request they keep your property flagged on their internal ‘not selling’ list. Ask your local Realtor to keep an eye out on your behalf. Make sure all of your contact information is up-to-date with the County Assessor. This allows Realtors and Title Officers dealing with a scammer to get in touch with you and verify your identity. If you discover your property is listed for sale without your consent, contact the Colorado Bureau of Investigation immediately. You'll find their contact details at the bottom of this post. After reporting to the CBI, we recommend also filing a complaint with the federal IC3 Division. How Can Buyers Protect Themselves When Buying Unimproved Land?* Luckily for Buyers, this list is pretty short. Lean on your professional advocates! Never, ever buy land without the involvement of a licensed Title Company who is willing and able to insure the Title. Work with a Buyer’s Agent who is experienced in rural, mountain region land sales, as well as familiar with the current land scam trends. Lastly, if you believe someone is trying to fraudulently sell your property, or that you have been a victim of a vacant land scam, please alert the Colorado Bureau of Investigation, High Tech Crimes Department - Attn: Traci Dowd | Traci.Dowd@state.co.us | 303-968-5406 Reportwirefraud.com If you are a victim of a vacant land scam, there are legal remedies but they will likely be time consuming. The mountains are supposed to be an escape from the stress and frenzy of the modern world. With common sense tactics, and by relying on local professionals working in your best interests, we can ensure the land stays that way! *Advice is provided as an opinion of the author, and preventative methods are not guaranteed to stop fraud. Please consult your legal representative and local real estate professional to discuss your best course of action if you are concerned about Real Estate fraud.
What Is A Home Inspection & Why Is It So Important
The residential home inspection and inspection contingency period is an integral part of every real estate purchase. It’s a chance for all parties to learn more about the property that is for sale, and renegotiate contract terms if needed. The inspection is often the most consequential contingency in the Colorado Contract to Buy and Sell, but it can be a confusing time for buyers and sellers who haven’t been through it before. Without a complete understanding of the process, and what a home inspection can or can’t accomplish, buyers and sellers may feel unclear, apprehensive, or misled. We don’t want that, so today, we’re going to tackle some FAQs about this important part of real estate! What Is A Home Inspection? A home inspection is a non-invasive, visual examination of the accessible areas of a residential property for the purpose of identifying any issues. Issues found during a home inspection are referred to as ‘defects’. A residential home inspection covers a thorough examination of all systems and components of both the interior and exterior of a property. Findings of the physical examination are then documented in an inspection report. While homeowners can have a home inspection done at any time to learn more about their house, they are most commonly performed as a part of a real estate transaction. Who Performs The Home Inspection? While buyers are within their right to inspect a property themselves, unless you are a licensed professional in this space, we highly recommend hiring a professional Home Inspector who is certified with InterNACHI (The International Association of Certified Home Inspectors - www.nachi.org/CO). Residential home inspection is not a regulated industry in Colorado. So we believe it’s essential to work with an inspection company that is fully bonded and insured, and an Inspector who has passed InterNACHI’s rigorous certification exam and adheres to their code of ethics. Luckily, there are several fantastic, certified Home Inspection companies working in the Summit Area! Who Pays For The Inspection? Since the inspection report is for the information and benefit of the buyer, the inspection and standard add-on services are almost always a buyer expense. While Inspectors use a standard methodology for every report, buyers can gain invaluable insight on their future home by building a relationship with their home inspector. Inspectors can answer questions on the report, make recommendations on how to fix issues that are found, and even show buyers how to operate and maintain mechanical systems, plumbing systems, and more. Specialized inspections may be a negotiable expense, and who covers the cost will be dictated by the Inspection Resolution. Unfortunately, if there are issues found with the property, and the buyer and the seller cannot come to terms on an Inspection Resolution, inspection costs are not refundable. What Does The Home Inspection Cover? Most inspection reports will document details on the following (and more), including whether a defect was found, and the severity of each defect. All appliances such as ovens, refrigerators, dishwashers, washers, and dryers. Mechanical and plumbing systems such as furnaces, boilers, water heaters and well pumps. Basements, crawlspaces, and attics. Interior finishes such as flooring, drywall, light fixtures and cabinets. Fireplaces Kitchen and bathroom plumbing fixtures. Decks, balconies, patios, and driveways. Garages and outbuildings. Exterior siding and windows. Landscaping, grading, and foundations. Electrical panels and outlets. Roofs (inspected via drone; on-roof inspections can be scheduled with a roofing specialist if needed). Thermal imaging and 360 degree photos. Additionally, there are a few inspection add-ons we often recommend when applicable. These include sewer scopes (for properties on municipal water), well strength tests (testing the water pressure and flow rate of a well), water quality testing (we recommend this for properties on well water), and 72 hour radon inspections. Radon is a big deal in Colorado, and while I won’t fully cover the topic now, please find the EPA Buyers & Sellers Guide to Radon here. If a possible issue is identified that’s out of the scope of a standard home inspection, buyers can hire a specialist to inspect the property as well. Some examples of this include mold remediators, structural engineers, and licensed plumbers/HVAC techs. Does The Buyer Have To Attend The Inspection In Person? Nope! All licensed home inspectors welcome buyers to attend, but it is not required. An inspector’s goal is to help buyers gain confidence in their purchase, so if a buyer can’t attend in person, an inspector will do whatever it takes to achieve that - whether by video call, 360 degree photography, or a followup call after the buyer receives the report. Our team also offers to attend all of our clients’ inspections, whether they’re able to come or not, to act as our clients’ extra eyes and ears. Sellers should note that inspectors in the Summit Area are affiliate members of our local REALTOR Board, and can schedule their inspection and gain access to homes in the same way as real estate agents. This helps ensure the physical home inspection is as noninvasive and secure as possible. How Does My Contract’s Inspection Contingency Work? The inspection contingency in the Colorado Contract to Buy and Sell is made up of three deadlines, each with a corresponding standard contract. Here’s a brief explanation of what each means, and how they relate to one another to make up what most Realtors refer to as ‘the inspection period’. Inspection Objection Deadline: this is the date by which the buyer has to submit their Inspection Objection to the seller*. The Objection is what the buyers want the seller to do. The Objection is written as a list of every defect found in the inspection the buyers want to address. The list both describes each issue, and proposes a fix for each one with a deadline for completion. The buyers are the only party who sign the Objection. Inspection Resolution Deadline: this is the date by which the seller must respond to the Inspection Objection with their proposed Resolution. It’s usually 1-3 days after the Objection deadline. The Resolution is what the sellers are willing to do. It can be written as a list detailing each fix, or it can be a generalized statement (such as, sellers will hire a licensed contractor to fix all items)**. The sellers sign the Resolution, and if the buyers agree with the terms, the buyers will sign too. Once signed by all parties, the seller becomes contractually obligated to do everything detailed in the Resolution by the agreed upon time. If the buyers do not agree with the terms and no compromise can be reached, the Contract to Buy and Sell will automatically terminate and earnest money will be returned. Note that in the Summit Area, many Inspection Resolutions are negotiated verbally between the parties’ Realtors before being put in writing. You won’t be sending multiple Objections and Resolutions back and forth! Inspection Termination Deadline: if anything in the inspection makes the buyers realize ‘nope, not for me’, the buyers can choose to terminate the contract on or before the Inspection Termination Deadline. The Inspection Termination deadline is usually the same day as the Inspection Objection deadline. Note that the Termination and the Objection are mutually exclusive. If you submit an Objection, you have to go through the Resolution negotiation. The Termination is only used if the buyers are not at all interested in moving forward after the inspection’s findings. To end the Contract to Buy and Sell this way, the buyers sign a contractual Notice to Terminate and deliver it to the sellers. Once the Notice is given, earnest money will be returned to the buyers. While it’s best practice to share anything uncovered in the inspection with the sellers, buyers can terminate without having to justify their decision. This is why I think it’s critical for all buyers - no matter how hot the market - include the Inspection Termination deadline in their offers. It’s one of the biggest buyer safeguards the Colorado Contract has! * Ideally, I recommend buyers have their home inspection completed at least two days before the first inspection deadline, so we have enough time to go over the report and strategize. ** In the Summit Area, it can be difficult to find and schedule contractors and handymen for projects under tight deadlines. It’s just a reality of living in a rural mountain community! Because of this, it is common for sellers to offer either a reduced sales price or a closing credit to the buyer instead of completing the material fixes themselves. If the buyers agree to a monetary resolution, the Inspection Resolution contract is not used. Instead, the buyers will withdraw their Inspection Objection via a second signature, and the sellers and buyers will then sign a Contract Amendment with the new sales price or credit. If I’m Buying A House ‘As-Is’ Can I Still Get An Inspection? Yes! This is one of the biggest misconceptions we encounter on the inspection contingency. Just because a property is being sold ‘as is’, does not mean that a buyer automatically loses their right to have the home inspected and know what they’re getting into. In fact, it doesn’t even mean you have to waive your inspection contingency! Phrases like “this home is being sold in ‘as-is’ condition” or “buyers agree to purchase home ‘as-is’” are used to convey intent in marketing and during negotiations, but are non-binding terms. Or to put it differently, legally speaking, there is no such thing as ‘as-is’. If a seller includes a remark that the home is being sold ‘as-is’ in the listing, it indicates that they know some (or a lot of) work is needed, and they want buyers to agree to take on the responsibility for any repairs. Just because this is the ideal scenario for the seller, does not mean buyers have to accept those terms. For our buyers looking at an ‘as-is’ purchase, our recommendation is usually to keep the Inspection Objection, Inspection Resolution, and the Inspection Termination deadlines in the contract, and include language accompanying the offer stating: The buyer is willing to take the property in "as is" condition, unless a major health, safety or structural issue is found; in which case buyers may choose to terminate or negotiate a resolution with the seller. This type of provision is most successful when the work appears to be mostly cosmetic to both the seller and the buyer; conditions like outdated interiors, lots of wear and tear from rentals, an estate sale, etc. It gives the seller some assurance that the buyers won't nickel and dime them over the inspection report, but also reiterates that the buyers retain all inspection contingency rights in case something significant is uncovered. Of course, in an ultra competitive sellers market like the one we just lived through, buyers may consider giving up their Inspection Objection and Inspection Resolution to make their offer more competitive. However, buyers should always keep their Inspection Termination, and I will always advise buyers to still have the property inspected by a professional just to make absolutely sure. And this nicely brings us to our next question. If I Waived My Contingencies, Can I Still Renegotiate If Something Comes Up In The Inspection? The answer to this question is more nuanced, but yes, buyers can try! If the Inspection Objection and Resolution deadlines are not included in the Contract and something significant is found in the inspection, there is no formal framework for renegotiating, but buyers can absolutely still have their Realtor share the inspection findings with the sellers and ask them in good faith to meet halfway. I cannot tell you how many times over the last 5+ years our team has maneuvered this exact scenario, from both sides! The seller in this scenario has the contractual right to refuse to renegotiate, but sellers, let me ask you a hypothetical: if you’re already a couple weeks under contract, and the inspection finds out you need a new roof, would you rather let the buyers terminate the contract, return the earnest money, put your house back on the market, and have to disclose your roof is shot to new prospects (or worse - replace it yourself), or would you rather lower your sales price or give a credit to the buyers who are already on the hook and invested? The vast majority of the time, sellers will choose the latter, and they're not wrong to do so. It’s also important for both buyers and sellers to keep in mind that if a new mortgage is involved, lenders can decline to underwrite the loan if serious home inspection defects like end-of-life roofs, structural problems, or heating or water issues are present. Even if the Inspection Termination was waived or the deadline passed, a buyer could still terminate the contract in this situation based on their loan deadlines and have their earnest money returned. What Home Inspection Findings Are The Biggest Problems? The biggest issues that can be uncovered in a home inspection can be categorized into what I refer to as the ‘Big Three’: Structural, Heath, and Safety. If an issue is noted that falls into one of these categories, it is going to be flagged as a significant defect. Structural problems are the biggest red flag for buyers and problematic fixes for sellers. Structural defects include things like water damage, broken windows/window seals, rotting decks, compromised roofs, and sinking/crumbling foundations. All of these things require specialized, professional assessment, and are big ticket repairs. Serious consideration should be given to any structural defect by both sellers and buyers. These types of issues are often a can of worms, and will certainly become bigger problems if left unaddressed. Health defects really run the gamut from cheap and easy fixes, to costly and time consuming projects. Carbon monoxide detectors that need new batteries are considered health defects, but so are high radon levels and mold. High radon levels are much more common in the Colorado mountains than mold, but remediating either of these health concerns requires a specialist, and usually has a price tag in the $1,500-$5,000 range. Safety defects, while still not to be taken lightly, are normally the most easily remedied of the ‘Big Three’. Examples of safety defects we often see include old electrical outlets, loose stairway railings, or worn mechanical system wiring. All of these defects have straightforward and inexpensive fixes: old outlets can be replaced with new GFCI outlets, loose railings take an hour of labor to re-secure, and new connectors for a furnace, water heater or boiler are under $35. The most costly safety-related defect you’ll encounter is if there is something wrong with a heating system - but even though more expensive, it’s still easy to hire a plumber or HVAC tech in our area to take the job. What Do Sellers & Buyers Typically Agree To On An Inspection Resolution? As you can imagine, Inspection Resolutions vary wildly. Every property is unique and every transaction differs. That being said, in the Summit Area, there are a few compromises between the sellers and buyers we see more often than not. Minor Fixes: when a property is in overall good shape and doesn’t need much, sellers often agree to take care of some marginal or minor fixes themselves or with a handyman/GC before closing. Escrowed Funds: if a significant defect is found that requires a lengthy repair, sellers can agree to set aside a portion of their profit with the Title Company (called ‘escrowing funds’) to pay the final bill once the repair is complete. Once the agreed-upon project is finished, the invoice is given to the Title Company to pay out of the escrow account. Any amount left in the escrow account is then released to the seller. This type of resolution is less common in our market, but it comes in handy if a seller does not want to pay cash out of pocket, or if a seller agrees to fix something that has an unknowable timeline or cost. Credits: as mentioned above, around here, it can be difficult to find and schedule contractors and handymen under tight deadlines. It’s just a reality of living in a rural mountain community! Because of this, it is very common for sellers to offer either a reduced sales price or a closing credit to the buyer instead of completing the repairs or projects before closing. A reduced sales price is usually used if the buyer is purchasing in cash. A credit towards the buyers’ closing costs is usually offered if the buyer is purchasing the property with a mortgage. The rationale is that the buyers can then use this cash saved to tackle any needed home repairs themselves after closing. What Is A Seller’s Pre-Inspection? Simply put, a seller’s pre-inspection is a home inspection paid for by a seller and performed by a licensed inspector before the seller’s property goes on the market. While not commonplace, a pre-inspection can be valuable to both buyers and sellers. There are a couple scenarios in which a seller could benefit from a pre-inspection. The first is if a seller is selling a home they don’t know much about - perhaps the property was inherited, or professionally managed by a rental company, or purchased without an inspection. If a seller who doesn’t have an in-depth history of their home is hoping to sell for top dollar, a pre-inspection can help identify defects (or lack thereof) before choosing a listing price and going on the market. Sellers can then better avoid surprises and costly concessions further down the line. The second scenario in which a seller might consider a pre-inspection is the opposite side of the coin. If a seller has taken exceptionally good care of their home and knows everything is in working order, a pre-inspection report from a licensed professional can be a great selling point to include on a listing. Buyers will see the spotless inspection report upfront, and take the proven condition of the property into account when writing their offer. A steller pre-inspection can help sellers sell with more favorable terms and for a higher price. Regardless of why a seller has chosen to get a pre-inspection, it’s never a bad thing to receive as a buyer. A pre-inspection allows buyers to see what they’re getting into early on. If the report was written by a home inspector the buyer trusts, they could consider saving the cost of buying their own home inspection. If a buyer still prefers to hire their own inspector, the pre-inspection report can guide the second inspection to see if defects have gotten better or worse. Does A Home Inspection Uncover All Current and Future Issues? Unfortunately, and hopefully not surprisingly, no. A home inspection will not reveal every issue that exists or could exist in the future. Because an inspector can only observe conditions on the date of the inspection, and the inspection is required to be visual, there is no guarantee that every defect will be uncovered. Owning real property will always come with risks; there’s no way around it. Home inspections can be immensely beneficial, but homeowners should always be prepared for both routine and unexpected maintenance and upkeep at the start of their ownership and in the future.
2023 Real Estate Year In Review: Summit County Sales Statistics & The Market Ahead
The 2023 real estate market statistics for the Summit Area are here, and they have a lot to share about why residential sales prices haven't dropped in the Colorado mountains, even though the number of overall sales is down from pandemic era highs. This year, I'll be dissecting the data even more in depth than usual to see how type of property, location, and age of property all affect sales price. There's a lot of graphs to follow, but bear with me to the end, where I'll break down what this all means for both buyers and sellers heading in to the 2024 market. We're going to look at the Summit residential market divvied up into ten catagories - Single Family Homes or Condos (including townhomes and duplexes) - for each of our five main towns. As mentioned, this year, we're also taking a look at average sales price based on age of the property. For catagories in our market with a significant amount of new construction, you'll find additional break downs to compare properties built from 2018-2023 with properties built in 2017 and prior. I've highlighted some of the most interesting statistical tidbits as we go along, and again, end with an overall analysis. Let's get into it! The Breck single family home market is the only place where newer construction prices fell from 2022 to 2023. Perhaps the cooling cost of building materials has allowed developers more flexibility on price? That being said, the prices and increase in number of new homes sales in Breck were still strong enough to bolster the whole catagory - overall average sales price is still up 1% year over year. In 2023, new construction single family homes in Silverthorne had by far the highest sold price to list price ratio at 104%. No other area of the Summit market even cracked 100%. The trend towards mountain modern subdivisions like Angler Mountain Ranch and Summit Sky Ranch clearly has legs. At 11%, single family homes in Frisco saw the biggest jump in average sales price of any of our 10 catagories. In my opinion, this is probably due to Frisco's perennial appeal to both full-time and part-time residents. While Keystone houses saw a big, 33% jump in number of homes sold between 2022 and 2023, they also saw the lowest sold price to list price ratio in any catagory. At only 95%, it's apparent that sellers in Keystone had more of a tendancy to overvalue their property when listing. Is this because of a disconnect between buyers and sellers on the added value that comes (or doesn't come) with the ability to short-term rent? I'd posit that probably has something to do with it - especially in the 2.5M price range. Silverthorne condo sales, when broken down by year built, appear at first glance to be a real, wild ride. With a nearly 60% difference in average sales price between condos built 2018-2023 and 2017-prior, you know this is one area where the stats aren't telling the full story. Anyone who has visited Silverthorne recently knows that the town is undergoing a major transformation with new, high end condo and townhome buildings lining a revitalized downtown. All of the Silverthorne new construction sales last year were located in this hub. In contrast, the vast majority of Silverthorne condos built prior to 2018 that sold in 2023 are located in the Wildernest subdivision. The biggest difference between downtown Silverthorne and Wildernest? Downtown is governed by the Town of Silverthorne and offers short-term rental permits. Wildernest is a part of unincorporated Summit County and is subject to a very strict county rental ordinance. Wildernest has also been hit with a rezoned wildfire district that disproportionately affected condo insurance policy rates. Impressive stats coming out of Dillon this year. This area's blend of year-round neighborhoods and short-term rental friendly zones made for a healthy housing market, with improvements accross all statistical genres. At only 22, Dillon condos had the lowest average days on market of anywhere in Summit. I thought property value was supposed to drop last year. So why didn't it? 2023 sales activity confirms that our market has been brought back to earth, and sales patterns are falling back into a pre-pandemic groove. Yes, the overall residential market saw it's first depreciation year since 2013 at a little under -1%. However, if we look at market updates throughout the year, we'll see that average sales price was down over -8% April through June (with double digit depreciation in some areas like Breckenridge and Silverthorne), average sales price by end of Summer crept up to -5%, and average sales price after our traditionally busiest closing months of September and October was up to -3%. Then, a strong final quarter filled with Buyers eager to get into a property before ski season and new construction closings pushed our average residential sales price to $1,314,947; only down -0.7% from 2022. Ultimately, inventory - while up in comparison to the pandemic era market - was still not high enough throughout the year to meet Buyer demand. Therefore, prices stayed high. So what does this mean for Sellers? The summer selling season is back in a big way. You can once again expect the summer months to have the highest inventory and the highest amount of Buyer interest. I predict that 2024's first forecast interest rate drops will align with the late summer, which will also amplify this trend. Since properties are sitting on the market for longer, you will face more competition when you list. Pricing your home right will be crucial, and pricing 'to sell' is still working to gain multiple offers and bidding wars. I am confident that every type of property is able to garner that type of attention if you are open-minded with your listing price and willing to look through your neighborhood's sales stats in depth. Alternatively, you might consider avoiding Summer's peak inventory months by listing in the spring or the fall if you have less wiggle room on sales price. Full renovations will continue to pay off in 2024, as we've seen in the 2023 data that the average sales price for newer construction is over 25% higher than resale property. Renovation projects aren't always easy to manage, but you may decide that the significant dollar gains on your sale will be worth it. Because average sales price remains so high, the most important thing to keep in mind as a seller in 2024 is the big picture. The equity you, along with most Americans, have in your property is still at an all time high. Looking at the overall return on your Summit investment should help you navigate any sticky details or compromises that come up in your real estate transaction. So what does this mean for Buyers? As a potential Buyer in 2024 , understanding what Sellers are going through above, will be indispensable to negotiating great prices and terms. As mentioned, mortgage interest rates are predicted to decline throughout the year. Lower interest rates will mean a larger Buyer pool and more competition, but don't let that scare you. Acting when your purchasing power is highest will benefit you more in the long run than avoiding competing offers in the now. If your primary real estate goal is to find 'a deal', I have two suggestions. The first is to consider starting your property seach now, or waiting until after next Sept/Oct. As we learned from the 2023 sales data, average sales price was significantly lower in the winter and spring, but steadily jumped through the summer and the autumn until it caught up with last year's peak prices. By avoiding the summer selling season, you may capitalize on Seller uncertainty during slower times and negotiate a lower price. The second is to avoid newer construction and tackle that remodel yourself! Investing in sweat equity has always had a solid return in the Summit Area, but that's true now more than ever with properties of a certain age. While we ran numbers throughout this blog post pre and post 2018, I'd argue that the highest renovation returns will be found on property built before 2000 that hasn't been updated. Most Buyers we work with find property up to 25 years old outdated but liveable, and therefore allocate a higher market value to them. Older 'gut jobs', on the other hand, are prime opportunities to build instant equity. For the record, this is not a recommendation to look for a 'flip'. The Summit market has never been particularly amenable to investment flipping. Rather, this is a recommendation we often give to our clients who want to keep their purchase price low and secure favorable contract terms. Finally, once you find a property of interest, we always look through that property's history via tax records and historical MLS data. If a Seller is stuck on a high sales price, have your Realtor look up when they purchased the property and roughly calculate how much equity they may or may not have. If the Seller purchased within the last year or so, they won't have the equity to justify a lower price. You may have to pivot from seeking a price reduction and look for different contract terms that could benefit you. If the Seller purchased in 2020 or earlier, this is an excellent opportunity to remind the Seller of their big picture, and encourage them to work with you on a mutually beneficial transaction. Looking to the market ahead No matter if you're buying or selling, there will be plenty of complexities to navigate in the 2024 Summit Area real estate market. Working with true local experts who are dedicated to client education is your best strategy to coming out ahead! We look forward to seeing what the new year will bring, and to hearing from you about how The Mountain Real Estate Team can support your goals in 2024.
Thank You For Naming Us The Best Real Estate Agents In Summit!
We are positively honored and thrilled to announce that The Mountain Real Estate Team has won the 2023 'Best of Summit' for Best Real Estate Agent/Team! Over 12,000 people cast 90,000 votes in the annual 'Best of Summit' contest, brought to us by the Summit Daily News. Our team garnered the most votes and was awarded first place. Our appreciation for all of you who took the time to vote is beyond words, and we are honored to be recognized alongside so many of our dedicated peers. We are immeasurably thankful for the trust our clients place in us, and it's a privilege to have worked with so many of you in our community. Real Estate can be a complex business, but our clients are the heart of what we do. Kelli, Steve and I look forward to serving our hometown in the same meaningful way in all the years to come. Thanks again to you all for this incredible recognition!
What We've Learned As Our Peak Selling Season Approaches
As the peak selling season in the Summit Area approaches, what insights have we learned about the 2023 Real Estate market? Here are a few numbers from the last week with a lot to say. 32: The number of NUCs (new under contracts) last week. 66: Of the 32 properties under contract last week, 66% found a buyer without a price reduction. 34: Of the 32 properties under contract last week, 34% have had a price reduction. 43: For the 66% of properties that found a buyer, went under contract, and did not have a price reduction, the average days on the market was 43. 178: Of the 34% of properties that found a buyer, went under contract, and had one or more price reductions, the average days on the market was 178. So what do these numbers tell us about selling in the 2023 market? They tell us that buyers are still lining up for the properties that are priced right, and they tell us about 34% of sellers are still listing too high - hoping to capture the same type of year-over-year appreciation as the last couple of years, and not investing in the type of marketing plan that leads to a successful sale. The past week tells us that a seller or an agent who says 'oh, we can reduce the price later' is looking at approximately 178 days on the market. Take a look at Summit County's monthly sales distribution by sides closed. So what does this mean for Sellers? We're approaching our peak selling season, so it's more important than ever to work with a Summit Area expert who can align your price for a successful sale. Market positioning is essential, and you should find an agent who can be honest with you, and can explain their position using data when they disagree with you. If you price your property appropriately, then you can estimate going under contract in around 48 days, which still falls in our peak selling months. The 178 days you can expect to be on the market if you want to 'test the waters' with a listing price higher than market value, will likely take you into the slower winter months. Our team is here to help you make the most of the remaining go-time. Let's make your selling goals a reality before the summer season wraps up! So what does this mean for Buyers? One of the best strategies for Buyers in 2023 remains putting in fair market value offers on overpriced properties before the price adjustment. While the recent rate hikes might affect the buyer pool a little bit, you can still expect more competition from other buyers over limited inventory for the next three months. If you're interested in a property that's priced right, then be prepared to submit a strong offer. If you're interested in a property you think is overpriced, then don't just give up on it. Get in touch with us to write an offer below listing price, and present the seller with an out before they hit 178 days on the market! Let's find you your new mountain home before the snow starts to fall. Whether you're looking to sell your mountain property or purchase in Summit, our team is here to help you find the sweet spot and make your goals a reality in the least amount of time. Sign up here to get market trends directly to your inbox, and get in touch anytime!
A Team With Increasing Production In A Shifting Market
Summit views of a recent climb up Keller Mountain in the Eagle's Nest Wilderness Recently, a stat came out in regards to local real estate production that caught our eye. Since Spring of 2022, a variety of factors unique to the Summit Area have caused dramatic shifts to our local market. Because of these rapid and complex transitions, the three top brokerage firms in our Summit MLS have seen an overall downturn in production. Top 3 Local Brokerages - Total Sales Production Year-to-Date 2022 vs 2023 RE/MAX Properties of the Summit: -9% Slifer, Smith & Frampton: -19% Liv Sotheby's Breckenridge: -18% If you've been following our market updates, you, like us, are probably not overly surprised by this statistic. Average sales price and number of sales are down year-over-year, so it only follows that brokerages' production is also less than last year. Naturally, we were happy to see that our RE/MAX office overall has kept production closer in line with last year's historically huge numbers. We then got curious about how exactly our team was faring. Lo and behold, when we added up our transactions, we were extremely proud to discover that our production was not only keeping pace with our production in 2022, but it was actually up - and up significantly! Our Total Sales Production Year-to-Date 2022 vs 2023 The Mountain Real Estate Team: +21% We've spent the past year trying to think progressively to navigate the post-peak market. As I've written many times, we all knew the 2021-2022 market trends were not sustainable. Over the first half of the year, we've found that 2023 requires a mix of adapting new strategies and getting back to the real estate basics. Growing through challenging times is why we founded The Mountain Real Estate Team in the first place. Helping our clients, both new and old, as best we can really is the reason we've kept our mindset forward-thinking. We're thrilled we've been able to help so many buyers and sellers already this year, and we look forward to what the rest of 2023 brings!
Real Estate Buyers: Beat The Market In 2023
Changes to the housing market are a top story of 2023, and national housing trends all agree that the peak of the Sellers market is behind us. So does this mean it's become easier to buy? I'm sorry to say it, but, not necessarily. That's not to say there isn't still an immense amount of opportunity today for Buyers who approach Real Estate as a long-term investment, and the shifting market will present some great deals. The key for Buyers will be understanding that: timing is everything. Read on to learn our #1 tip for Real Estate Buyers hoping to come out on top in 2023! After two and a half years of getting raked over the coals in the hottest Sellers market in modern history, Buyers are eager to take back control. They have made their new stance quite clear - no one is willing to overpay anymore. As a result, property appreciation in 2023 has stalled out, and overall sales price is down in Q1. Properties are sitting on the market 62% longer on average than in 2022, and 29% of active Summit MLS listings today have reduced their sales price. On the surface, these statistics point to a slowing market. So why then are we still running into bidding wars and hearing stories of Sellers receiving multiple offers? This past month, we've encountered four different multiple-offer scenarios where our clients had to race against a deadline, submit offers with aggressive contingencies, and compete against other Buyers on price. Sounds a lot like the last two years, right? You, like us, have surely heard a LOT about how interest rates are still hovering around 6%, purchasing power is down, and Buyers are wary of the economy. This is all true, but at the same time, you know Real Estate remains a reliable, stable investment, and demand remains high in second home and resort markets like ours. You're taking the time to inform yourself on today's market value, and other Buyers are too. If you're interested in mountain property, you're still keen to pay a price you can justify. Everyone is talking about what Buyer habits are affecting the market, but does it not take two to tango? Instead of harping on about interest rates, lets consider what Sellers are doing right now and how it's affecting the market. Generally speaking, Sellers are having a very difficult time adjusting to the end of the fever pitch pandemic market. As a result, Sellers are perpetually over-estimating their appreciation, and their property's value. (Are you a Seller concerned about missing the peak and losing value? Read more here about how to reframe your thinking!) As we established, no one is willing to overpay anymore. Yet every over-valued listing that hits the market begets a handful more. Every Seller wants the same price as they see their neighbor listing for. So the more over-valued properties there are for sale, the higher the average days-on-market number skews. If a property has been sitting on the market for too long with no interest, the Seller is forced to reduce the price. So you can see now how Sellers' habits are affecting the market statistics as much as Buyers' habits. If the first price drop doesn't work, then you can expect another one and another one, until the property price is finally in line with today's market value. Because Buyers are more educated than ever, they're all waiting to pounce on a deal. So once a property's list price hits 'the sweet spot', all those Buyers who have been watching the falling price are ready and willing to make a move. This is when the bidding wars and offer deadlines and so on all come back into play, and it's also when Buyers begin to lose their bargaining power. Of the four multiple-offer situations our team faced this month, three of them were on properties that had just dropped price after being on the market anywhere from 20 to 86 days. So finally, lets get to the hook. How can Real Estate Buyers come out on top and beat the market this year? Our #1 tip for our Buyers right now is to go after properties before they hit 'the sweet spot'. As the data and our anecdotes show us, there are still many Buyers in the Summit Area who are interested in attractively priced properties. If you can get ahead of the price drops, then you can likely get ahead of those other Buyers. Submit an offer that you think is reasonable, and see where it goes! You never know the Sellers' motivations and true bottom line until you begin the negotation. It's not true every time, but often, Sellers who are overpriced begin to realize it after two weeks. If they're mentally prepared for a price adjustment, then they could be prepared for a significally below-list offer. Many of our clients are wary of "lowballing", but the right Realtor can help you craft an offer that's realistic and considerate. If you can begin a conversation with a Seller before other Buyers, then you have a higher chance of avoiding competing offers. You might even be able to score some additional wins such as a lower purchase price, seller concessions to help cover your loan costs, or credits for home improvements. Set yourself up for success as a Real Estate Buyer in 2023 by studying the market and its timing. Don't wait for prices to fall like everyone else in the crowd; make the price that's right for you a reality.
Sell At The Top Of The Market In 2023: The Big Picture
Since the halcyon days (for Sellers) of the pandemic real estate boom came to an end, the question on all Sellers' minds is: Is it still a good time to sell? We have been hearing this more and more from our clients, and while they're right to consider how their goals align with a shifting market, this is often asked to get at a different, more specific, question: Did I miss the "peak"? Now this is a trickier question to answer, because the "peak" of the market is subjective. As any Realtor worth their salt will tell you, each neighborhood is it's own microclimate; subject to wildly varying conditions that affect property value. While some areas in Summit are beginning to see double digit increases in Average Days on Market, some properties are still seeing multiple offers in the first 48 hours. I say the better question for sellers to ask right now is: What is my property worth now vs. when I bought it? By reframing the question, you're looking at the bigger picture. And for the Summit County Area, a much clearer answer comes into focus. Take a look at the graph above. This graphic breaks down the average change in sales price by town from 2019 to now (red), 2020 to now (green) and 2021 to now (yellow). As you can see, the big picture gains are huge. We can see some of the Summit County specific market variables that we often talk about here at play. For example, Breckenridge (where STR permits were restricted throughout 2022) only saw an increase of 11% in 2022, while Copper (where STR permits are unrestricted and unlimited) saw a whopping 41% increase in Average Sold Price in 2022. Now, all local forecasts and reputable models, believe that 2023 will be at best a "flat" year for appreciation in our market. Meaning that the percentage change in Average Sold Price throughout the Summit Area between 2022 and 2023 will be 0% - maybe even single digit decreases in some areas. This isn't hard to imagine; nobody could think the pandemic Real Estate frenzy would last forever, and you don't need me to tell you that interest rates and inflation have wrecked havoc on Real Estate Buyers. Even though the market change is decidedly not a repeat of 2008, maybe by some specific standards the "peak" is in the rear-view mirror. However! If you look at the big picture of property value in our area, and ask what your property is worth now versus when you purchased it, I'm very confident you're still going to like what you see. For those in areas like Silverthorne and Frisco who have seen an unimaginable 75% average gain in property value since 2019, even if we do lose 10-15% in the next year or two, your big picture still shows a big return on your investment. So...IS it still a good time to sell? The big picture clearly says, yes. For the past 6+ months, we've been honest with Sellers that yes, the market has changed. Yes, the days of multiple-offer-mania are behind us. Yes, you will have to accept Buyer contingenices. And yes, you can expect your property to be on the market longer if it isn't priced correctly. At the end of the day, though, the bottom-line equity you have in your property today speaks volumes. If the timing is right for you, it's a good time to sell and still catch the top of the Summit Area market.
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