In trying to evaluate your home for a listing price that could actually result in a sale, agents and owners should look at the following factors objectively and without emotion.
A buyer may react emotionally to an aspect of the home which is great but most buyers will then ask their agent to do a comparative market analysis to measure the fairness of the asking price. If a buyer is getting a loan to purchase the home, the home has to appraise according to strict guidelines. See here for what an appraiser looks at https://sf.freddiemac.com/content/_assets/resources/pdf/forms/70.pdf
Following are 14 Factors that help determine a home’s value.
- Age of home and design style – While newer homes are favored by some buyers due to the lack of maintenance requirements, there are many buyers who love the charm of an older home, especially those of the craftsman and victorian style.
- Structural materials and systems. Even in an older home, one that has had updates to systems such as electrical, plumbing, heating and replacements to roof and siding will be seen as more desirable and garner a higher price.
- Quality of Renovations and Added Amenities. Renovations that are properly permitted are most desirable. Beyond that, the quality and workmanship of renovations will garner a larger listing price. Added Amenities such as hot tub, water feature, etc will also add value.
- Floor plan. Is the floor plan functional for today’s consumer? Needs and tastes change so this can be a moving target.
- Number of bedrooms and bathrooms. Price should be reflective of these numbers and these days, a private master bath is a sought after feature.
- Square footage. Not always the most important element if the home has a great floor plan and makes use of space well.
- Curb appeal. Very important for first impression.
- Lot square footage and design. Not only is the lot important but also what is done with the space. People want to spend more time outside and a backyard oasis where one can entertain and relax is a sought after commodity.
- Storage. More important for some consumers than others but organized storage is generally a plus.
- Garage. In some places, the number of garage spaces can make a huge difference in selling time and price. In Bozeman, 3 garage stalls are very desirable so that people can store their toys on site.
- View. Views can increase the value of property especially if they are unobstructed and protected.
- Location. Everything factors in here from walkability to shops, coffee, restaurants, ambient noise, convenience to freeways, airports, perceived demand for the neighborhood.
- Neighborhood. What does the rest of the neighborhood look like? It is most desirable to have like kind or better properties than the subject home in the neighborhood
- Comps and the current real estate market. What have other homes sold for in the past 90 days? And then what is the momentum of the current market?
If you are curious how your home would be valued, please reach out and let’s schedule a free property analysis. Montana is a non disclosure state so only a licensed relator or appraiser has access to real sold data which you need for an accurate valuation. For up to date information on the Bozeman market, read my blog posts at https://movemetomontana.com/.
First Time Homebuyers – 2020 is YOUR year to purchase your HOME!
Let’s just say that the stars are aligning for first time homebuyers. Market forces are good as we are entering a more balanced market that we have not seen in years. In addition, there is an abundance of programs to help the first time homebuyer get into that first home in 2020.
Let me explain why:
Low Downpayment Programs
There are VERY generous programs out there to help with qualifying the first time homebuyer for a purchase with a low downpayment.
- FHA loan program: A loan insured by the Federal Housing Administration. Good for those with low credit scores and little money saved for a down payment. https://www.hud.gov/buying/loans
- USDA loan program: A loan program 100 percent guaranteed by the U.S. Department of Agriculture for lower-income borrowers in eligible rural areas. https://www.rd.usda.gov/programs-services/single-family-housing-guaranteed-loan-program
- VA loan program: A loan backed by the U.S. Department of Veteran Affairs that allows no down payment for military personnel, veterans and their families. https://benefits.va.gov/homeloans/
- Good Neighbor Next Door buyer aid program: A HUD program that provides housing aid for law enforcement officers, firefighters, emergency medical technicians and teachers. https://www.hud.gov/program_offices/housing/sfh/reo/goodn/particip
- Fannie Mae or Freddie Mac loan program: Conventional loans backed by Fannie Mae or Freddie Mac require 3 percent down. Good for those with strong credit.
- HomePath ReadyBuyer Program: A program that provides 3 percent in closing cost assistance to first-time buyers. Must complete an educational course and buy a foreclosed Fannie Mae property.
- Energy-efficient mortgage program: Backed by FHA or VA loan programs and allows borrowers to combine the cost of energy-efficient upgrades onto a primary loan upfront.
- FHA Section 203(k) loan program: Borrow the funds needed to pay for home improvement projects and roll the costs into one FHA loan with your primary mortgage.
Downpayment Assistance Programs
On top of the low downpayment programs, there are actually programs that will grant the first time homebuyer part of the downpayment!
- Montana Neighborhood Lift – Down payment assistance up to $12,500 for service members. https://www.montanalift.org/
- Montana Board of Housing deferred or Bond Advantage Program can provide up to $10,000 https://housing.mt.gov/Homeownership/Lenders/Down-Payment-Assistance
- HRDC Road to Home offers up to $30,000 . https://thehrdc.org/how-we-help/housing/down-payment-assistance/
- Dream Makers Grants for Veterans – Offers up to $5000 . https://www.penfed.org/learn/mortgage-programs-for-veterans
- There are also local and state programs that can help get you into a new home!
Other Positive Factors for First Time Homebuyers
- Prices in the SW Montana area are leveling off and slowing their rate of increase. See my blogs for up to date information on real estate trends! https://movemetomontana.com/montana-blog-real-estate-trends
- Inventory is good and days it takes to sell a home has risen. We are approaching a balanced market where everything is not weighted towards the seller.
- Mortgage rates themselves are quite reasonable and are actually down from a year ago.
Free Seminar for First Time Homebuyers
This is a lot of information to digest. To help, a mortgage broker, Kari Francisco (NMLS #1123666) from First Security Bank and I will be presenting a Seminar with just about everything you need to know to purchase your home in 2020. The seminar will take place on February 8 from 10 am – 12 Noon at the Windermere office in Downtown Bozeman – 135 East Main street. PLEASE RSVP to liz@windermere .com or on my contact form at https://movemetomontana.com/as space is limited.
Pictured home is in Belgrade – check it out on this link. https://www.windermere.com/listing/MT/Belgrade/1308-Fozzie-Lane-C-58714/100542204
Bozeman 2019 Real Estate Pricing Trends
Bozeman December numbers are in! Let’s take a look at the Bozeman real estate pricing trends of 2019, compare it to trends of previous years of 2017 and 2018 and check the crystal ball for 2020. The following numbers represent all sales in each category for each year and numbers are coming from the Big Sky MLS.
Median Sales Prices
First up are median sales prices – I have divided these sales into Single family, Townhomes and Condos. We see a not unexpected increase in median sold prices in all three of these categories BUT we also see a slowing rate of increase which is great news for buyers and bolsters the thought that the real estate market is becoming more balanced.
Median Price Per Square Foot
Second number I checked to confirm the median sales price slow down, was the median price per square foot. And I reached the same conclusion, that prices are indeed slowing their rate of increase.
Days On Market
To help round out the picture of the market conditions, I then took a look at days on market. If days on market is a large number and homes are languishing on the market, then we would have certainly turned the corner to a buyer’s market. But alas, this is not what I found and in fact, homes in all categories are still moving along at a good pace with a decrease in DOM actually found in the single family home category.
Looking Ahead to 2020
So what does this mean for Bozeman real estate pricing in 2020? All indications currently point to a very similar year in 2020 as in 2019. Mortgage rates are now very low (under 3.7% for conventional 30 year fixed!) which will make it attractive for people to consider a home purchase. Movement to the Bozeman area is expected to continue at similar rates (about 1500 people a year) as in previous years.
These numbers reflect sold pricing. Remember that Montana is a non-disclosure state so only licensed realtors can access accurate data. If you would like to dive deeper into market trends, please reach out and let’s have a conversation! Keep an eye on the blog at https://movemetomontana.com/ for more ongoing analysis. I hope you found this helpful – please pass it on!!
I suppose the answer to this is complicated and really depends on one’s goals with the vacation rental, how much work one wants to put into the rental process and the cost / benefit analysis of purchase price and rental income.
I will use my vacation rental as an example. We own a vacation rental on the Big Island of Hawaii at the upscale Mauna Lani resort. We purchased it in 2014 when prices were still somewhat depressed from the great recession. We put down 30% and have a second home mortgage with rate less than 4% for the rest. We have large HOA (about 1400 per month)due to the fact that in Hawaii the HOA takes care of all exterior elements including landscaping, exterior paint, roofing, common areas such as fitness center, pool, beach club etc. But considering we are not on island for 10 months of the year, we are happy to pay someone to manage all of that for us.
We advertise our home on Vrbo and Airbnb. Those websites have changed a lot over the years and charge the renter more than they used to but people are still using them. I have seen a huge shift in the past few years away from Vrbo and much more to Airbnb. A general rule of thumb is that foreigners will use Airbnb as will younger (millennials and younger) Americans but baby boomers and some genX will use Vrbo. It has been fascinating to watch this evolution. We also do have quite a few return renters that will just contact me directly after their first year.
The big question that one has to answer which will directly affect if you lose money on the vacation rental itself or break even (assuming you have a mortgage), is how involved do you want to be with the management of your rental? First thing you need to look at is the IRS code – https://www.irs.gov/taxtopics/tc415 and then discuss with your accountant. You must take the rules of this very seriously. There are a few more issues to discuss with your accountant as enumerated here: https://www.marketwatch.com/story/own-a-vacation-home-heres-how-the-new-tax-law-affects-you-2018-12-03 How much you can write off on your taxes and the passive activity loss is directly affected by your activity.
So what that means is that for the best tax benefit, you need to actively manage your vacation rental – that means taking the bookings, communicating with guests, keeping maintenance log, and doing as much of the work yourself at least to get up to the 750 hours per year. If you have a booking agency deal with your guests, you are not actively managing your property and while you may have some tax advantage, it is no where near where it would be if you did it yourself.
Another large factor is just income vs expenses. Before purchasing a vacation rental, I would check occupancy rates pretty carefully. Can the home be rented all year long? Are there seasonal adjustments in rates and what are the rates? Does the number of nights rented per year times rate cover your expected expenses? What about the weather? We picked our location on the Big Island partly because of its very strong rental history and the consistent weather. It is always in demand as there is no rainy season, no mud season etc. We are also rarely affected by flight delays as there is no snow coming this way. As a result, we enjoy high rates of occupancy.
But to be in demand as a vacation rental, one has to maintain your home carefully. Things cannot be broken, everything should be sparkling clean, it should be well equipped. We regularly upgrade and repair elements in our home so it is pristine. As someone who manages her own rental, I watch the reviews carefully and strive for perfect reviews every time. The only way to achieve that is pay attention and make sure you visit your place. In my opinion, anyone who is self managing needs to visit once a quarter at least.
Let’s take money out of the equation though. What do you get for a vacation rental? For us, we are happy to meet up with our family members who live apart from us in a place that has years of happy memories. Even though we enjoy travelling to new places too, there is something special about everyone knowing we are going to favorite place that is stress free – knowing what to expect has a lot to do with the lack of stress.
In the end, everyone needs to take a look at the cost benefit analysis and weigh the work against financial impact versus your happiness that you get from enjoying your second home.
Check out this website https://buyvacationrentals.net/ for more vacation rental purchase information!
Tis the season…for family photos!
Whether you have an adult family or have young ones, read on for tips to get the best photos in the least amount of time with the least amount of stress.
- If you can, engage a photographer. If your budget is more generous, look for community referrals and then examine the photographer’s work on his or her website, checking to make sure that he or she captured the vibe that you want. If your budget is not so generous, check out a local university or even high school for expert hobbyists. Make sure to discuss with the photographer, time of day, mood, lighting etc that you would like.
- Decide on a mood or vibe for your photos. Do you want casual, almost spontaneous shots or a bit more posed? Do you want an outdoor, natural setting or maybe something against a textured background – old brick walls, barnwood siding etc make great backgrounds. Discuss what you would like with your photographer as well as your thoughts on close ups vs whole body shots.
- The mood you decide on will then help out with outfit selection. Clothing will be influenced by season of course. It is nice to have coordinating outfits but not strictly matching, unless maybe if it is a Christmas PJ picture! Examples of coordination can be everyone in a shade of white top with khaki bottoms or for winter, a few of the party in a plaid shirt of coordinating colors, maybe a few more people with a solid color top in one of the colors in the plaid and then maybe a scarf or two in a different plaid that uses the same colors. On the bottom, keep it simple with blue jeans. Denim photographs really well. I would also bring a few accessories like jackets to change up the look to give you more options. Sometimes you will be surprised by what you like better. All of that being said, don’t leave the outfit selection until the last minute. Try them on, take a few selfies and make sure you like the look!
- Make sure the time you select takes everyone’s schedule into account. To make sure kids are at their best, the time should be after naps and after some food. Maybe even a glass of wine and snack for the adults so everyone is loose and in a good mood.
- Lastly, try to have fun at the photo shoot and let it flow naturally. The best photos are usually the ones that are the least canned. Don’t be afraid to move around, try different poses, and different arrangements of people. Ultimately, you want a natural feeling photo that captures the love that you have for each other, so just relax!