May 28th, 2010
Spring Showers bring June…WEEDS!
While all the recent rains have been great news for our forests and for gardeners they also have a less desirable effect-they bring out all sorts of weeds, many of them considered noxious or invasive in Idaho. And noxious weeds aren’t just along highways or in farmers fields, they are often right in our own backyards, literally! Now is a great time to identify and take appropriate control measures against un-welcome weeds as many of them have not yet flowered or produced seeds. Landowners in Idaho are responsible for controlling and properly disposing of noxious weeds growing on their property. So whether you just want to “do the right thing” or avoid a fine it would make sense to educate yourself about weeds, survey your property for weeds, and if necessary take steps to control them. While most weeds will be found in vacant lots or in alleyways they can appear almost anywhere. I just removed several thistles that are considered noxious from the edge of my driveway in Boise’s East End. I’ve even had them come up in my raised bed garden.
Fortunately there are some good resources to not only help you identify all types of weeds, but also on proper control and disposal methods. Some weeds spread using rhizomes or runners underground or will re-grow if their tap root is not completely removed so simply whacking weeds down before they go to seed often is not the solution. One great resource here in Idaho is the Erickson Weed Laboratory at the University of Idaho http://www.uiweb.uidaho.edu/weeds/Erickson/Erickson.htm. They have several ways for you to submit weed samples or photo for identification. I recently filled out their form and emailed it to them along with digital photos and I got a positive identification back the same day. Another option is the Ada County extension office on Glenwood St. http://www.uidaho.edu/extension/ada/hcontent/resources. You can take weeds samples to them for ID and they can provide lots of good information on control and disposal as well as general gardening information. If you happen to live in Boise’s North End you may have seen a great article in their most recent Newsletter on common noxious weeds in the North End. The information is thorough and should apply to most everywhere in Boise. You can also view it on line at http://www.northendboise.org/Default.aspx?pageId=267401
And finally, because this is a real estate site, another reason to get out there and deal with those weeds is if you are selling or considering selling your home. The presence of weeds can be a real turn off for buyers and may either consciously or subconsciously lead them to believe the house is not well maintained or may have other issues. For more information on preparing your house for sale and the importance of landscaping and curb appeal please don’t hesitate to contact myself or another agent in our office.
April 1st, 2010
Keep It Simple Sellers!
When preparing your home for the market, borrow another set of eyes. Home staging is the act of preparing a home and its contents for sale with a special emphasis on presentation and appearance. Making small repairs and minimizing furnishings and decorator items are essential to giving your home a facelift and creating the feeling of space. Your goal should be to improve your home`s appearance in the eyes of potential buyers. The extra pair of eyes helps with objectivity in minimizing ones attachment to ones “things”. A neutral second opinion may see needed repairs and ways to optimize space.
March 23rd, 2010
How “distressed” is the Boise Market?
While the national headlines give many indicators of where real estate is headed it is important to remember that real estate is local and what plays in Peoria or Phoenix typically won’t be relevant to the Boise metro area.
One area that is of interest to many who watch the market is how dominant a force “distressed” sales have become in driving prices and activity in our local market. For the purposes of this discussion a “distressed” sale is any transaction involving a property marked by the listing agent in the IMLS as “possible short sale”, “in foreclosure”, or “REO-Bank owned”. The raw data comes from the Intermountain MLS (IMLS), but a local appraisal company, Hennessey Appraisals, has compiled and reformatted the data into a more easily digestible form and I would like to share and discuss some of that information here. So how “distressed” is the Boise market?
14 month summary for Ada and Canyon Counties showing distressed and “typical” sales
Source IMLS & Hennessey Appraisals
What really stands out in these numbers, besides that they are very high, is how dramatically the percentage has risen since January 2009 and that since reaching very high levels in the spring of 2009 there has been little if any retreat in the percentages. If one looks at the latest data broken down by area within the Treasure Valley you can begin to see where the highest concentrations of distressed properties are. Some of this data is misleading however due to the small number of closed sales in a particular area. However the pattern supports the theory that more established areas closer in to Boise show fewer distressed sales than areas south and west of the city that were built up primarily during the last boom. Possibly more of the homes in those areas were originally purchased using sub-prime lending or by investors and speculators.
Source IMLS & Hennessey Appraisals
With a few exceptions the areas that have had the highest percentage of distressed sales also have suffered the largest drop in prices. While Ada County average sold price has dropped 11.8% in the same 14 month period as the distressed sale data covers, in the areas of the county that have seen higher percentages of distressed sales the drop in prices has been steeper. Star (76.2% distressed sales) prices have dropped 21.8% in the 14 month period, while Eagle (67.9% distressed) has dropped 23.8%.
In Canyon County the overall rate of sales price decline has been 18.2% over the last 14 months while 69.6% of all closed transactions in February were distressed. In Nampa (72.7% distressed) average sales prices have dropped 23.3%.
Another trend starting to occur throughout the valley is buyers gradually shifting away from short sales and towards REO and “typical” listings. In the short term this is being propelled by buyers trying to beat the April 30 deadline for federal tax credits, knowing that it is unlikely that a short sale offer will be accepted in time. This has led to an environment where multiple offers, bidding wars, and sold prices over asking are somewhat common on bank owned properties particularly at the entry level. As an example, in Ada and Canyon counties since February 15, of the 1084 properties that have gone pending 400 (37%) of them have been REO’s and 122 (11%) short sales. However of the active inventory of 6270 listings, 1877 (30%) are short sales but only 609 (9%) are REO’s . While recent REO closed sales have averaged 97% of asking prices, prices on short sale listings that closed in the same period were only 93% of asking price.
Buyers in general are frustrated by the short sale process and have found prices on REO’s in many cases just as attractive as for short sales without much of the hassle. Banks, who, under pressure from the White House, have been delaying foreclosures are expected to ramp up foreclosing on properties currently in default this year shifting additional inventory into the REO column. The new HAFA guidelines going into effect April 5 are designed to streamline the short sale process. It remains to be seen whether or not that will actually happen. Regardless, most of the experts agree that 2010 will be a year the Boise market focuses on bank owned properties. Good news for buyers. Not so great for sellers of “typical” listings who find their primary competition is distressed property and whose appraisals also tend to reflect this reality. One thing we can say with certainty– the market will continue to change rapidly and buyers and sellers, and their agents need to continually educate themselves as to the current state of affairs LOCALLY. Please feel free to contact me if you have any questions on this information or would like me to update it for you.
October 7th, 2009
A Website That Won’t Try To “Capture” You
This is my first real estate blog. It is inspired by a recent email I received that congratulated me on my great web site. The thesis of the email was that he liked the fact that he could cruise through my site and the MLS listings without being required to give his name, rank and serial number. I like that too. My first job was as a telemarketer, my dad didn’t believe woman should work outside of the home ( the best of the male chauvinists, a wonderful man of his time) so when I wanted to earn more money than he would give me in allowance I had limited choices. Telemarketing was allowed because I didn’t work in a place that served alcohol or served food. At 16 that left babysitting and telemarketing. I hated that job, it was intrusive and required that I call people during their dinner hour and invade their privacy. I don’t respond well to that myself, and I do not stay on websites that try to “capture” me. If you do, you will find yourself inundated with countless emails that offer you “free” dinners etc in an effort to hook you in.
Advertising has changed, and consumers are so much harder to reach. People can Tivo through commercials, tape the shows and fast forward through commercials, turn off the radio, stand by the trash can when they go through their mail, and throw the direct mail directly into the recycle bin. Now in movies you might notice that the actors are drinking name brand sodas and eating from boxes of name brand crackers. The idea is you can’t watch the movie and escape the subliminal messages. I ramble, and the mind salad is getting too big. Here’s the point, at Windermere you can go to the websites as often as you want and look through the live listings, updated every hour and no one will bug you or contact you unless you want them to. Sounds good? It is. It’s my kind of website. Visit as often as you want. Call me when you are ready for help. It’s a great time to buy, interest rates are low, inventory is high, and prices are low. It is the classic best time to buy to those who have the desire and means. My website you ask? www.BarbBurnell.MyWindermere.com
Thanks for asking,
Barb
October 5th, 2009
Surprise Valley Sensation Maples
Fall is in the air in Boise and it is fabulous! Being born and raised in Les Bois I’ve grown up loving the autumn changes that fill the air each year! From the heat of the Indian summer to the rainy days & surprise of snow top mountains, these are the signs of fall that surround us. The entrance to our neighborhood in Surprise Valley is lined with the most beautiful trees, Sensation Maples, and each day they change a different color when fall hits, ultimately ending with the most brilliant red leaves I’ve ever seen. It is such a wonderful greeting to come home to each day.
Boise also boasts many of the best public celebrations in the fall, such as, Art in the Park, the Hyde Park street fair, and the Women’s Celebration run. I love all of the outdoor activities and festival that Boise has to offer, along with the changing seasons, chill in the air and smell of BSU football tailgating.
These are the few reasons I love the seasons in Boise, Idaho…the best place on earth! Now this is Living!
September 21st, 2009
Rentals in Boise: Do they pencil?
I‘ve been getting a lot of calls lately from potential buyers and investors asking that very question. Have prices of easily rentable homes in Boise dropped to a level that makes them pencil out as cash flow positive? The answer is yes…and no.
As we are all aware, the mortgage crisis and the ensuing recession have all put downward pressure on housing prices both nationally and here in the Boise market. The latest numbers for August 2009 indicate that single family home prices in Ada County have dropped 17.9% in just the last year and in many areas have dropped as much as 35-40% since the peak in 2006. The current climate of near record low interest rates, readily available credit for well qualified borrowers, and relatively low prices presents a unique opportunity for those with access to cash, whether they be seasoned investors, or those lucky enough to have saved up a nest egg. Add to this that rents, while somewhat down, have held up much better than home prices and you can see why there is renewed interest in buying rental properties.
There are many, many ways to approach this question from in-depth analysis using several different measuring criteria such as Cap Rates, time value of money, GRM (Gross Rent Multiplier), etc. to the most basic. Is there any money left each month after I make my payment and cover other expenses? For the purposes of this discussion I will only be looking at single family residences, not apartments or multi-family houses. If the answer is yes, then there is positive cash flow. Obviously, this is the most desirable scenario. However, especially in times when home values are rising, there are many investors who are willing to tolerate negative cash flow in order to build equity. I believe it will be quite some time before home prices in this market begin to significantly appreciate so it makes much less sense to look at anything that isn’t cash flow positive or at least neutral, unless you have deep pockets and lots of patience.
I spoke to Gary Stott, a loan officer with Waterstone Mortgage The Stonebrook Group here in Boise, to get a lender’s perspective. A few basic things to consider before you decide that buying a rental makes sense now:
Almost all lenders will require at least a 25% down payment to provide competitive rates.
You will also need closing costs of around 3% of the purchase price.
Rates are currently around 5.5% for this type of loan, but can change daily.
You must be well qualified.
If you currently own a rental you must have a 2 year history as a landlord for the rental income to be eligible for qualifying you for the loan. Banks will typically assume a 25% vacancy rate and deduct that from the allowable rental income.
Most lenders will limit you to a total of four financed properties (including your residence), although Fannie Mae is now allowing up to 10. However the PITI reserves required by lenders increase dramatically for 5 or more properties.
Since the property will not be your principal residence you will not be eligible for the Idaho property tax homeowners exemption. If the property you are buying currently has the exemption applied to it you will need to multiply the assessed value by the levy rate to determine what the approximate taxes will be. This information is available from a qualified real estate agent or on line at www.adacountyassessor.org
There are other expenses which should be considered in your decision such as maintenance, repairs, vacancy, and management fees (optional).
So what are the magic numbers that you should look for to find properties that will pencil? There is no simple magic formula because there are so many non-numerical variables, such as location, condition of the property, layout of the house, etc. Most importantly in evaluating the property you need to try and determine, ‘How rentable is the property and how much will it realistically rent for?’ Rentability and rents vary by neighborhood, so thorough research is important. You need to ask, ‘Who are the potential renters in this neighborhood?’ ‘What affect will things like proximity to large employers, the freeway, or schools have?’ You can also research what current rents are by talking to a qualified real estate agent, property manager, or by scanning such sites as www.CraigsList.org and www.idahostatesman.com. You can typically search these sites by neighborhood and type of house.
But is there a simple litmus test the potential investor can use in today’s market here in Boise? Depending on your investment and income goals there are some criteria that you can apply to “weed out” properties once you have determined the areas you want to focus on and what the expected rents will be. 1) Typically, the most “rentable” home is a 3 bedroom, 2 bath newer home with at least a 1 car garage. 2) Rents will, of course, vary by neighborhood, but for our purposes, $800/month is a pretty reasonable number to use.
So one easy place to start would be 3 bedroom, 2 bath, homes with a garage where the PITI (Principal, Interest, Taxes, & Insurance) payment is going to be less than $800/month. We assumed hazard insurance of $35/month ($420 annually) and taxes at $185/ month ($2,220 annually).
We figured $140,000 for a starting point. Of course these are only estimates and the actual numbers would be dependent on the specific property involved. So I researched to see if there were specific properties available in the city of Boise that would meet our most basic criteria. There were:
| Listed Price (3bed, 2bathw/garage) | Number Listed as of 09-10-2009 |
| $140,000 or less | 181 |
| $130,000 or less | 91 |
| $120,000 or less | 38 |
I had Gary Stott at Waterstone Mortgage The Stonebrook Group run some sample good-faith estimates for me to see if we could hone in on a price point that works.
| Purchase Price | Loan Amount | Interest Rate | PITI Payment |
| $140,000 | 105,000 | 5.5 | 816 |
| $140,000 | 105,000 | 6.0 | 849 |
| $130,000 | 97,500 | 5.5 | 773 |
| $130,000 | 97,500 | 6.0 | 805 |
| $120,000 | 90,000 | 5.5 | 731 |
| $120,000 | 90,000 | 6.0 | 759 |
Based on Gary’s samples it looks like at an interest rate of 5.5% or lower the purchase price cutoff is around $130,000 and if the interest rate jumps to 6% then it is closer $120,000. Of course, this is not the whole picture as no allowance was made for other expenses such as vacancy, repairs, maintenance, or management. Nor does this consider that you are tying up anywhere from $30,000-35,000 in cash as a down payment in a market where values are not expected to increase anytime soon.
My conclusion at this time would be that if you can find a well located, easily rentable, property under $120,000 there maybe some marginal positive cash flow and that if you are able to hold the property for at least 3-5 years you may see some increase in the property’s value. Given the relatively large amount of up-front cash required and the relatively low (if any) cash flow in a declining market, this is probably not the investment strategy for most. However, compared to from 2005-mid 2009, the numbers are really starting to improve. For those who are comfortable doing more detailed financial analysis of rental properties there are several web sites that offer easy to use programs to quickly analyze investment properties. www.erealinvestor.com, www.realdata.com (I suggest the REIA Lite Edition), and www.planease.com are three that I am aware of. And of course you can always seek the advice of a qualified real estate professional.
July 15th, 2009
FSBO vs. Real Estate Agent
So you’ve decided to sell your home and you are tempted to sell it yourself… For Sale By Owner, FSBO, Fizbo, etc. For some, a FSBO is the way to go and they can reach all of their home selling goals. However, while a prospective FSBO’s determination and sense of economy is to be admired, have they truly considered everything involved with a FSBO and what potential disadvantages a FSBO has? There are a large number of things to consider prior to going FSBO but here are just a few:
Do you know how to prepare your house for sale?
While you may love your extensive collection of birdhouses, will it turn-off prospective buyers? That wall of memories that includes photos of every event of your child’s life? Sorry, it needs to go. Remember, you’re not selling the home you live in. You’re selling property that someone else can envision as their home. Can you make that distinction?
Do you know how to price your property properly?
It’s fairly easy to “take a shot” at pricing your property. But what if you’re wrong? If you are too high then your house sits on the market and you keep spending money on whatever advertising you decide to do. Meanwhile, the price of homes continues to drop and you chase the market price down. You may end up selling your home eventually, but what did the “chase” cost you? Maybe you price too low and you leave money on the table. Simply put, the information that a licensed real estate agent has access to is vastly superior to non-licensed individuals. Do you really want to determine the selling price of your largest asset based on partial information you may have?
Are you prepared to spend your money up front?
In most cases, the listing agent funds the marketing efforts on a listing and re-coups those costs after the property sells (we hope). A FSBO seller must front all costs. If the property does not sell then the FSBO seller simply lost the money spent. The nice thing about sales commissions is you don’t pay them until the result you want actually occurs… your house sells.
Do you know how to market your property?
It takes more than a yard sign and a Craig’s list ad to give property the best chance of selling. There are powerful promotional tools only available to agents; the Multiple Listing Service (MLS), agent tours of newly listed properties, the most widely used real estate search tool on the planet (Realtor.com), and magic selling powder. Okay, I made the last one up.
Are you prepared for the legal issues?
Selling real estate has become increasingly complicated. The days of a simple one page contract are long gone. Selling the house yourself to save some commission dollars may be a short-lived victory if you get sued after close of escrow. Do you fully understand what disclosures you must provide? What about your responsibilities to obtain work permits on improvements you have made to the property? Are you inadvertently discriminating through your advertisements? How do you protect yourself if the Buyer backs out of a contract?
Do you know how to close the sale?
Are you prepared to open an escrow account, get a preliminary title report, order property inspections, handle contingencies, and order payoff demands for your mortgage? A licensed agent takes care of all of these details for you.
Thanks for reading. Do you agree? Disagree? Think I’m an idiot? Whatever you think, please share your comments and experiences.
June 30th, 2009
Eco-Friendly Design Materials
Two weeks ago, along with several other Windermere Capital Group agents, I completed the NAR Green Designation Course. After taking this course, I can’t help but notice all the great eco-friendly materials out there. Being a self-proclaimed interior design aficionado (Is subscribing to 20 different interior design magazines too much??); here are some of my favorites.
Benjamin Moore has some of my favorite colors to use for interiors. Now, they continue to be one of my favorites with their new paint line called Natura. This interior waterborne paint offers 3500 wear-resistant hues. It is also virtually odorless, zero VOC’s (volatile organic compound), and highly washable. That means bye bye baby grime marks. This paint runs about $50/gallon. For more info, check out their site at www.benjaminmoore.com.
As most of us new, compact fluorescent lights (CFL) are not the prettiest. The coiled look is too obvious and noticeably different. GE has recently unveiled a new Energy Smart CFL that is much more stylish. It boasts a life span of 8,000 hours and costs about $8. You can even go to their website to calculate your estimated savings by using their Energy Smart CFL’s. http://www.gelighting.com/na/home_lighting/products/energy_smart.htm
Caesarstone has never really been my favorite for quartz counters, but they’ve recently added 8 new colors to their ‘09 Collection, and I must say, I am quite impressed. Within these colors there is a recycled line, a new matte-hammered texture, and the first black metallic-accent surface. http://www.caesarstoneus.com/
FLOR provides carpet tiles that use non-toxic dyes and are made from recycled materials. The best part is when you are done with the squares (or sick of them) you can send the tiles back to be recycled. You also do not need a carpet installer for the tiles. This is definitely something that you can do yourself. They are also extremely durable and come in a range of colors and patterns. I have some in my garage and love them! http://www.flor.com/
June 29th, 2009
Hispanics form considerable economic base for Idaho
Recently a business partner brought to my attention an article on Hispanics in Idaho. I found the information very motivating with today’s economic conditions. Recent studies show that Hispanics in Idaho increased in purchase power in comparison with Hispanics nationwide by a full percentage point, reaching 13.5% in 2008.
Hispanics play a large part in overall economic growth, and are increasingly becoming more important contributors to the economy of Idaho and its businesses. Furthermore, the Hispanic population grew by 5% in 2008, representing 10% of the total population in the state. Pew Research Center shows that 60% of the 10% are homeowners/householders in Idaho and rank 3rd in the nation.
The statistics show that the influence of Hispanics will continue to grow in the future, and during the current recession, will continue to contribute to the economic growth of the state of Idaho.
Source: Idaho Department of Labor & Mirada Magazine
February 9th, 2009
What does it all mean; Short Sales, Foreclosures, Deed in Lieu?
It is hard to pick up a newspaper or turn on the news without hearing about short sales or the increase in foreclosures. As I talk with people about real estate, this is one of the areas that is probably a bit of a mystery.
Short Sales
In the vast majority of real estate transactions, when someone purchases a home they borrow money from a bank or mortgage lender to cover a portion of the purchase price. As security, the lender places a lien on the property in the amount of the loan. In order for the home to be sold and clear title issued to a new buyer, the lender has to remove the lien. Typically a lender removes this lien once the loan balance is paid in full. A short sale occurs when the net proceeds of a real estate transaction are less than the amount owed on the property. In a short sale situation, the lender must agree to accept less than the amount owed in return for removing the lien.
A lender’s willingness to accept a short sale depends on several factors:
- The home owner has to display some type of financial hardship. They must submit past tax returns, bank statements, brokerage account documents, etc. Based on their review of a person’s specific financial situation, the lender will give preliminary approval for a short sale.
- All offers on a home in a short sale situation must be approved by the lender. While the person selling the home may agree to the offer, the lender must also approve the sale and agree to remove the lien. Getting approval from the lender can be a very time consuming and involved process. The biggest time consuming part of this process is getting the contract and associated paper work to the top of the stack. Lenders are dealing with so many short sales it is easy for your contract to get lost in the process. Once you are on the top, the lender will compare the contract price to a liquidation appraisal or similar value estimation. They will also compare the estimated net proceeds from this transaction to what they feel they would obtain under a foreclosure scenario.
Short sale transactions can take anywhere from 30 – 180 days to close. My experience this year is that the average is running close to 75 days. Given the drawn out nature of this process and the uncertainty associated with getting lender approval, many Buyers shy away from a home going through a short sale. As a result these homes are typically sold at a significant discount.
Foreclosure
When a home owner falls behind in their payments, the lender can initiate the foreclosure process to gain full title to the property. There are very specific steps the lender must take as they work through a foreclosure. In Idaho, this process takes a minimum of 120 days. If the home owner has been approved for a short sale, they can still sell the home during this time period. If at the end of this period, however, the home owner is still in default an attempt is made to sell the property at auction. Typically the lender places a minimum bid on the property at the auction. If there are no buyers at this price, the property is taken over by the lender and becomes what is referred to as an REO property or Real Estate Owned.
It is important to note that a home facing a short sale situation may not be in foreclosure. A home owner could very well be current on their payments yet still owe more on the home than it is worth.
Deed in Lieu of Foreclosure
There are times when a home owner is facing foreclosure that they may opt to sign all of their interest in the property over to the lender in exchange for avoiding a formal foreclosure. The benefit to the home owner is that they are immediately released from their debt and they avoid any of the public notoriety associated with the foreclosure process. The benefit to the lender is they avoid the timely process associated with a foreclosure.
While the above three scenarios are not very appealing, they are a reality of the times. If you have any questions, please do not hesitate to give me a call.