Should I insure a parcel or building site that I own?

This is an important question that not many people think about. Usually, it’s called land or vacant land insurance. Basically, it is coverage that will cover bodily injury or damage to someone’s property if they have an accident on your property and you are found to be at fault. If that person files a lawsuit, it can help cover legal fees. Not that it comes up often, but injury on your parcel could mean liability for you.

The good news is, this coverage might not cost you anything as long as you bring it up to your current insurance company or agent. In some cases, your separate homeowners or renters policy can be extended to insure your vacant land, but it’s important to check with your insurance provider first. Don’t assume this happens automatically.
If you do not have a homeowners or renters policy that can be extended to your land, you can purchase a land policy through an independent insurer. Normally the deductibles are close to nothing, and the premiums are very affordable.
Another note about vacant land policies – remember that in most cases if there is any sort of structure, even a dilapidated cabin or barn (like many properties in Teton Valley) that hasn’t been used, your land may not be considered vacant, at which point your insurance policy may not cover a claim. It is important that you ask your insurance provider or agent how to protect yourself against claims related to abandoned buildings. It’s only a little bit of work on the front end, and taking these steps to protect yourself can really pay off in the long run!

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Homeowner’s Associations, a brief explanation

In light of the recent happenings with a local homeowners association (HOA) in Driggs, I thought I would write this week’s article about HOA’s purpose, and their ability to control certain situations – and why. Some feel certain HOAs have entirely too much control. However, the board of directors who represent the HOA, as well as each individual owner must abide by governing documents of the development that typically include; Articles of Incorporation, Bylaws, CC&R’s, and Rules and Regulations. The articles are usually simple documents to get the HOA up and running initially, and include non-profit filings with the Secretary of State. The bylaws dictate how the association is run. The CC&R’s are the bulk of these documents that include everything about the operation of the HOA, restrictions, requirements, etc. If written, the Rules and Regulations are typically a simplified version of the CC&R’s that include specific rules that will directly effect owners and residents. All of these documents can typically be found in the record, or provided by a county, real estate agency or title company.
When considering a purchase, it is imperative that you review these in their entirety, though they can certainly be comprehensive. For you, tenants or other residents, it might not be a bad idea to review (at least) the CC&R’s and/or rules and regulations as they most directly impact the residents. All of the above said, the problems with homeowners associations usually arise when someone hasn’t reviewed, or there is a misunderstanding. Regarding the issues I was recently involved with, it was a matter of interpretation. Honestly, the largest problem is lack of participation by the homeowners. Understandingly so, it’s usually a thankless job performed voluntarily. In this latest circumstance, I’m not convinced the majority of the owners didn’t disagree with the interpretation of the board of directors, but without enough participation from those that feel that way, nothing can change. Further, it takes initiative. If none of the Board of Directors take that initiative, oftentimes a member not directly involved with the board will know how to get that ball rolling. It’s all about questions, knowledge, and involvement. In this latest circumstance the entirety of the HOA took the brunt, even though it was only the decision of the board of directors that the residents didn’t agree with. Despite how all of these tenants and residents feel, all of this interpretation can be clarified exactly how the majority rule intends, but the majority must participate in the next meeting, ask those questions, and make their own personal decision, not leaving the decision to the board.
Next time you receive a proxy in the mail for your local HOA, forget about the proxy and set aside time for the meeting to cast your own vote. You will be enlightened and help the better cause that YOU believe in!

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I have been trying to find someone to owner finance or lease to own, why is it so difficult around here?

I’m glad you mentioned owner finance and lease to own in the same question. In a way, they’re the same thing. a summary of each;
-Owner finance is possession upon closing, usually in the form of a deed of trust. This works the same as getting a loan and buying a home, except the owner collects the payments. Usually the owner will collect payments through a third party such as a title company and a long term escrow. This way, your insurance and taxes are typically included in the mortgage payment to protect the seller from a disaster or tax foreclosure.
-A lease to own is not considered possession upon closing, but exactly how it reads, leasing until either obtaining finance by the bank, the owner, or cash at the end of the lease term. typically a portion of the lease payments would apply to the purchase price in this event.

Now, why aren’t they very popular? I think the best way to understand this is pros and cons of each. Not only that, but there are pros and cons for each the seller and the buyer, which are sometimes conflicting. In the owner finance situation, the buyer has an opportunity to recover poor credit, and purchase a home today at (presumably) a lower price. On the conflicting inside, the seller is (presumably) selling the home for a lower price today to a buyer with potential credit problems and not receiving a full cash payment to invest elsewhere. Of course in return for this, the seller will be making a return on the interest rate. That interest rate must be sufficient to cover a higher return than the seller would make investing the full cash investment elsewhere today. This might sound weighted towards disadvantages for the seller only, but there are other disadvantages for the buyer. The biggest disadvantage to the buyer in my opinion is the lack of inventory. We are already in short supply, and even shorter, approaching nonexistent supply for owner finance. That means the buyer has very little to choose from, and may be stuck with a home they really don’t want, or can’t afford just to make the terms of the owner finance work. The buyer must determine if this is the only route, even after credit recovery, the buyer can take.

With regards to the lease to own situation, this is very similar. However, the buyer may not have credit issues, but simply wants to learn about the area before moving into a purchase. Though the risk might be minimized on the credit aspect for the seller, the other terms remain the same. Even worse, they don’t have the initial cash deposit they would with the owner finance, which would come usually in full payment after the end of the lease term. Moreover, the same inventory and choice issues remain the same for the buyer. The buyer is looking for a home they will enjoy leasing, and living in, all in one. Where neither opportunities are common, this drastically reduces the availability in the number of homes to choose from, both for rent and for sale. In this circumstance I would advise the buyer to find a more affordable rental option, and keep their options wide open for a purchase after their lease is up and they have determined they want to live in the area.

On a final note, market conditions can drastically change the amount of inventory. With the two real estate markets in recent history though, it has not. In the wake of the downturn, a number of sellers had mortgages that far exceeded market value. They did not have the option to owner finance because even the initial or final payment would not recover their initial investment. Remember, in most cases an owner can only owner finance if they own the real estate out right. In today’s recovering real estate market with low inventory and supply, it simply does not make sense for a seller who can easily sell their home at market rates today, without the hassle of going through the owner finance situation. Since other markets are also doing reasonably well, the cash they would receive on a full purchase sale could be reinvested at a substantial return.

There are circumstances I did not touch on in this article. If you find yourself in this situation as a buyer or seller, and would like any free advice, don’t hesitate. Also remember to keep your eye on the Teton Valley Realty blog for other information on the topics above!

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More tips and advice to get the highest price for your home sale!

We’re sure you are tired of reading real estate articles that talk about staging your home, cleaning up your mess, putting your dogs outside, and stepping out for showings. I have comprised a list of ideas and tips to help get the best price for your home, but tried to touch on ideas that don’t come up as often.

Providing a certain level of comfort to a buyer, and expressing knowledge and insight about your home or property can make a dramatic difference in the outcome of your sale. As real estate agents, we won’t ever know about any super efficient insulation, upgraded windows, or anything else inside your walls that might be above average unless you tell us about it. The more we know about your property, the more we can convey to buyers. This goes both ways. Unlike Wyoming which is a non-disclosure state, Idaho is (for the most part) a full disclosure state with regards to items sellers know about their home. As agents, we are also required to disclose any “adverse material facts” that we are aware of. Hiding a problem can be just as bad as not shedding light on upgrades or improvements. Once the buyer discovers a problem that they were not told about, it creates a trust issue which can deepen concerns.

Since we are starting to see new construction, we will probably see a wave of sales in the coming years by those who built the home. Now is the best opportunity to keep good records about your construction or renovations. Buyers usually request a copy of the original set of plans for a home, and any other information about paint color, roofing type, appliance manuals, and so forth. Unfortunately, plans and other information are usually unavailable. The county keeps building plans, but only for a limited amount of time. It’s best to keep a copy.

Depending on how you organize, pick a location in your home to keep appliance manuals, paint can lids or labels, building plans, renovation details, exterior stain colors, window warranty information, irrigation system and landscape layouts, and even contact information for contractors you may have used. A common place is that little cabinet above the refrigerator that nobody uses. I personally prefer to get a small mouse proof plastic container and leave it in the crawl space. Out of the way, but always there. Obviously, an electronic file is best. If an agent is armed with all of this information about your home, it provides not only good information, but a comfort zone for most buyers knowing the home has/had a diligent owner. Those looking to start renovations after the purchase will be very pleased to have this information.

As a final tip, Try to keep all maintenance records. Every time you have a service provider such plumber or electrician (if you can find one) visit the home, try to keep track of it. Remember the little maintenance journal inside your car’s glove compartment? Most car buyers like to know the maintenance history of the automobile. If they know the automobile had a diligent owner that kept good records and maintained the vehicle they feel better about the purchase. Often times even willing to pay a little bit more. The same goes for your home. Keep track of when your furnace filters were cleaned, refrigerator water filters, any new equipment, services, etc. You never know, you yourself might even find this information useful!

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Increasing Rental Rates, Will it Stop?

Increasing Rent Rates, will it stop?

As most of us know, we are seeing major recovery in the real estate and rental market. Note I said recovery, not inflation – yet. Generally speaking, we are recovered to about 2005 levels. Not yet height of the market “boom” prices, but we are still recovering. There is quite a bit of buzz regarding new construction, homes to be built on spec, and even rental complex/apartment construction – mostly based on the assumption that the market will continue to grow and improve (hence the “spec” or “speculation”)
As we know, the key driving factor is demand. The availability of homes for sale in the affordable price range is minimal, and rental supply even worse. With that said, I agree that there is a fairly safe bet for investment potential.
The above said leads me to predictions for the question. My response is – I hope that is slows, or better yet, quickly recovers to reasonable degree, levels off, and stays on par with inflation. We need to remember that there is a fine balance between a return on an investment, and real world effects. The result of too much supply too quickly coupled with National ecenomic factors (which will always be in play) is still all too fresh in my mind. We must also remember who we are in Teton Valley. I believe we will always be the “quiet side of the Tetons” a family oriented community supported by our own tourism, and proximity to Jackson and Idaho Falls. We cannot directly compete with Jackson, and we should not. We have a niche here with semi-resort real estate prices that is still an attractive place for an investor, and/or a resident.
In my opinion, we are competing for a population and commerce, but more so with areas like Alpine, WY or Rexburg, ID. If prices here become unobtainable for most (such as Jackson) the vast majority of those who support us will not be able to afford to live here. This is particularly true with rental rates. In times where supply is dangerously low, the sky’s the limit. This is a perfect opportunity for investors and owners to take advantage of the market – as they should. However, I do caution our community. We need to remember that we must work together to support each other. We still have shoulder seasons. If the cost of living becomes too high for a meal, a service, or a rental, our community will look for alternatives they can afford.
So, here’s to continued growth, recovery, and profitability – in responsible, high quality, Teton Valley Style!

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Real estate and rental scams: What to look out for

Since I did not have a question this month, I thought I would take an opportunity to provide information about scams related to real estate and rentals. As our market ramps up, we are going to see an influx of scammers, whether it is in our community, or online.
Real estate related scams are mostly going to be targeted towards real estate agents. I have been in several scenarios where a buyer from another country wants to mail an earnest money deposit for a large sum of money on a property he or she “cannot live without”. The contract will of course fail, at which point they will request the funds to be returned to them in the form of non traceable funds, such as Western Union. For sale by owners need to be aware of this, as they will effectively be that real estate agent, and arguably an easier target whereas they are not in the business day to day. We are seeing many owners using marketing tactics which will atract these scammers. Watch for buyers who cannot communicate on the telephone  and especially those who reside in other countries.
There are of course other types of real estate scams related to non disclosure of material facts, but not necessarily the type a scam I am talking about today.

On the rental side of things, we can expect even more scams. A couple examples and some things to watch out for:
When searching for any rental (though primarily long-term rentals) be wary of duplicate listings on websites like Craigslist. If you find a property listed at a higher price, and another with the same exact photographs or address, it is likely a scammer duplicating the marketing material to attract a renter, then scamming them into sending a deposit.
Another tactic is finding old or expired real estate listings on marketing sites, copying the information, and listing it as a rental.
In either scenario above, the end result is usually the same. The scammer will ask you to send a deposit for the rental. Be especially careful about providing cashiers checks, as they are about as traceable as cash. A scammer can also cash a personal check.
I was once in a situation where I rented a vacation rental to a family outside the United States, which is not uncommon. They cancelled the reservation and asked what the cancellation fee was. I can’t remember the amount, but they were okay with it. They asked me to wire the money rather than mailing a check Since they were out of the country. Two weeks later, the cashier’s check they used to pay for the rental bounced, it was never a real check in the first place. In this example, rental owners are also an easy target for scammers, this is probably the most common type of rental scam.
Watch out for listings that are too good to be true, and again be careful of those who will not communicate over the phone. When dealing with vacation rentals, credit card transactions are always the safest bet in my opinion. As a final bit of advice, look to local resources for advice. If someone represents that they are the owner of a home, confirm with the county courthouse that they actually own the home if it is suspicious. Depending on what type of service you are working with, local real estate agents and property managers are also a good resource for advice. I recently was contacted by a woman who was on her way to the rental she had paid a deposit for. She said it seemed suspicious. I helped her to determine that the person she was dealing with was not even the owner of the home, and was able to save her about a thousand bucks, and a whole lot of travel time.

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The Ultimate Teton Valley Guide to Great Scenery, Hiking, and Recreation

Hiking and horseback riding in the greater Teton Valley region are sought after pursuits by many outdoor enthusiasts. The Teton Valley area is home to impressive scenery, hiking, and other recreational activities. Here are some of the best trails and areas to enjoy during your visit to the Teton Valley region.

 

The Teton Crest Trail

The entire route is 39 miles from Teton Pass on Highway 22 to string Lake in Grand Teton National Park. This rugged mountain environment is home to impressive views and a challenging trip for anyone looking for a unique backpacking expedition. Consider horseback riding, as it is roughly 75 miles along the crest of the Teton Mountains.

 

Table Mountain Trail

Another must-do hike is the table mountain trail in Driggs, Idaho. The top of the trail features impressive views of the Tetons. This is an 11-mile, round-trip hike, but seems longer due to the elevation changes. This hike generally takes 10 to 12 hours to complete.

 

South Teton Canyon Trail

Located just outside Driggs, Idaho, is the South Teton Canyon trail. This trail features gorgeous glacial valleys, surrounded by forest and creeks. This is an easy day hike to numerous waterfalls and is best enjoyed in the spring and early summer.

 

Grand Targhee Resort

If you love to ski, Grand Targhee Resort is the place to go during the winter. Grand Targhee Resort features snow skiing, tubing, snowshoeing, snow biking, snowmobile tours, and sleigh ride dinners.

 

Teton River

If fishing is your favorite outdoor activity, plan some time to spend fishing on the Teton River. This mellow River is perfect for fishermen, paddle boarding, and more.

 

Whether you like to hike, golf, fish, ATV, or horseback ride, TVR Ranches has the right rental property for you. Contact them today to find a great vacation rental home, and enjoy your summer or winter vacation!

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What do I need to know about the County assessment notice I just received in the mail?

Not long ago I did an article on property taxes, and how they work here in Teton County. In that article I go over levies, taxing districts and so on. Since I won’t go into too much detail on that end of things, feel free to email me, and I will forward you the link to that post. I keep all of the Ask the Expert articles up on the Teton Valley Realty website blog.
Anyway – the county’s primary source of revenue is property tax. The county has to come up with a way for all property owners to share the cost of “operations”, and they accomplished that by prorating each property owner’s share based on the value of their property. They determine that value based on sales prices, construction costs, rents, etc. Whenever a property is sold here in the county, they send the new property owner a letter requesting the details of the sale, including purchase price. ***Note, Idaho is a non-disclosure state, and the new owner is not required to respond to the letter.
Back to your asessment notice. Many of you probably noticed an increase in your assessed value this year. Don’t get excited, this only means that your prorated share of property taxes is going to increase. The increase most of us are seeing is based mostly on real estate recovery. Building costs are up, rents are up, demand is higher than in recent years, and supply is low. It’s important that you understand the accuracy of this letter. If the county is assessing the value of your property too high, you could be unnecessarily paying more than your fair share of property taxes. If the value is too low… well, you decide what to do.
If you read read your notice, you will see instructions on how to “appeal” your property’s assesment. If you only made note of the value and stashed it in your file cabinet, you can find that information on the county’s website under additional information on the assessor page. If you don’t email, you can pick up the information at the county courthouse during normal business hours, or stop by my office and I will print it out for you. IMPORTANT – should you decide that the county is over valuing your property, the deadline for appeal is Monday, June 22nd at 5:00 PM. The county is surprisingly easy to work with regarding the appeal process, but probably less so as we approach the deadline. Those who wait until 4:30PM on Monday the 22nd, might see less cooperation.
Prior to starting the appeal process, it would be a good idea to arm yourself with data supporting your claim that your property is overvalued. If you are a land owner, you might obtain recent sales of lots in your subdivision or nearby. When the county assesses homes, they value the land, then the improvements for a total assessed value. You could obtain sales data for land, or data of recent home sales in your area, as long as they are similar in size. If you have a finished basement and your neighbor doesn’t, that would definitely affect assessed value. A great resource is your favorite real estate agent, who would probably love to send you the information you are looking for.
There is a bit of good news in all of this, our market is improving dramatically. If you missed last month’s article, It’s a good overview of where we are today.

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Why annual inspections are a great idea

If you have a secondary residence, performing an annual inspection is a great way to ensure the home is maintaining its value. How often do you think to check your home’s roof, or check for signs of mold growth? Annual inspections help you pinpoint small problems before they become a major issue.

 

What a Professional Home Inspection Entails

When you hire professionals to inspect your home, you will be aware of the different elements that impact the home. Inspectors look at the structure of the home and identify areas of potential problems. Home inspections help you understand what needs to be repaired or replaced to maintain the integrity of the home.

 

Do I Need a Professional?

Some people prefer to perform a basic home inspection without professionals. Hiring a professional is the best way to ensure all signs of damage are checked in early stages, something most homeowners are not trained to identify. Professionals also raise awareness to homeowners about water concerns related to outdated piping or poor attic ventilation.

 

What Do Inspections Include?

When a home inspector is assessing the property, they will examine several areas including:

  • Heating and air conditioning systems
  • Electrical systems
  • Plumbing
  • Walls, ceilings, and floors
  • Foundations
  • Structural components
  • Roof, attic, and insulation
  • Windows and doors
  • Basements

 

How Routine Inspections Save Money

Catching mold growth in an early stage is easier to treat than a stage where it has taken over a home and causes serious health risks. Performing routine inspections save homeowners thousands of dollars on mold issues and other small problems that will eventually become a major expense.

 

Correct property inspections require adequate training. Hire TVR Management to ensure your property is being cared for correctly. With the right preventive steps, you will be able to save money and maintain a higher property value!

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Market Update & When to Sell (May, 2015)

I thought I would wrap a question from a customer and a market update into one article this month. That is, “Obviously the market is improving, should I consider selling this year, or waiting another year for more recovery?”
I think that depends on what you are selling. To help answer the question, market update first; Residential inventory is low, lot sales are on the rise. The bank owned era has nearly come to a close, very few short sales and foreclosures remain on the books. The inventory mentioned, and the lack of bank owned properties is what is causing the spike in prices for residential. That trend is mostly reflected for properties under 350,000, which was also the bulk of the bank owned inventory. We are seeing a number of new homes built on spec popping up or under construction to meet the demand for the price range. I don’t think we’ll see any high end spec homes for a while longer, as that sector, let’s say 500+, is still relatively slow. Though our building site sales have more than doubled since the height of the downturn, prices haven’t. There is still a great supply of available building sites as many of us know. However, many of these are in vacant subdivisions, which will take time to recover. That being said, if you are currently priced out, are comfortable in a rental, and have the means for a reasonable down payment, now might be the time to pick up a nice lot in a vacant subdivision in anticipation of higher prices down the road when construction begins.
Now for my selling recommendations:
***Homes under 350-400,000
More than anything, prices are affected by supply and demand. We know supply is very low in this sector, which has created slightly artificial pricing for homes in this range. With supply on the low side, and absorption rates which are down, now may be a good time for and expedited, slightly artificially high price. Also, consider spec home or new construction competition in the coming months.
***Homes 400k+
As mentioned, this sector is relatively slow at the moment. Supply is not high, so it may not be a bad time to consider selling if you don’t mind staying on the market for a time. If you only have interest in selling quickly when going to market, know that buyers may expect deeper discounts with current market conditions. I think Sellers in this price point will weigh options, and consider whether funds will be better served in another investment before markets fully recover throughout the rest of the region.
***Building Sites
This is a pretty broad sector, so I will do my best to cover everything quickly. Spec/Neighborhood lots – Investors are going to be looking for building sites to construct spec homes. If you are in the mood to sell, now might be the time. However, know that because the spec homes are going to be on a tight budget due to recovering markets, you may not want to expect a huge pay day. You should expect more competition in terms of supply in the near future, but possibly higher prices. Custom Home sites/Farm & Ranch – In terms of custom home sites, I think it depends on location. If you are in a well developed neighborhood with quality homes, now might be a good time for consideration before you are competing with vacant subdivisions once they see recovery. If you are a lot Owner in a vacant subdivision, I would suggest holding out until you see some construction in your neighborhood, which should increase values. Farm and ranch is just that, farm and ranch. It used to be the Holy Grail of an investment. Cash flow during ownership, and waiting for a big investor or developer to come and pay off. Today, farm ground is actually in short supply, and we are seeing an agricultural comeback. It might actually be worth consideration, depending on your original investment and timeframe.

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