CC&R’s, what you need to know

CC&R’s, short for covenants, conditions, and restrictions are basically written and recorded rules of the neighborhood or subdivision. It’s important that these rules be recorded to make them binding and enforceable. They should also conform to all laws as well as local government regulations and requirements. When it comes down to a dispute with a lot or homeowner, it’s important for the subdivision to have CC&R’s that have been written and recorded correctly.

The purpose for these restrictions is to ensure conformity in a subdivision. Most of the rules are just long winded ways of saying that you have to keep your lawn mowed and weed free. Some developments have stricter rules than others. Some require certain design aspects when constructing a new home, where you can and can’t park a trailer, and so on. For the most part however, the rules are considered to be for the good of the neighborhood.

When working with Buyers, I often have requests to spefically look at lots without these restrictions. Sometimes it’s only because they want to build a house smaller than what they assume most developments would allow. However, based on that example, there are a number of developments that require a minimum of only 900 square feet, which is pretty minimal. Some developments are even along Ski Hill Road surprisingly. When searching for a home or a piece of land based on your special needs prohibited by most restrictions, it’s important to remember that all CC&R’s are not the same. Some are only a few pages long, with very few restrictions. All of the above considered, don’t rule out being in a subdivision if you can help it. Consult with your agent, most experienced agents have an understanding of the general rules in each development. Another way to explore subdivision opportunities is to take a drive around the development. Usually, if all of the homes have trailers on the side of the house or in the driveway, trailers are allowed. If all of the homes have metal roofs, you might find out if a comp shingle roof can be used. Use caution however, this is not a guaranteed way of understanding what is or isn’t allowed.

You might ask yourself how or who to contact with some of these questions. Our brokerage can usually get you an electronic copy of the CC&Rs for free, any time. If we have it on file, we can also send you contact information for the homeowner’s association (HOA) who would ultimately be responsible for enforcing the restrictions.

To conclude, be advised that CC&R’s are not the only way to restrict uses or enforce rules with a property. Even a piece of land or a home that is not located within a subdivision can still carry deed restrictions which works similarly, though I will cover those in another Ask The Expert” column!

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What can you tell me about water wells in the area?

We have good water. It’s full of minerals, which also causes some of the hard water deposits you see in your bathrooms and kitchens. I know we are not talking about soft water systems, but most people don’t realize that there’s a good possibility your home either has a system in place, or hookups ready for a system to be installed. Almost all of the newer constructed homes have hookups – remember the plastic pipe loop next to your washer and dryer? That’s what it’s for. I’ll save you from what I know about ion exchange in regards to how these systems work. Back to wells. I decided to do this write-up because of an increasing number of buyers interested in lots that are uncertain about the cost of drilling a well, and bringing in other utilities. As far as the cost, it’s pretty simple. I interviewed a few local well drilling companies, it’s about $40/foot including a well casing. The Idaho Department of Water Resources requires a steel casing, that is tagged with a well tag number. Almost every well drilled in recent history is then recorded with the department. The department’s website, idwr.idaho.gov provides a well driller’s research tool in which you can pull up information on each well drilled that has been reported, called a well driller’s report. The well driller’s report will tell the approximate site, the types of ground materials, and at what depth. As you would guess, it also reports the exact depth of the well. The reason I am telling you this of course; the next logical question after understanding the price per foot, would be the depth. Usually, you will find a neighbor who has a well in the same area in which you are thinking about drilling a well. Now, there are no guarantees your well will be the same depth of your neighbors, but you can bet that it will be pretty close. The well driller’s research tool can be daunting unless you understand how to search by township and range, but there is also a way of searching by last name etc. On a final note, you might be thinking to yourself, “Why don’t I just buy a lot in town and hook up to the city water and sewer system?” You can! Just remember, the city will charge a hook up fee for water and for sewer, and it’s not all that cheap. The cheapest way of doing it? Locate a lot in a development with a pre-existing community well system. They’re usually pretty reliable, and fairly inexpensive to hook up to.

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Seller or owner financing, what’s the deal?

Seller or owner financing, what’s the deal?

I have run into this question lately more than ever. I’m not sure why, if it is the sudden turn in the economy, or otherwise. As a Seller, you first might ask, “What’s the point, why bother?” There are a number of scenarios in which it makes sense, for example; the property will not appraise for the asking price. Now, you might be wondering why the buyer would be willing to pay more than the appraised value, what an expert in the marketplace believes the property is worth. I mentioned that sudden turn in the economy, and most of us are feeling the pinch. In some cases, property value is a rising faster than market data can suggest, or otherwise support. The same thing happened as the the housing market was collapsing, just on the flip side of things. There are several other scenarios, and it doesn’t always lead to a buyer that is not qualified, or cannot get financing.

The next question I usually receive is “Who takes the Buyers money?” That question can be a little tough to answer. Really, it just depends on the agreements, and the purchase contract. In my opinion, the easiest solution is to work with a local title company. Most title companies are set up with a long-term escrow department. A long term escrow is basically an arrangement where an unbiased, usually unrelated third party is responsible for the documentation, and funds. The company can accept, and distribute funds according to the agreement written by the Buyer and Seller. When the owner of a property acts as the lender, the owner usually doesn’t want to have anything to do with the property there after. They want the buyer to be responsible for everything related to the property, and that would include property taxes, maintenance, utilities, and so on. That being said, the company can also collect an estimated amount for the payment of property taxes and homeowner’s insurance, just like any other lender would require. The Seller is also probably going to want to receive is sizeable down payment, as well as an interest payment. There are several things to consider, and it’s not uncommon to get an attorney involved when creating the terms. Those terms are then sent to the long-term escrow or title company.

The third question I usually receive is “How the heck would I do all of that on my own?” That’s also good question, but the easiest to answer. Business professionals such as real estate agents are usually ready for anything that comes their way, including a situation where Seller financing is needed. Real estate agents are not attorneys, so sometimes they will work closely with an attorney to draft those terms, but you certainly wouldn’t be on your own when working with a good agent or brokerage!

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Is the Spec Home Market Back?

Spec Home FrontIs the spec home market back? I think so. At least, it’s coming. The problem some spec home investors are going to find is the increase in the price of lots for this type of home. Usually, spec homes are not state-of-the-art custom homes with shake shingle roofs. They are, however, usually quality starter homes built to Idaho Code, and specifically snow load capacity etc.

For an investor, every expense has to be considered. Everything has to pencil. Utility connection fees, City impact fees, building permit costs, excavation, contractors, subcontractors, landscaping, everything for a finished, salable product. Holding costs and real estate commissions must also be considered. My point is, a big part of making sure the investment is sound, is making sure that every expense is necessary, and hopefully as cheap as possible without sacrificing quality and desirability. With the increasing price of buildable lots, it might be worth considering making that purchase sooner rather than later, in anticipation of the spec market we’re talking about.

I went ahead and picked a great little subdivision (I’ll call it ABC Subdivision) in Driggs for my analysis on lot prices and home prices. First, lot prices to show the importance of investing in land – sooner rather than later. Unfortunately, the real estate commission and the local Board office has gotten pretty sticky about agents disclosing sale prices without a cause, I could argue that, but I think I’ll play it safe – hence the non-disclosure of actual prices, and the real name of the subdivision.

So, for lot sales: From 2011 to 2012, the average sold price of lots in ABC rose exactly 25%. The average sale price from 2012 to 2013 rose a little over 47%. The last sale in 2013 is about 14% less than the cheapest listing currently available in ABC. Don’t think that you’ve missed the bandwagon, they are still dirt cheap (literally) and they are still priced about 70 percent cheaper than they sold for in the height of the market.

So, moving on to home sales to justify my comments about the up-and-coming spec home market: From 2011 to 2012, home prices stayed about the same, only rising just over 5%. However, from 2012 to 2013, home prices rose about 13 percent. On top of that, the most recent of those sales are within what I believe to be spec home margins. Current home price listings, that seem to be getting a fair amount of activity are priced 47% higher than the average sold price in 2013. I did my best to make these calculations as accurate as possible, and base them on the median price per square foot, per year. Source: Teton Multiple List Service.

That all being said, I would of course love to let you in on my opinions of the best lots yet available in Teton Valley!

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Mortgages – Where to get started in 2014

I have had several transactions since the (new) lending changes took effect in 2014. Unfortunately the sentiment from almost all of my buyers is frustration with lenders.

I’ve spoken with one of our local lenders, Cathy Starrett at Stearns Lending asking what I can do to better serve my buyers and prepare them for the roller coaster process that financing real estate seems to be. Cathy had some good tips and I wanted to elaborate here.

- Buyer Confidence and Trust It seems that buyers and lenders have both lost the human element of trust with downturn in our real estate market. Buyers seem to have lost trust in Realtors, appraisers and financial institutions. It is understandable with home values that have literally been on a landslide for the past few years. However, it appears that the tide has shifted. “REALTORS® generally expect prices to increase over the next 12 months at a modest pace with the median expected price increase at 3.9 percent, according to the latest REALTORS® Confidence Index. Demand has slowed somewhat because of the increase in home values and the cost of borrowing from higher mortgage rates and mortgage insurance premiums for FHA loans. The modest pace of economic growth has also kept the lid on price growth.” -National Association of Realtors

State Median Price Expectation

State Median Price Expectation

Of course, the other side of the coin is lender trust. Lenders have also lost trust in home owners. With the high rate of foreclosure during the downturn, lenders went from very lenient guidelines to very strict ones. We are now starting to see the balancing of the scales, and qualified buyers are able to get financing at very favorable rates.

- Confusion and Miscommunication  There are so many sales pitches for buyers. Many are unsure where to even start. Should the search begin with looking at homes? Talking to a Realtor? Talking to a mortgage lender? Stalk sites like Zillow, Trulia? My answer is contact both a Realtor and a mortgage lender early on. Most of the time a buyer will have to have a pre-qualification or pre-approval letter from their lender to even submit an offer. It also doesn’t serve anyone for a buyer to be looking at homes they can’t qualify for. Cathy says “When looking for a mortgage, you don’t have to apply to ask questions.  And no question is silly…after all, how many times will you be purchasing a house?  Get the facts!!  Find out if the lender is focused on you…or the loan.  Does the lender have your best interest at heart?  A good lender will listen to you and can give you advice to move you closer to your goals and secure a loan that is suited to your needs.” Also, be wary of some advertised rates. While the rate may be very appealing, there could also be hidden fees or discount points (cost of the rate) that aren’t apparent at first glance. Find out what the true cost of a loan is before applying. Ask your lender for a Good Faith Estimate (GFE).

- Finding the RIGHT lender Start by asking someone that may have recently purchased a home. Ask your Realtor, call your financial adviser, get referrals. Then CALL these people. The person you’ll be working with is human, and different personalities work better with certain people. You’ll want to take a few minutes to have a lender answer your questions. If you feel comfortable talking to this person and you like the rates you’re being quoted, then chances are you’ve found a good “fit” and can look forward to a pretty good experience. Take control of your loan by talking with a live loan officer who can give you answers.

- Don’t get frustrated It may seem that the lender needs to know everything about you for the application. Actually all the lender needs to know about is:

  • Can you afford the loan
  • Do you qualify for a particular program?
  • Do you have the ability to repay?

The ability to repay the loan will include your credit report (score and proof of paying your liabilities on time) and your stability of income.  You will, however, need to provide quite a lot of details (read: paperwork) about these topics.  The goal with fitting a loan program to your needs is to avoid financial hardships. This is the lender’s way of ensuring they are not risking losing money on a home that a buyer can not pay for, as well as keeping a borrower from stretching too thin while they repay the loan. I know you’ve heard it time and time again: Check your credit score! Know what your numbers are, or if you have some clouds on your report that need cleaned up before a lender can help you purchase a home. One of the best websites for obtaining a free, annual, credit score is to go to www.annualcreditreport.com. This website will give you all three credit bureau scores.  Most other sites will only give you one score.  Lenders usually get all three scores and will use the middle score.

- Your Realtor and Lender It is also important for the two to communicate. Both your Realtor and Lender need to keep each other updated and when you find that symbiotic relationship, it makes the transaction so much easier for a buyer. Ask your lender about communicating with your Realtor.

Ultimately, the lender is trying to help you as much as your Realtor. There are times when it seems like a lender is obsessing over every minute detail of your financial life. This is not a personal vendetta. The lender is trying to make sure that you are able to repay the loan you’re asking for. With the changes in the underwriting requirements that occurred in the beginning of 2014, lenders are cautiously moving forward. Buyers can help themselves by having income and expense documentation easily accessible. Get your copies of your tax returns in order so when you’re ready to hit the gas, you aren’t stalled by missing paperwork. Most lenders will give a buyer a checklist early on to make sure that the majority of the documentation is received in one package; don’t procrastinate. It may be the difference in getting the home you love or missing out because you aren’t ready with your lenders approval letter.  Every indication is telling us the market is heating up, buyers have excellent opportunities as well as incentive. Make the most of this market by finding a lender, Realtor and a home that will work for you!

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New economic development projects in Victor!

City of Victor

April 9, 2014“Lighter-Quicker-Cheaper” Economic Development comes to Victor! Your ideas and thoughts on how to enhance Victor’s public spaces (along Main Street and Center Street, parks & pathways) are needed!

Would benches, picnic areas, more trees, and water fountains encourage you and your family to spend more time on Main Street or in Victor’s parks? Do you appreciate the hanging flower baskets on Main Street during the summer and the holiday decorations during the winter? Would you like to see public art like interactive sculptures or murals in Victor? Would you post news and flyers for events on a community bulletin board in a public space?

These examples above are just a few of a limitless amount of small scale economic development projects that could enhance life in Victor and you are invited to contribute your ideas! (See more ideas for inspiration here and here.)

The kickoff for this project will take place next Wednesday, April 17th. See the schedule for the day in the flyer above. If you are interested in participating in one, several or all of the sessions please e-mail a RSVP to Brittany Skelton, City Planner, at brittanys@victorcityidaho.com If you are unable to participate next Wednesday look for updates in your e-mail, on the City of Victor website, and on the City of Victor Facebook page.

- City of Victor

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Huntsman Springs – Updated Price & Availability List

Interested in learning more about Huntsman Springs? See below link with the 2014 pricing & availability!

FULL HUNTSMAN BROCHURE

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How Property Tax Works

by Tayson Rockefeller

Trying to figure out how property tax and levies are created can be daunting, even for a real estate agent! Property tax can be defined as the primary source of revenue for the local governments that serve and protect the community, such as school districts, ambulance, fire, and so on.
First, we should understand how your property values are assessed. Basically, the assessor’s office identifies and values all the taxable property in the county.  They use recent sales data, estimated construction costs, and other data to estimate the value of each property. All valuations are monitored by the state tax commission to ensure accuracy and compliance with state laws. The letters that you receive asking about sale data after you purchase a property are used to help value your property. Note*** Idaho is a nondisclosure state, and you are not required to submit this document. Weigh the pros and cons of giving this information to the County.
Next, we need to understand how the levy (imposed tax) is calculated. This job is handled by the County Clerk. The simplest answer is the rate is calculated by dividing the amount of property tax needed by the total taxable value of all the properties. The long answer is not quite that simple, but it uses the same method. This method is used by 14 districts within the county that create their own budget, and calculate a tax rate for that specific district. District 1, the City of Driggs has a slightly different tax rate and budget than District 2, in the City of Victor. So, each district divides their budget by the taxable value of the properties within that district to come up with the tax rate for that district.
Now that we have the tax rate for your district, and your assessed value, all each district has to do is multiply the value of your property by the tax rate to come up with your property tax amount. So, this is the final step before you receive your bill. It’s important to understand that each budget is created at the end of the year, and therefore your taxes are assessed for the prior year. The taxes are paid in two halves for each year. The first half of each year becomes due December 20th and the second half of that year is due the following year on June 20th. State law limits budget increases as a whole (not on an individual basis) to 3%.
Understanding that this is a very brief description of how the system works, coming from someone who does not work for the County with only a limited understanding, there are a few other points to be made here. One question you might ask yourself is, how can I reduce the amount I pay in property taxes? There are a few things to keep your eye on. First, if the property is your primary residence, make sure that you have applied for the homeowners exemption. This must be filed with the assessor’s office by April 15th. Second, always review your annual assessment notice, and call the assessor’s office if things seem out of line.  Idaho Code states that any claim for tax reduction shall be filed with the assessor’s office between January 1st and April 15th of each year.

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Updated price list Huntsman Springs

11

380 Cottongrass Road $1,890,000

Bedrooms: 5
Bathrooms: 5+
Sq Ft: 4,735
11

420 Cottongrass Road $1,790,000

Bedrooms: 6
Bathrooms: 6
Sq Ft: 4,203
11

440 Cottongrass Road $1,690,000

Bedrooms: 4
Bathrooms: 4
Sq Ft: 3,481
10

480 Cottongrass Road $1,690,000

Bedrooms: 4
Bathrooms: 4.5
Sq Ft: 3,570

736 Harper Dr. $749,000

Bedrooms: 4
Bathrooms: 3
Sq Ft: 2,964

735 Jasmine Avenue $800,000

Bedrooms: 4
Bathrooms: 3
Sq Ft: 2,964
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Are the days of a good bargain gone in Teton Valley? By Tayson Rockefeller

I’ve heard this a few times recently. Now that the economy is obviously improving, buyers are feeling like they missed the bandwagon. Before I go into details, I’ll start my response to the above question by trying to establish a clear understanding of the actual value of real estate. The value of real estate can be perceived in a few different ways. Namely, replacement cost, and comparable sales data. Replacement cost is fairly easy to nail down, though often is not considered, or is miscalculated. Comparable sales data often creates an artificial meaning of what property is worth. The psychology behind this method of valuation effects certain markets more than others, and these small community and recreation based markets often times take a hit much more than other markets. They can be based on the real estate boom, or bust, which has a dramatic effect. The boom can create a huge amount of artificial inflation, and the bust can cause irrational values and depression. In the past decade, we have seen both in our market. Getting back to the actual value or replacement value of real estate, I’m going to attempt to break it down, though I’m always up for further discussion. As a real estate agent, I must have a clear, or at least a general understanding of costs related to construction and replacement. In fact, it is my duty to my Sellers to have an understanding. Because of that, I interviewed with a reputable local builder prior to writing my article. When we first started to converse, I mentioned that buyers are feeling like there are no more good deals. I have to say, the gentleman I was speaking with chuckled as he started to give me an idea on construction costs. “Do you know how much it costs to drill a 300-foot well?” is where we started. Well, I have an idea, last I checked, by the time a pump, plumbing and case is installed it’s about 40 bucks a foot. I also know that on average, septic systems can run 4 to 5000, landscaping can range from 10 to 30,000, (and beyond) then you have construction costs. Now, there are some huge variables here, just like there are some huge variables in well depths, location, etc. I spoke with several builders, and came up with numbers that range from $100 to $350 per foot. Though I can tell you that for 100/ft you’re not going to build a home similar to what we typically see in the valley floor with comp shingle roof, cedar siding, some tile, maybe some hardwood, and some decent finishes with a few vaulted ceilings. Finishes can make all the difference. HVAC, media, roof, windows and doors, and many other variables and finishes can change that number substantially. I’ll probably get a few phone calls on this, but for the sake of keeping my article short, let’s say $150. To wrap this up, let’s put the price of a building site with a well, septic and landscape at 75k – which is cheap – and let’s construct a 2000 square foot house. Considering I’m only scratching the surface of the costs associated with building, I’d say there are still some good deals out there. Now let’s get those sold, and put Teton Valley back to work!

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