One of my clients has a good paying, steady job. He is working on a loan with a large, national bank in Park City. He is buying a home from a relocation company. His loan was approved, subject to us providing the bank with the following information:

• Proof that the relocation company was not a “flipper”, ie, a private individual profiting from a short term sale of the property;
• Proof my client does not have an ownership interest in the relocation company.
• Proof my client is no longer required to pay alimony to his former wife because she is living with her new boyfriend.

These requests seem ridiculous, but we need to provide the bank with this information or they could deny my client’s loan. My client is not alone. An article on marketwatch.com by Amy Hoak states that fearful lenders and underwriters are heightening scrutiny, requesting more paperwork, and asking unexpected questions that border on comical.

Ms. Hoak cites examples of banks requesting a divorce decree from someone who was divorced 17 years, asking a borrower why his income increased 6% (he received a raise), and asking a borrower to verify his Social Security income would continue. Credit inquiries can also raise a red flag. For example, a borrower who was thinking about buying a car on credit, had his credit report pulled, but ended up paying cash.  The bank wanted proof of the sale.

Sometimes the lender’s requests for more and more documentation frustrate borrowers to the point where they pay cash.

The take away?   If you are going to be applying for a loan to purchase or refinance property, be prepared to provide mountains of paperwork.

Last weekend we participated in the Park City Bike Swap, sponsored by Young Riders. My son and daughter had outgrown their 20 inch bikes long ago. I decided that they could “trade up” by selling their old bikes in the swap and buying new ones.

What does this have to do with real estate? Stay with me. A couple of days before the swap we took the twenty inch bikes to Jan’s to complete the paperwork. We paid over $250 for each bike when they were new. The Jan’s person suggested we price these bikes at $200 each. We took his advice since we have never sold used bikes before.

The swap was jammed Saturday morning. Within a few minutes each of my kids found a bike they wanted to buy. These larger bikes were priced at $200/each. Immediately I began to wonder if we priced the twenty inch bikes too high. I decided that I wanted to sell those small bikes. I did not want two old bikes and two new bikes in my garage.

The next morning, I checked the swap to see if our bikes had sold. They had great exposure, as there were hundreds of people at the swap on Saturday. But, those people chose other bikes, not ours. I cut the price on our bikes to $100/bike. Three hours later, the swap was over. There were several bikes that had not sold. Ours were gone. Someone had purchased them after we dropped the price.

I thought about all the similarities between the bike swap and my real estate business. Here are some lessons:
1. If you decide you are a seller, you need to price your property to sell.
2. All the exposure in the world is not going to encourage someone to over pay, especially when there are choices.
3. Buyers search for the best value for their budget. We found the best bikes available for $200. We passed on bikes priced at $200 that were lower quality or in poor condition compared to the bikes that we purchased. Two houses may be priced the same, but the nicer of the two will sell first.
4. We know we over priced the bikes we wanted to sell because no one bought them. We did not place blame on Jan’s or Young Riders. The market told us the bikes were overpriced. Because we wanted to sell the bikes and the swap was open for only 3 more hours, we slashed the price.
5. If we had priced the bikes right to begin with, we may have been able to sell them for $150 each. We had to slash the price because we missed our best selling opportunity. This is like the owner who slashes the price of their resort property after ski season ends.
6. If you are trading up you will probably be more in tune with the market by being a buyer and a seller at the same time.

1. Consumer confidence in real estate is increasing.
2. Foreclosures, notices of default, and the percentage of Americans behind on their mortgage payments are all decreasing.
3. Home prices are still about 30% below the peak in 2006. This varies by neighborhood in Park City.
4. Interest rates are still at all time lows.
5. Inventory is very low, creating multiple offer situations for desirable properties.

How can you use this information to achieve your goals?

This delightful condo is close to skiing, restaurants and concerts at Canyons Resort Village, yet it is nestled among the Aspen trees in a serene, park-like setting, providing a sense of peace & quiet. Professionally decorated; remodeled kitchen and upgrades throughout. A private master suite on each level plus a sleeping loft allow this home to function like a 3 bedroom unit. Just steps from the clubhouse which includes pools, tennis, hot tubs, and sauna. A fantastic place to call home , take advantage of the turnkey rental business, or both! established by the Furnishings included.

Red Pine E-5

Park City Homes

Our real estate market has stabilized over the past 12 months. Last year, 88 single family homes sold in the first quarter of 2011 and 75 in the first quarter of 2012. Condo sales were also flat, with 103 in the first quarter of 2011 to 100 in the first quarter of 2012. Vacant land saw a decrease from 54 sales in the first quarter of 2011 to 23 the first quarter of this year. Last year, 15 of those lot sales occurred at Promontory, where the distressed inventory was rapidly clearing out.

April has been busy! We have already had 28 single family home closings, 19 condo closings and 4 vacant land sales through the 24th of this month. Condo sales were down about 36% from the same period in April of last year. In my opinion, the sunny spring weather and lack of snow probably accounted for the slowdown in condo sales towards the end of the season.

The biggest difference between this year and last year is the number of listings available for sale. New inventory of single family homes in the first quarter of 2012 was 14% lower than 2011. In some areas, like Park Meadows and Silver Springs, single family home inventory was down 40-50% from the first quarter of 2011.

With a stable number of sales and a lower inventory, we may see the dynamics in some Park City neighborhoods change from a buyer’s to a seller’s market.

Spring is around the corner and many people are thinking about a home addition or remodel.  I am often asked my opinion about whether an improvement will make a house more valuable and/or more marketable.  My standard suggestion is to make the improvement if you can afford it and plan on staying in your home long enough to enjoy it.  Then, the improvement will be worth it to YOU, whether or not it adds monetary value to your home. 

Trulia recently surveyed homebuyers on features that would make them fall in love with a home.  No surprise that the most popular features differ ed by gender. 

What women love (more than men):

• Master Baths
• Walk in Closets
• Gourmet Kitchens

Favorites men love (more than women):

• Pre-Wiring for Entertainment System
• Pool
• Hot tub

What this means for you:  The improvements mentioned above will make your home more appealing to buyers.  Does it mean they will make your home worth more money?  Possibly, but there are no guarantees.  Improvements should be made because they will make living in your home more enjoyable.  If you are considering selling a home with these improvements, they should be highlighted in all of your marketing.  Which features are important to you?

Sales of investment homes climbed 64.5% in 2011, while vacation homes increased 7%. Combined, second home sales accounted for 38% of all home sales last year, up from 27% in 2012. “During the past year investors have been swooping into the market to take advantage of bargain home prices” said Lawrence Yun, NAR’s chief economist.

About 25% of all vacation buyers and 50% of investment buyers paid cash. International purchases accounted for 3% of transactions in 2011.

This is great news for a resort market like Park City, where buyers are snapping up vacation rental properties, long term rental properties and second homes.

One of Park City’s lowest priced two bedroom condominiums. Walk to shopping, dining, Park City Mountain Resort, movies, and restaurants and only a 10-minute walk to Historic Main Street. If you don’t feel like walking, you are on the free bus route. There are also two assigned parking spaces for added convenience. Although centrally located, this bright and cheery south-facing condo is situated on tranquil, park-like open space and has dead on views of the Park City Mountain ski runs. Watch the skiers or 4th of July fireworks from your private outdoor deck. Meticulously maintained this condominium is in great shape and ready to enjoy. Gas furnace. HOA dues include cable and some utilities. A great primary residence or income producing rental property.

Time Magazine Article

Traumatized by layoffs, US consumers have fallen into their deepest funk in years. Says University of Michigan economist Paul McCracken, “This is more than just a recession in the conventional sense. What has happened has put the fear of God into people.” Americans have suffered a long-term stagnation of their earnings.

In what some business leaders view as an overcorrection, many of the surviving banks have slammed shut their lending windows to all but their best-heeled customers, depriving the economy of sorely needed money for recovery.

Downsizing has dismayed recent college graduates, who have found it difficult, if not impossible to land a good job. Hard times are forcing some people to turn their back on the American Dream. “—Thanks to my friend and colleague, Rob McGarry for pointing me to this article, published in Time magazine on January 13, 1992. Click here for the link to the entire article. http://www.time.com/time/magazine/article/0,9171,974645,00.html

In 1992, I had recently finished graduate school and was lucky to have a management position in a growing HMO. Many of my friends had lost their homes to foreclosure, the aerospace companies were laying off engineers due to the end of the cold war, and everything looked pretty bleak. Who would have thought a few years later we would be entering the dotcom era and one of the most robust recoveries ever? Do I wish I still owned the home I bought in Los Angeles in 1990 for $139,000? The mortgage would have been close to paid off by now.

I don’t have a crystal ball, but I’ll bet people will be looking back at 2012 and wishing they took advantage of 4% interest rates and undervalued real estate. Even if you have no need to replace your primary residence, the real opportunity right now is in investment properties. I just saw a 3-bedroom Fox Point at Redstone condo listed for $299,000. That property will rent for at least $1800/month, a 7% ROI at today’s rental rates if you paid cash for this unit. With a 30-year fixed mortgage, the rents will rise with inflation while payments will remain locked in at record-low rates.

Don’t look back on 2012 as the year of the lost opportunity.