by Osman Parvez
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It was another great week in Boulder real estate at House Einstein. 


A few highlights:  
• We’ve been taking steps to help a client evaluate a really special home in Boulder.  This deal is still in play so I can’t discuss it in specifics, but I can touch upon one of the key challenges. How does one accurately determine the appreciation rate for a unique, high-end property in Boulder when there are no comparable sales?  

Starting with a baseline for appreciation is helpful but the data online is mostly garbage. It’s too generic to be useful at the County level and I don’t trust the appreciation rates provided by other sources because they don’t take the time to clean the data. I used to maintain an index of basic ranch sales for our clients for this very purpose, but due to the inventory shortage, the sample size became so small that I no longer felt it was an accurate portrayal of the market. Another approach is a matched pairs analysis, but the small sample size problem occurs again. With either approach, mapping a base appreciation rate onto a market with both small sample sizes and high variability in location values is problematic.  


The investment thesis ends up hinged on a qualitative analysis and ultimately, the buyer’s gut. Back in my Nantucket real estate days, another small market with a high degree of variability, we literally would go around the office for back of the envelope opinions of value because we couldn’t quantify it. Analysis is only useful if you trust the data and in this case, we’ve been frank. It’s more akin to valuing art than real estate. Ultimately, the market value is what a buyer is willing to pay. 

There’s no crying in real estate negotiation

• We been gazumped! If you recall last week’s update, I told you about an option that allowed the seller to terminate if another buyer showed up during the inspection period. It’s a practice that’s common in the UK but virtually unheard of in Colorado. My buyer agreed to it in exchange for a rock bottom price. Two days before the option expired, another buyer showed up and offered $20K over my buyer’s price with no loan contingency. My buyer was pushed out of the deal. At a minimum, I’m glad I was able to negotiate having my client’s inspection costs covered but the take home lesson is to avoid deals with gazumping provisions. From a negotiation perspective it was a win, but the risk of heartbreak for first time buyer is very real.    

LED grow lighting

• The farm deal is moving ahead. The property has several sources of income, water rights, mineral rights, long term leases, and other entities that want to cooperate together. It’s complex and although the deal size is relatively small (under $1MM), it’s interesting enough for my involvement. It also touches on permaculture, container box farms, sustainability, and the farm to table movement – which matches up with my personal values. So we’ll keep working on it.  


• The seller of our listing in Niwot is considering pulling it from the market and placing it for rent. It hasn’t been on the market a full month and I’m surprised that a buyer didn’t jump on it the first weekend it was available. For an end-user who wants a basic two bedroom, two bath lock and leave property with access to trails and great restaurants/pubs, it’s a home run. It’s proof that the market sometimes misses great opportunities.  It’s hidden in plain sight. If you’re interested, you better move fast. Call us. 


• Last Friday we found two great tenants for our listing in Majestic heights and 100% of the properties under our management are once again rented. We’re engaged in this line of business primarily because we’ve been so disappointed by the experience of our clients when we’ve referred it out. A side benefit is an opportunity to build better relationships with our existing clients and introduce new people to Boulder. 


• For a moment, our deal in Tantra Lake was under a cloud due to poorly kept minutes and inadequate details on the HOA. That’s what happens when your reserve study is almost ten years old and the title company sends over only a third of the documents. Luckily, the new property manager helped clarify the situation and our clients now understand the likely positive impact of BHP as a large owner in the complex. The deal continues to move forward. As a side note, I would personally buy in this location due to the future investment by CU and the low supply of housing provided to students by the university.  

• I snuck out of the office last week and took a half day at Eldora. It’s the first time I’ve used my pass this season. The mountain got 4″ of fresh pow on the same day that Boulder got 9″ snow. Whatever, I’ll take it.   

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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.