Category Archives: Buyers

The Appraiser’s Perspective on Appraisals

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Whether you are a seller or buyer, the appraisal is important as it can make or break the sale, the subject of our December 2012 Article, Why Do I Need an Appraisal. Here we will focus on the appraiser’s perspective.  Appraisers of residential property use the Sales Comparison Approach.

Appraiser’s Tasks. The appraiser will:

  1. make a visual inspection of a home in about 15 minutes (yes, that’s all!) looking at:
    • location
    • square footage
    • room count
    • number of bedrooms
    • number of bathrooms
    • functionality and useable space
    • garage and parking
    • basement square footage and finish
    • anything atypical of a comparable home.

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What to Expect During a Home Inspection

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The negotiations are complete, and you are finally under contract!  The next step is the home inspection and it should be scheduled as soon as possible.  Selecting a qualified inspector can be a daunting task. In Colorado, home inspectors aren’t required to be licensed by the state.  It’s important to hire an experienced inspector who has professional certifications, such as ones from the American Society of Home Inspectors.  A great place to start the search would be to ask your Realtor® for some names of qualified inspectors.

Home Inspection

Why a home inspection?

Buying a home is a major purchase, and the last thing you want to happen during the first year is a big maintenance issue.  A home inspector can not only discover maintenance issues but can give you an unbiased opinion of improvements that need to be made to the home.

Expectations

The purpose of home inspection is to look for health and safety issues that could potentially cost you thousands of dollars to repair.  Keep in mind, the inspector can only inspect what he or she can see and won’t be ripping up flooring or taking down drywall during the inspection.  They are there to “nitpick” details of the home and provide you with as much information as they can about the history and current condition of major systems, structure, cosmetics, interior and appliances. Continue reading →

Buying a Home in Today’s Market

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Owning a home has long been the “American Dream.”  Yet, Census Bureau statistics show that the national homeownership rate fell from 69% in 2004 to 65.4% in 2012, the largest decline since the Great Depression.  Now we see homeownership on the increase, as we see being reflected in the changing real estate market:

  • the supply of homes is down
  • the pent up demand has unleashed
  • renters are buying their first home
  • homeowners are moving up
  • people are downsizing or moving from a larger two story home to a ranch
  • there is an influx of relocations
  • interest rates are still at historic low levels.

A well-priced home in a desirable neighborhood can sell very quickly, even garnering multiple offers and selling over list price.  The American Dream of homeownership is alive and well.

ADVANTAGES OF HOME OWNERSHIP Continue reading →

Rules for Buying a New Primary Residence without Selling Your Current Home

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By guest author: Christian Durland of Homeowner’s Blueprint

Here in Denver, Colorado, things have been quite exciting in the local world of Real Estate.  While many other parts of the country are still struggling in terms of foreclosures and short-sales, and an over saturated Real Estate market, here in Denver, we’re actually enjoying some home appreciation with certain pockets of the Metro area going up into double digit appreciation rates over the last year, along with home inventories (homes currently being offered for sale) being at a 23 year low.

With all this positive news, many are now thinking that this maybe the right time to dive into Real Estate and purchase a new home, but many of those who are making this decision must also sell their current home before purchasing a new home, which is still (even though the market has “healed” quite a bit) not as easy as it once was before “mortgage meltdown” and the subsequent housing crisis of 2007-2010.  Then there will be those, who will opt to retain their current home and convert it into a rental property, either by necessity, or because they choose to, however this transition may not be as simple as one might think either. Continue reading →

The Anti-Flipping Rule and How It Affects You

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If you want to want to purchase a single family home using FHA (Federal Housing Administration) insured, low downpayment financing, there is some good news.  The temporary waiver of FHA’s 90 day “anti-flipping” rule, that was set to expire on December 31st, has been extended to December 31, 2014.  Whether you are an investor, rehabber, or buying or selling your personal residence, FHA’s announcement may benefit you.

PROPERTY FLIPPING DEFINED

The Department of Housing and Urban Development (HUD) defines property flipping as a practice whereby a recently acquired [single family] property is resold [within 90 days] for a considerable profit with an artificially inflated value, often abetted by a lender’s collusion with the appraiser.

Anti-Flipping RuleREASON FOR ANTI-FLIPPING RULE

Here’s a typical scenerio:

  1. investors were buying homes that were foreclosed, abandoned, or in poor condition
  2. investors used low downpayment FHA insured loans
  3. they would make minor cosmetic or no improvements to the properties
  4. they would sell the properties within 90 days, often just days after acquisition, at  prices with high markups
  5. fraud for financial profit was often involved between lenders, appraisers, sellers, real estate agents, and sometimes “imaginary” buyers”.

These practices resulted in buyers overpaying for a home, buyers defaulting on their mortgages, often leaving vacant and deteriorating homes which depressed values of other homes in the area, and significant losses to FHA’s insurance fund. These issues began to surface in the early 2000’s and grew more serious and widespread.  FHA realized something needed to be done.

THE ANTI-FLIPPING RULE

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As a Buyer, What Can I Expect at the Closing Table?

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What to Expect at ClosingYou’ve negotiated a successful offer, resolved all the inspections items, and done your due diligence.  You are so close to ownership that you can feel the new keys in your hand.  The only thing standing between you and moving into your new home is the closing table.  Whether this is your first real estate closing or you are a seasoned veteran, the following will point out what to expect in a real estate closing in Colorado.

PRE-CLOSING ITEMS: 12 TO 48 HOURS OUT

Depending on how condensed your contract period is, you may receive the final settlement and HUD-1 statements with enough time to review them with your lender and real estate broker.  It isn’t uncommon, with the volume of new mortgages and refinances, to receive these documents just hours before closing.  Either way, you will have time at the closing table to have all your questions answered about the details and account for every penny of the transaction.

Prior to your closing, you will do a final walk-through of your new home with your broker to inspect its condition.  This is your opportunity to ensure all agreed upon inspection items have been completed, the condition of the home hasn’t changed from when you went under contract, and all contractual items are in the home.  The final walk-through is not an opportunity to re-inspect the home.

WHAT TO BRING TO CLOSING

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Decoding Title Insurance

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Decoding Title InsuranceWhen the title commitment shows up in your inbox or mailbox it can be a little overwhelming with all the technical and legal terms.  My colleague, Deb Albrandt, recently explained the importance of title insurance in protecting your investment.  So, how do you actually read it?

The American Land Title Association (ALTA) is the national trade association for the title insurance industry, which advocates safe and efficient transfer of real estate.  The association helps set a high standard by establishing best practices in the title industry.  The policy should be issued as an ALTA policy with an effective commitment date, insured names, and policy amount.  The following are the different sections of a title commitment (see example), although they may vary slightly from company to company:

SCHEDULE A

Schedule A defines the basics of the policy such as:

Title Insurance: A Necessary Expense

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Title InsuranceWhen buying or selling a home you will receive a statement detailing closing costs.  One line item will be “Title Insurance.”  What exactly does it cover and why do you need it?

Title insurance, or transfer of ownership insurance, is like any other insurance in that it protects you from loss.  Specifically, title insurance protects the buyer from matters that have occurred in the past such as:

  • hidden title defects in the chain of title or history of ownership which could include someone else owning an interest in your property
  • easements (you don’t have access to your property or someone else does)
  • encumbrances or liens on the property
  • an unmarketable title
  • false impersonation of the true property owner
  • forged deed, releases, or wills
  • missing or undisclosed heirs
  • instruments executed under invalid or expired power of attorney
  • misrepresentations of wills
  • deeds by persons of unsound mind
  • deeds by persons claiming to be single but in fact are married
  • fraud
  • liens for unpaid estate, inheritance, income or gift taxes
  • errors in deed recording.

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Buying a Home in a Seller’s Market

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Navigating a Seller's MarketThe housing market in Denver is one of the best in the country, fueled by low inventory, record low interest rates, and buyer demand. If you are actively searching for a home you probably already know it has been really hard to find the perfect home at the right price.  Back in February, I made the statement that Denver was experiencing a seller’s market for properties listed below $300,000.  Now that number is creeping higher every day, as we are seeing multiple offers on competitively priced homes and condos above $300,000.  While this is great news for sellers, it causes frustration and disappointment for buyers looking for their perfect home.

AUTOMATED HOME SEARCHES

Forget about using Zillow or Trulia, I wrote an article in May about the inaccuracies of Zillow.  In a fast paced market, the inaccurate data is even worse on sites such as these.  Instead, partner with a local Realtor® who offers an online property search that has Internet Data Exchange (IDX) directly from Denver’s Multiple Listing Service (MLS).  To automatically receive the latest listings that meet your search criteria, consider utilizing a property search that sends daily email alerts.

TIME IS OF THE ESSENCE

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