|
|
A blog from the perspective of a 30+ year Real Estate Professional |
|
FIXER UPPER MYTHS & FACTS What You Should Know BEFORE You Buy
"A home will only sell for what the market can bear. What this means is that no matter how many upgrades were made, or how much money has been invested in the upgrades, a home will only sell for what the majority of homebuyers are willing to pay."
Before deciding that your next home must be a fixer-upper, you should do some homework into what to expect when purchasing these types of homes. Many prospective homebuyers tend to have a romanticized version of the entire process, and are quite shocked when confronted with the hard reality. Fixer Upper homes can often represent a good deal, but there are some points that a homebuyer should be aware of before making that offer. MYTH #1 . . . FACT #1 . . .Most homeowners looking to sell their "fixer upper" home understand that they will have to list their home at a price that reflects the cost involved in restoring the home to its original condition. The asking price of a fixer upper is usually calculated so that the savings represented by the lower than average market price is roughly equal to the amount of money that a buyer could expect to spend on necessary renovations. Updating the "look" of a home, or upgrading to higher-end finishes, is not included in these calculations, and you should be careful not to spend so much money on renovations that you are unable to recoup your investment. MYTH #2 . . . If I’m buying a fixer-upper home, I don’t need to bother with the added cost and aggravation of a home inspection because I already know what I’m getting. FACT #2 . . . A home inspection should always be included in an Offer To Purchase and Sell agreement, and it is arguably even more important to include one when you are looking to buy a fixer upper. Structural defects are normally not visible to the untrained eye, yet will cost much more to repair than the obvious cosmetic fix-ups. Most licensed home inspectors will not only detail the defects that they uncover, but can also give you a good idea of the costs involved in fixing them. MYTH #3 . . . FACT #3 . . .Most of us have heard the quote, "the three most important things to look for when buying a home are: location….location…and location!" While this is obviously meant to be funny, and is a somewhat oversimplified rule of home buying, it does drive home the point of how important it is to consider where you will buy your home. Purchasing a fixer upper in a desirable neighborhood will cost you more initially, but the payoffs -- personal peace-of-mind and higher return on your home investment when you sell -- should not be overlooked. MYTH #4 . . . Once I fix this house up, I can turn around and sell it for double the price I paid. FACT #4 . . . A home will only sell for what the market can bear. What this means is that no matter how many upgrades were made, or how much money has been invested in the upgrades, a home will only sell for what the majority of homebuyers are willing to pay. Factors to consider when calculating your possible return on investment:
MYTH #5 . . . I can make a lot more money by turning this single family home into a multi-family dwelling. FACT #5 . . .While this statement is for the most part true, it may not be possible. Most towns and cities have strict zoning laws that not only dictate the maximum allowable occupancy within any given area, but also dictate the size and design of a home when building new, or creating additions to an existing structure. Once you have thoroughly investigated the pro’s and con’s associated with purchasing a fixer upper home, and you have decided that it’s right for you, be sure to "run your numbers". 1. List Price of Fixer Upper 2. Average Recent Sale Prices of Similar "Non Fixer Upper" Area Homes 3. Estimated Cost of Repairs from Reputable Source (e.g. referred Renovation Company) 4. Buffer Amount for "Unexpected" Repair Costs (usually 1/2 of estimated total) 5. Selling Expenses (real estate fees, lawyer fees, closing costs) 6. Amount of Profit You Desire versus Amount of Actual Profit For example: 1. $200,000.00 = List Price of Fixer Upper 2. $255,000.00 = Average Sales Price 3. $ 25,000.00 = Estimated Repairs 4. $ 12,500.00 = Buffer for Repairs 5. $ 17,000.00 = Selling Expenses 6. $ 20,000.00 = Desired Profit Versus Actual Profit of $500.00 If your intent was to purchase the house shown in the example above, make the repairs, and immediately list the house for sale, your Actual Profit shown is only $500.00. If, however, your intent was to purchase the same house, but actually live in it for a few years before selling, you would normally expect to turn a much better profit for two reasons:
As with all investments, though, nothing is guaranteed. So when looking to finance a home, keep in mind that the real estate market has taken some big hits in the past. Never overextend yourself financially.
Serious Information Regarding the Denver Housing Market!
The following link provides information on estimates about different housing markets across the country. Denver is among one of the top 20 in size and is closely followed by market analysts in the loan and mortgage insurance fields as well a stock analyst for building and material related stocks and funds. There are plenty of opinions in the market. Some are much more relevant than others.
 There will always be a need and desire for housing in all of the price points. These price and supply issues became exaggerated based on a strong economy, hard to satisfy egos, the always buy more syndrome of the late 90's into the first 5-6 years of this century. This coupled with very, very easy to borrow money, the housing and general real estate market was pushed to high unsustainable levels in price, size and loan amounts. After the crash and its ongoing consequences, each of the previous mentioned issue are resetting and trying to find its market balance.
Yes, the prices have come down and in many cases, way down from just 18 months ago as well as the past 4 years. What is continually said by many of the market expert pundits is that we are near the bottom, possibly have hit bottom or may be getting close to the bottom. We have to have obtainable financing to have any possible balance in the home market as we have known it. Real estate values have been based on the the ability to purchase as much as any other item that has driven the market.
Consumers are still buying homes based on payments and what they think is a reasonable value. I have visited numerous new home developments over the past 90 days and the majority of the builders have sold off their past inventory of built homes(existing inventory) and are building new for buyers with solid commitments to them. The new home sales are solid with out the "got to sell mine first" contingency that plagued the industry in 2005 to 2008.
Many of the builders pricing has been reset lower since the builders have been able to buy land and developed sites at 30-50% of of the 2006 highs. This needed to have happened for the builders to be able to compete with resale component of the housing industry including the distressed sales of bank owned and short sales as well as extra motivated sellers which this market continues to pump a supply of out to the sales market.
The number of resale homes in the Denver area will still be around the 40,000 sale mark. Still a solid number. The well located and highly desired communities have held their prices better than the fringe areas. These have not made great headlines, the headlines have been all about home loss and and value decreases. There is till plenty of that type of headlines to follow.
Each of these market resets do provide a good incentive to buy this coming year. With low rates the sooner the better to lock in a low fixed 30 year rate. There are many almost new homes(1-5 years old) that are great buys, since they are priced lower than the new home replacement in a similar or same neighborhood. A buyer still has to find that home with the right colors and finishes, so that the home is attractive to them. The existing home seller needs to make their home as new like as possible, with as few negatives as possible, to induce the buyers and their emotions to buy that one versus some of the other choices.
I am continually asked about market growth as in when will prices stabilize and move up again. I have many thoughts and answers to this question as it is never a single simple answer.
If you are a buyer right now, you may be able to get an exceptional deal in price which in turn will have a high probability of price growth since it can be bought so well.
Many of the great deals are properties with lesser finishes that do not appeal to the market as strongly as a well upgraded and maintained home. The deals may also have a location challenge or may have been excessively over improved to the point that many of the excessive improvements cannot be recovered in price in this market.
A home is still where you come to everyday, where your family resides and calls home, where you have solice and a boundary from the outside, less caring world. It is a place that you call yours and that your family knows as the home base. Those are the intrinsic values that your home has that no other place that you visit actually can give you unless you own that too.
Values will go up and down but we still will want to own our home and enjoy all that it has to offer.
In my next article , I will discuss the need for many financial type loans to get the housing recovery working and to sustain a recovery as well as some of the abuses that had such a negative impact on the home market across this country.
As always, I welcome your comments and I appreciate your referrals of people that need my professional services to help them buy and sell houses.
I look forward to hearing from you. Steve J
Take Charge When Buying a Home
If you approach the home buying process intelligently and with confidence, you are much more likely to buy a house you'll be proud to call home. Approaching the task of buying a home can be overwhelming; there's so much to consider: How much house can I afford? How can I find the best loan? Where will I come up with a down payment, and how much will I need? Should I buy a new or resale home, and which will go up in value? Should I work with an agent or look at homes on my own? And these questions are just the beginning. Buying a home is one of the largest financial transactions in your lifetime - do your research so you know what you’re doing. Here are the two most important things to remember no matter where you are on the road to home ownership: 1. You can and should understand everything that is happening in the home buying process. There is nothing that is so complex that it can't be easily explained to anyone with average intelligence. Just because you don't apply for a thirty year mortgage once a week doesn't mean you have to take the first one that comes along. You'll need to learn some new terms, apply some new concepts and take the time to understand what you're getting into. If, at any point, something happens that doesn't make sense to you, simply demand a full and complete explanation. If it still doesn't make sense, seek help from someone you trust like your CPA, your banker or maybe an online real estate columnist. 2. In the world of real estate sales, YOU are the most important person in the entire process. It's easy to think that everyone else carries more weight than you. The agent talks fast and has an answer for everything. The lender may decline your loan application, and on and on. But the truth is that you, the buyer, are the one person in the transaction that makes it all happen. If you decide to not buy, the entire process comes to a grinding halt. So flex your consumer muscle and take command of this process. Surround yourself with a team of professionals that you have confidence in and make them work for you. Approach home buying with intelligence and confidence, and by doing your homework, and you are more likely to buy a house you’re happy with and to know that you made the right decision. Call me with your questions and concerns. Together we’ll work to get you them home of your dreams. Email me here or call 303-898-9000
Tips To Getting Your Home Ready to List By K. Glasgow for the Steve Jacobson Group There are many people who will try to sell their homes this year and many will fail. There will be several reasons for this and I am going share with you what some of those reasons might be. I am going to reveal to you ‘trade secrets’. These are things that are not truly secret, but they will all have a great impact on the sale of your home. This all may seem a bit long and overwhelming, but stick with it, make a checklist of need-to-do and you and your home will be ready to sell in no time! Let's begin: HONESTY
My goal right now is to be as honest with you as I can, so the best advice I can give you is to be honest with yourself. “With myself?” you may ask. Yes, YOU. You as the owner/seller of your home must learn to be brutally honest with yourself about the following: 1) How much is my home REALLY worth? 2) Is my home REALLY ready to sell? 3) Does my Realtor® REALLY have my best interest at heart? How much is your home really worth? Steve Jacobson is a Realtor® and he is an experienced a professional who is trained to research and understand the market. The rule is that people will buy the less expensive of two comparable properties. It is his job as your Realtor's® to know what the comparables are and how much they sold for AND how much you can REALLY ask in the current market. It might be that your neighbor sold their home, which is exactly like yours, six months ago for $X amount and you want to ask $X or more. If the market is cooling off you most likely won’t get $X. You will have to ask for $Y instead. Yes, $Y is less, but it is an HONEST evaluation of your home in the market. In the housing market, like any other market, worth is based on the law of supply and demand. More houses on the market and higher interest rates (AKA “The Cost of Money”) will lower what a home owner can ask for their property. Conversely, fewer homes and a lower interest rate will increase what an owner can ask. It is up to your Realtor® to know what the trend is and decide accordingly how best to advise you. It is human nature to think that what we have is worth more than it really is due to the fact that we have an emotional attachment to our homes. We raised our children and dreamed our dreams there, but in the end houses are simply bricks, wood and concrete. Try to let go and see your house as it REALLY is. Let Steve, as you real estate professional, show you the real worth of your home through honest evaluation. Is your home ready to sell? Wow! That’s a loaded question. Anyone can sell anything, in any condition, at any time, for a price. The idea here is to get the very highest price we can! Your home is a personal living space. It looks like you, smells like you and it even feels like you. That’s the way homes should be…while you are living there. When the time comes to sell, the time has come for the ‘you’ in the house to fade in to the background. It is time for the home to look new and inviting to any and all who may come to view it. REMEMBER: You Never Get a Second Chance to Make a First Impression! The ‘curb appeal’ that your home offers a prospective buyer is EXTREMELY important. APPEAL TO THE SENSES!
Light-People react more favorably to a home shown under bright light. Color-Neutral and light! Avoid highly textured or patterned wallpaper. If you have either of these consider removing it and re-painting with a neutral color. Sound-Avoid sounds that will be distracting: vacuums, lawn mowers, banging pipes, barking dogs and noisy children. Light music in the background can be a nice touch. Smell-We react more to scent and smell than to any of our other senses. This can work for or against you! The smell of newness, cleanliness and citrus are the most favorable in selling a home. A dish of vanilla in a warm oven can give the aroma of baking cookies! And who doesn’t like that? Avoid the smells of tobacco, pet odors, cooking oil or gas. Don’t smoke in the house if you can help it! Many people are allergic to smoke! Strong cooking odors are a turn off. Avoid cooking fish in the house if at all possible. OUTSIDE FIRST!
Small details are a BIG deal! People want to view and buy a property they perceive as having been well cared for. The following are a few small and large details to help you improve your chances of a full price offer! Begin with your exterior. Mow, fertilize, and weed the lawns and garden. Plant or place flowers in the beds or on the patio. Neatly trim all the trees and bushes. Always remove snow and ice from walks and drives. The front door is your welcome sign to a person coming to your home for the first time. Be sure the front door and walk are clean and appealing. Add a seasonal decoration for an inviting touch. If the exterior need a fresh coat of paint…paint it! There is nothing that can make your home look more lack luster and uninviting than the dull and dingy look of cracked, faded and peeling paint. Choose neutral colors, please. You may love Bronco Orange or Steeler Gold, but you can bet the buyers (not to mention the neighbors) won’t. Don’t forget to paint mend or stain the fence! CLEAN IT!
Sparkling bathrooms will help you sell your home. Every inch of the tile, grouting, and stainless should shine like the day it was made! It should all be free of soap scum, mildew, dirt and grime. If the caulk is stained, mildewed or damaged repair or replace it. Fixtures should be free of water spots and polished up. If there is a window, open it up to allow fresh air to flow through. Place a fresh vase of flowers on the vanity. Replace the old toilet seat with a new one. Try to replace any out dated light fixtures with newer updated versions. Check to be sure the counter tops are not old, worn or stained. Place ALL PERSONAL items out of sight. Put out fresh towels. Clean up that Kitchen! Many buyers will judge the amount of housekeeping they will need to do based on the condition of the oven, stove and the refrigerator. Make these as clean and shiny as possible inside and out. Clean the interior of your dishwasher, removing stains, especially on the door. Clean and organize your cabinets and pack away unnecessary items. The counters should be clean and free of clutter as well. Remove small appliances such as toasters, blenders, electric can openers and coffee makers. Show off your counter space! Avoid clutter-Buyers have a hard time looking past the clutter to the beauty of your home. Remove items you seldom use. Let people see the space you have to offer. Don’t leave toys out or clutter on the stairs. These little things can be distracting!! Make the closets look as big as possible. Remove items that can be packed or stored elsewhere. Closets that appear neat and organized seem larger and more enticing to buyers. Don't leave anything on the floor! The brighter the better! In the living room, clean the windows and open the drapes to highlight the walls and ceiling. By letting in the natural light you let the buyers see how bright and cheery your home can be. When showing at night be sure to turn on as many lights as you can so that it appears as if it were day. The bedroom can be a make it or break it area in your home. Make sure the bedrooms are ABSOULTELY spotless! Clean the rugs and wash the windows. Dust all the surfaces and wipe off the window sills. If you know you have a showing, make up the bed as if it were for a guest. If you are able, purchase fresh flowers to brighten up the room. Hide TV and computer chords if you have these items in your room. It can make the area look disheveled. If you have a basement, it can be a dead give away to the true condition of your home. If you just threw all of your knick-knacks and such in the basement to hide them, I hope you remembered to ORGANIZE THEM! Be sure not to skip out on cleaning the basement if it is used for storage. Check the sump pump if you have one. Be sure all of the lights are working and the light bulbs are burning. Check for rodent intrusion and correct the problem ASAP! Clean it up and call the exterminator right away. Don't wait! The last thing you want is rodent droppings ruining a showing or scraing off a potential buyer! All of the above also apply to the garage as well and don’t forget to clean up the oil stains! CLEANING CONCRETE: Cleaning the oil from your concrete garage and drivewasy: Cover the oil stain with a layer of a clay-based cat litter or sawdust. Allow the cat litter or sawdust sufficient time to soak up the oil, which could take a day or more. Completely sweep the concrete free of the litter or sawdust and dispose of it properly. If the stain is still present, scrub it with a solution of detergent and water using a nylon scrub brush. Rinse thoroughly. Dry concrete also makes a good agent to absorb oil stains when used in conjunction with cat litter. Allow the litter to absorb the surface oil, sweep away the oil soaked litter and then spread a good covering of dry cement over the stain and let it sit on the surface for a day or so. The dry concrete will actually absorb the stain right out of the surface of the driveway. Be careful of weather conditions, as rain will cause the dry concrete to solidify. Older oil stains that have penetrated the surface of the concrete are much harder to remove. Follow the above procedures to soak up the surface oil. Make a paste of two parts hydrated lime powder and one part turpentine. Spread the paste over the surface of the remaining oil stain covering a larger patch than the actual stain. Cover the stain with plastic sheeting to help prevent the turpentine from evaporating. Leave the poultice covering on the stain overnight. Scrape off the paste and follow with a good scrubbing of detergent and water. You may need to repeat this poultice procedure as more of the stain leaches up to the surface of the concrete. HAVE YOUR HOME PROFESSIONALLY DEEP CLEANED! What you think is clean may look different in the eye of the buyer and a professional housekeeper. Cleanliness is subliminal. Surface clean can never make up for deep down clean. Baseboards, faucets, sliding glass door tracks, doors and door jams, window sills, cobwebs, under and behind furniture, walls (if not freshly painted) and kitchen appliances all need to be cleaned to give a potential buyer that deep down feel of cleanliness and freshness. Make sure all surfaces are free of dust and debris. If by chance you smoke in your home please remove the ashtrays from sight. FIX IT! Caution: Wear and tear makes buyers uneasy! Faded and scraped walls, as well as scratched woodwork should be restored to good condition. A little paint and furniture polish can go a long way! Buyers tend to estimate repairs for anything a bit high. The less they see to repair the more they can offer for your home. If the carpet is wearing thin or is stained you can clean it, cover it or replace it. It will sell faster and closer to your asking price if you replace it if at all possible. It will always cost you less in the long run to replace it before you put it on the market. Once again the buyer will tend to over estimate the cost of replacement. Tend to small cracks in every room in the house. Check Major Repairs. Major appliance repair is something that very few prospective buyers would look forward to. Have your heating and cooling system check, fixed and certified by a licensed professional. Do the same with the roof. It is a wise idea to have a home inspection done long before you put your home on the market. This can get you to the closing table much faster! Check Minor Repairs It’s the little things that can lose the sale or lose the potential money in an offer! If the ceiling fan hasn’t worked right for years and you are used to its funny little quirks, buyers aren’t as easy to over look them. If the toilet runs on, change the plug. If the faucet is leaky, replace it. Bottom line is to fix all the little annoying things that have been on that Honey Do list for years. The thing is this, buyers are looking for the easiest to move into, cheapest to buy, best deal in town. It’s our job, as a team, to see to it that that is exactly what the buyer thinks about your house. It will take some elbow grease, but I promise in the end it will be time and effort well spent. Does My Realtor® REALLY have my best interest at heart? AS for your Realtor®, I can only tell you this: He is not only LEGALLY obligated to have your best interest at heart, but he REALLY does. Helping people buy and sell the most precious possession they will ever or have ever owned is like a sacred duty to him. Our team promises to do the very best job we know how to do. We will be as informative and as up-front as we can be with you about all of the issues that accompany the confusing world of Real Estate.
REMEMBER: There is no such thing as a stupid question!!!!
If you want to:
Call Steve with and and ALL of your questions! 303-898-9000
Home Health Quiz By Gil Gross - Real Estate Today Radio
How healthy do you think your home is? How much do you know about home health and safety? Take this quiz to find out the answer to some of your Home Health Questions!
1. The first step to making your home healthier is to: A. Take out the trash. Answer. Well, the answer may surprise you – it’s opening a window. The air in your home is potentially full of toxins, emitted from paint, carpet and furniture. In fact, research has shown the air you breath indoors is often up to 100 percent dirtier than the air outside. Opening a window to let fresh air in is no final solution, but it’s a start. 2. The healthiest type of carpet for your home is: A. Shag Answer. The answer is no carpet. You may like the soft feel under your toes, but hard wood or tile floors are much healthier than carpet, which often is full of noxious chemicals that will continue to release into the air for years to come. Not only that, but rugs and carpets are magnets for dust, bugs, pet dander, pollen and lots of other nasty stuff that can make you sick. 3. The worst thing that can happen if you don’t follow up on a water leak in your home is: A. You’ll have a mess on your hands. Answer. Believe it or not – the answer is death! Water leaks often cause mold to grow in homes, mold that can spread and trigger allergic reactions, asthma attacks, and in extreme cases, create a potentially lethal toxic shock in some people. If you have any sign of a water leak in your home, you really need to take care of it immediately. 4. The best time to wear shoes at home is: A. Always. Answer. The answer is never, especially if you’ve been wearing those shoes outside. Shoes track all kinds of stuff around your house, from germs to pesticides to unmentionable organic waste material. It really is best to leave them at the door. 5. Pesticides are best used: A. Liberally to get rid of those nasty bugs and rodents. Answer. The answer really, not at all. Pesticides and herbicides are, after all – poison. If they kill bugs and rodents, they can, at the very least – make you and your family sick. Most of the things that pesticides can fix can be dealt with by keeping your home clean. And as for your lawn – a little elbow grease pulling weeds never hurt anyone! 6. The best type of dish for heating up food in the microwave is made of : A. Aluminum 7. The healthiest water to drink at home is: A. Straight from the tap. Answer. The answer is that Brita is indeed better. Brita or any one of a number of devices that filters your tap water. There really is no reliable standard for making sure bottled water is clean in the U.S., plus there are concerns that some types of plastic bottles release toxins into the water. Filters for your tap water provide an extra level of protection that will not only take out pollutants – it may make your water more tasty as well.
Thanks to Gil Gross fo Real Estate Today Radio for that great quiz! If you need more information about Home Health Issues( i.e., lead a paint, carbon monoxide, radon) Please call me and I'll provide answers for you. Call me at 303-898-9000 or email me at Steve@SteveJacobson.com Median sales price vs Average Sales Price Statistics for Home Sales.
Median Sales Price: The midpoint between the most expensive house and the least expensive house sold in an area during a specific time. The midpoint of the price of homes - equal number of properties sold above the median price as the number of properties sold below the median price. The Median Sales Price is often used as an indicator of the strength and the direction of the real estate market. Average Sales Price: This is more plain and simple. You take the number of properties you are looking at and you add up their total. Once you have that number you divide by the number of properties and you have the average sales price for that particular search. One thing I will warn you about. Be very careful when looking at statistics published in newspapers or other publications. These are just ways to spot trends in certain areas. When it comes to selling or buying a home always consult a REALTOR to help you with specific properties. Both sales price include a wide range of properties in any given neighborhood. When pricing your own home you’ll want to look at the stats of just the properties that would be considered “comparable” to what you have. A few of the many things that a affect averages are the age of the home and area (Washington Park vs a newer area in the outskirts of the metro area), remodeled interior vs not remodeled, view and greenbelt locations, home features, etc. I have sold homes all over the Denver neighborhoods for 30+ years and I can help you identify what will provide value in todays market enviroment. As always, feel free to contact me with any questions or clarification. Call me at 303-898-9000 or Email me by clicking here.
Steve J.
Home Ownership Brings Real Benefits In August of 2010 the National Association of Realtors released a research study highlighting some of the social benefits of home ownership. Their list included: - Home ownership stabilizes neighborhoods. - Home owners are more likely to participate civically. - Home ownership produces higher life satisfaction. - Home ownership fosters less neighbor crime. - Home ownership and housing stability lower teenage pregnancy and public assistance. - Home ownership fosters quality property maintenance and improvement. Most recently the NAR released these timely reminders: "Good jobs enable people to achieve the American dream of home ownership. And every time a house is built, bought, or sold, jobs are created-lots of them-right here at home." - Home sales in this country generate more than 2.5 million private-sector jobs in an average year. For every two homes sold, a job is created. - Each home sale touches 80 different occupations. - Every home purchased pumps up to $60,000 into the economy over time for furniture, home improvements, and related items. - Housing accounts for more than 15% of the Gross Domestic Product, making it a key driver in our national economy. - Housing has led this country out of six of the last eight recessions. "America needs jobs. Housing creates jobs. That's one of the many reasons home ownership matters to people, to communities, to America." "Strong federal government support of home ownership equals strong support for American jobs. We urge the Obama Administration and the U.S. Congress as they debate the new federal budget and reform proposals for the nation's mortgage finance system to continue federal support for home ownership." "Jobs and Home Ownership. You can't have one without the other."
If you have any questions or are READY to reap the benefits of home ownership call me NOW at 303-898-9000 or you can click here to email me! .
An ILC stands for Improvement Location Certificate and may be required on a home purchase transaction. An ILC requirement will most often be listed as a condition to the purchase contract. This will help potential buyers determine whether the improvements made on a parcel of land contain any encroachment or boundary risks to the surrounding properties. Improvements normally made to a home can include fences, decks, driveways, patios, paths, sheds, and other upgrades which will add value to the property. If the improvements made on the property are done outside of the property lines it could create a liability issue to the new home owner. Title companies and mortgage companies may also require an Improvement Location Certificate to be completed on a transaction. The stipulation for requiring the ILC is that both the title company and the mortgage company want to make sure the structures and the improvements being purchased are genuinely on the property. The ILC can be ordered by anyone working on the real estate transaction and will range between $100 - $350, depending on the company providing the service and the location of the property. After the ILC has been completed you will receive a copy for your own records. An ILC will provide the requester specified information, based on a surveyor’s general knowledge of an area. The document will depict the property boundaries, illustrating the size and shape of the parcel, based on the legal description provided in the warranty deed. It will illustrate improvements, encroachments, and easements based on their estimated size and location, in respect to the property’s legal parcel boundaries. It is important to note that the ILC is not a formal survey and should only be used to “red flag” or emphasize any potential risk to the lender or to the title insurer for possible encroachment or boundary disputes. ILC requirements are rare, but may be an asset to you in the event you should question any of the structures located on your property or your neighbor’s property. Dispute resolution related to encroachment or boundary issues must take place before the real estate contract is approved, and if pursued will most likely require legal representation.
Call me for more information regarding the ILC and what it can do for you! 303-898-9000 OR you can click here to email me!
THIS IS FANTASTIC NEWS!
March 2, 2011
As many of you know, the real estate market recovery will not happen without simpler, easier to obtain home financing. All of the banks have been so tight the last 3 years, they have shut out hundreds of thousands of would be buyers. A large national lender, also local in Denver, has recognized the need for in house portfolio lending for owner occupied homes. They are using common sense underwriting and have reduced FICO scores of 620 or higher.
This type of financing tool will help me sell more homes for my clients and my buyers will be getting the best loan available in DENVER. Over the years, I have taken pride in providing the best information to my clients. Call me if this will help you decide to buy or sell. 303-989-9000!
Typical loan examples at 5 3/8%:
Jumbo loans available up to 1 million with 10% down!, no origination fee Availability of financing has always been a primary market driver. My clients will get their home sold quicker with programs like this. As always, my goal is to help you find the best home and the best ways to own it.
Call me TODAY with you questions regarding fantastic home loan programs! 303-898-9000 or you can click here to email me! I am available with all of the answers YOU need!
Fresh Fixes for Kitchens and Baths
March 3, 2011
Hi to all!
Freshening up the kitchen and baths is inexpensive, fairly easy, and very worthwhile. These efforts will reap big rewards in the selling game, and please any prospective buyers. Contact me for more selling tips for the rest of your home. I have been helping sellers stage their homes to sell since my first staging class with Barb Swann (one of the premier staging experts of the ages who was highlighted on the Today Show just last year), i spent time in her seminars clear back in the 1980's and ever since I have a truck load of ideas for my homeowners depending on each situation. Of course being personally involved with over a thousand new home sales and seeing how each owner and decorator chose colors for each personality was experience hard to obtain anywhere else.
Call me 303-898-9000 or click here to email me with all of your questions and tips!! Thanks!!
Steve J Return to the top
Thank you for your response!
It is overwhelming to see the genuine "thanks".
I am doing another flip on another property that I bought at auction. I seem to keep the contractors busy. The opportunities are there, but only a few really result in good opportunity. The buy and hold and rent are good choices right now. Returns are generally around 8-11% after expenses assuming no appreciation. Keep the lenders out and pay cash. Get the lenders return and the extra rent profit. No leverage and pretty safe when buying a modest price range in good areas. Value increases will return someday when the lenders are able to loosen up the lending underwriting. A private banker this morning said he thought that at our all-time high 4 years ago that 74% + of our US population was lendable, his estimates today are closer to under 25%. I would have guessed 30%. That’s the primary reason that the real estate market is soft and will likely stay soft until 40-45%+ % can qualify for a home mortgage. This will keep the rental market solid for the next few years as it is quite an obstacle for many would be borrowers. I appreciate being asked to help. Have a great week.
Steve J
Call me with all of your questions! 303-898-9000 or click here to email me!
Research Firm Says U.S. Housing Has Never Been This Undervalued 03/07/2011 By: Carrie Bay published in DSNEWS.com The continuing depreciation of residential property values at the end of last year has made housing look more undervalued relative to income than ever before, according to analysts at the research firm Capital Economics. Looking at data included in the index published by the Federal Housing Finance Agency (FHFA), the firm found that housing in Q4 was 15 percent undervalued as measured against individuals’ disposable income. Capital Economics says its results illustrate “housing is exceptionally undervalued,” and the gap is getting bigger. In its third quarter 2010 report, the research firm pegged the Case-Shiller index readings as 19 percent undervalued and the FHFA index as 14 percent below what would constitute a balanced housing value in relation to income. The recent fall back in house prices, coupled with low rates, explains why the initial monthly mortgage payment on a median priced house bought with a 20 percent down payment has fallen to a record low of 13 percent of the median income, Capital Economics pointed out in its report. Home prices in 29 states hit a new cycle low in the fourth quarter of last year, and the research firm says on both the FHFA and Case-Shiller house price indices, housing now appears close to fair value when set against rents. Such favorable valuations mean there is plenty of scope for housing to perform well in the medium-term, according to Capital Economics, but over the next year, the firm says the combination of weak demand, high supply, and more forced sales of foreclosed properties will push prices lower. As Capital Economics pointed out, the sharp fall in the mortgage delinquency rate at the end of last year means there are fewer homes in the foreclosure pipeline, but the elevated number of defaulted properties still in process means home values will continue to be negatively impacted by the presence of distress for some time. On top of low prices, mortgage rates have fallen back a bit in recent weeks, leaving them even further below the 20-year average of 7 percent, the firm’s analysts wrote. Last week marked the third consecutive week that rates have continued to decline. A national survey conducted by Freddie Mac shows that the average 30-year fixed-rate has dropped to 4.87 percent, while the 15-year fixed-rate has slipped to 4.15 percent. When you wrap declining home prices and historically low mortgage rates together, Capital Economics says, “The incredibly favorable affordability and valuation environment is the housing market’s one big positive.” But despite this fact, mortgage applications have remained subdued. While buyer demand is notably weak by conventional standards, Capital Economics says the decrease in mortgage apps of late reflects, at least in part, the prevalence of cash buyers. The company says the recent “de-valuing” of housing stock appears to be attracting cash buyers and investors back into the market. They have driven 70 percent of the increase in existing home sales seen since last July, particularly among heavily discounted foreclosed homes, Capital Economics pointed out. Over that same period, first-time buyers have been responsible for just 6 percent of the increase in sales of previously owned homes. This article was in DSNEWS on Mar 7, 2011. I post some articles in my blog due to their high relevance of home valuation or impact of home ownership.
Call me 303-898-9000 with questions about this or any other real estate related question. I have 30 years of experience to assist you! You can also email me by clicking here!
Thanks again,
Steve J
FHA 203k Closing Cost for Renovation What Homebuyers and Homeowners Should Know
The first thing you’ll need to do when figuring out 203K closing costs is to list and estimate the cost of all the repairs & rehab that you are planning for the property. This is essential because the 203k closing costs will be calculated based on this amount. The following is a list and explanation of costs involved when financing a 203K Loan Standard Fees: FHA 203k contingency reserve FHA 203k Inspections & title updates Mortgage payments financed Architectural and Engineering fees Consultant Fees Permits Supplemental origination fees for both standard 203k and streamline Discount points on repair cost and fees Well there it is…the costs associated with the FHA 203k renovation loan. Now remember, these costs only apply to the repair and rehab amount and as mentioned earlier there would still be the standard closing costs such as Title, Lender, Attorney, Escrow and Recording Fees but these costs apply to all Real Estate Loans.
SteveJ Return to the top Time to Buy!
Shawn Tully, senior editor at large for Fortune penned an article last week which was titled: "Real estate: It’s time to buy again". In the article, Mr. Tully explained:
Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing. Let’s state it simply and forcibly: Housing is back. Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction … The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.
When you're ready to buy just give me a call 303-898-9000 and we will discuss all of the many financing options we have avaiable for your purchase. Email by clicking here!
How much impact does a short sale have on FICO® Scores? How about a foreclosure? I get these questions infrequently and thought I'd share some research that I came across. Contact me anytime if you or your clients have mortgage questions!
~Impact to FICO® Score Starting FICO® Score -680 -720 -780 FICO® Score after these events:
Source: FICO® Banking Analytics Blog
~Estimated time for FICO® Score to fully recover Starting FICO® Score - 680 -720 -780
Note: Estimates assume all else held constant over time (eg: no new account openings, no new delinquency, similar outstanding debt) Source: FICO® Banking Analytics Blog
All in all, we saw:
Call me with scenarios! I can help! 303-898-9000 or feel free to EMAIL me!
Thanks! Steve J
"Buying an ugly property and getting money to fix up /repair as part of your first mortgage. This is a great loan to buy foreclosures and short sales that need work. Your down payment is just 3.5%. This is a great program and has been around for many years. Check out the How to video!"
Call me and let's get started! 303-898-9000 or you can email me by CLICKING HERE! Steve J
I have access to some of the MOST TOP SECRET information about the Denver Real Estate Market that is available today! CLICK HERE for your 11 page report! After you have looked over this report CALL ME 303-898-9000 or EMAIL ME and we can discuss HOW this information can help YOU when buying or selling a home!
Should you contest your Current County Tax Assessment? May 17, 2011
Here are some opinions to consider.
You can have a simple appraisal done on the web for $125.00. My Group will pull comparable sales from the MLS system for the time frame of June 1, 2009 – June 30, 2010 in your neighborhood and email them to you. The cost to you is only $30.00. You may pay after receipt and if you think that the past sales information is relevant to you. When you list your home with us in the future, any fees paid to us would be credited to you as a thank you for your business. I hope that you review and take advantage of a possible tax saving opportunity. Please call me with ANY questions! 303-898-9000 or EMAIL me. Return to the top
The 5 Most Common Complaints of Short Sale and REO Buyers (and How to Avoid Them) May 18, 2011 Author: Tara Nicholle Nelson Roughly forty percent of the homes for sale on today’s market are short sales and foreclosures! Distressed properties are well known for their value (a reputation which is sometimes accurate, and sometimes not), but they also have a reputation for causing buyers to become distressed, too! Transactional snafus, last-minute surprises and long, drawn-out escrows that never close seem to be par for the course. Instead of avoiding these properties altogether, get educated about the most common dramas that go down in these deals, and how you can avoid falling victim. 1. Run-on (and on, and on) escrows. When you’re buying a home (or selling one, for that matter), time is absolutely of the essence. And buyers reasonably expect that the big time suck in real estate is in the house hunting process itself; seems like once you find a home you want to buy and the seller agrees to your price and terms, things should move pretty quickly, right? Not so much, when it comes to some distressed property sales. I’ve heard tell of the occasional, swiftly-moving escrow on an REO (real estate owned – by the bank). But for the most part, these transactions take anywhere from a few days to a few weeks longer than “regular” sales, because of the extra signatures, supervisor-level approvals and even investor involvement required to seal the deal. Banks don’t have the same sense of urgency individual home sellers do, and it’s not uncommon for the people who need to sign on the dotted line to be on vacation or scattered across the country, adding days’ or weeks’ worth of time to the escrow. And short sales are also an entirely different animal when it comes to escrow time-lines. While a standard sale from an individual seller to an individual buyer might take 45 days from contract to closing, a short sale can take anywhere from 45 days to 6 or 8 months (!) to get the deal closed, after the seller has accepted the contract. Avoid the drama by: expecting your escrow to run long, and being pleasantly surprised if it doesn’t. Expectation management is everything. Make sure you take these extended time-lines into account when you’re working with your mortgage broker on the issue of when to lock your interest rate, and how long your rate locks will last. You might even need to plan on and/or set aside an allowance for the cost of extending your low interest rate, if rates are rising rapidly during the time you’re waiting for the deal to be done. 2. Bank won’t take lowball offer. If I had a dollar for every time I’ve received a question from an outraged reader to the effect that a buyer has had their short sale or REO offer rejected on grounds that it was too low, even though the bank has no other offers, I could buy a foreclosure myself (admittedly, it’d be one of those $150 foreclosures in some blighted town with tax liens and no plumbing, but still). Banks owe their shareholders and investors a duty to get as much as they can for these properties. Just because you see it’s on the market and listed as a short sale or a foreclosure doesn’t mean they’re going to give it to you for a fraction of its worth. The bank’s goal is to get a purchase price as close as possible to the home’s fair market value, as determined by the recent sales prices of similar, nearby homes, with some adjustments made for the property’s condition. Fact is, many banks would rather see the listing agent reduce the price by a moderate amount, and wait to see what offers come in, than to accept an offer 30 percent below the asking price just because there are no other offers on the table. Avoid the drama by: working with your agent to make a realistic offer, based on recent comparable sales in the neighborhood, not just on what you think you can get away with. You can waste a lot of time, spin a lot of wheels and lose out on a lot of properties making low-ball offer after low-ball offer on distressed homes. Sit down with your broker or agent, review the ‘comps’ and make a smart offer that reflects a good value for you, is within your budget and is not bizarrely out of the realm of the fair market value of the property. 3. Last minute postponements/cancellations. These transactions have an uncanny way of being delayed at the last minute – or never going through at all, through no fault of the wanna-be buyer. You signed docs yesterday, put your dog in the crate this morning and just hopped in the moving truck, only to get a text from your broker that the deal didn’t close because the escrow company which was selected by the bank flubbed the check-boxes on a single sheet of paper (it happens). Or, you’ve been in contract (with the seller) on a short sale for four months, and the bank refuses the sale entirely because the seller refuses to kick even $1 of their own cash into the deal, despite having a flush savings account. Avoid the drama by: staying as flexible as possible with your moving plans as long as possible. Best practice is to plan on some overlap between the time you can be in your last place and your scheduled move-in date. Also, if you’re in contract on a short sale, you should take the point of view that you don’t have a firm deal until you get the bank’s approval of the transaction. So don’t even think about starting to make moving plans or paying for home inspections and appraisals until you know the bank has green-lit the deal and that the purchase price and terms they’ve approved work for both you and the seller. 4. The bank’s black box. Make an offer on a normal home and you’re likely to know what the outcome will be within a few hours or a few days, at the outside. If things take longer because the seller is out of town or some such, the listing agent tells you that, and you at least know what’s going on. Make an offer on a bank-owned property or a short sale? It’s a crap shoot – could be days, but could also, easily, be weeks or months before you know what’s going on. And no amount of calling, pleading, prodding or nudging is likely to get you much information on how your offer or the seller’s short sale application is being handled or what (if any) progress is being made. And that “black box” into which your offer disappears at the bank level is very frustrating. Avoid the drama by: continuing your house hunt until you have an answer back. Maniacally pestering the listing agent for answers or harassing your buyer’s broker into spending hours on hold with the bank is highly unlikely to get you any insight. (With that said, it does make sense for your agent to check in regularly – sometimes even daily – with a short sale or REO listing agent to stay updated on any developments with the property and to make sure your offer/transaction stays in the front of their mind.) Most of the angst in these situations arises when a buyer feels they passed on properties that would have really worked for them when they pinned their hopes on a distressed home. You can only control your efforts and activities, not the bank’s. So, consult with your own broker or agent about staying proactive in viewing and even pursuing other properties until you have a firm “yes” from the bank on your short sale or REO offer. Until that time, and usually for a short time after you get the bank’s approval, you have the right to back out of the transaction if you need to (make sure your broker briefs you on precisely when your right to rescind your offer or exercise contingencies – i.e., bail – will expire). 5. Double standards. In a “regular” equity sale with no bank involvement, both buyer and seller are obligated to meet various time-lines. Seller has to provide disclosures by X date, open the property to inspections – with utilities on – by Y, and close and move out by Z. REO and short sale buyers, on the other hand, are often dismayed to find that even though the bank might take weeks or months to sign or handle its deliverables, the bank will insist that the buyer show up, sign or send a check quick-like. Avoid the drama by: chalking it up to the (admittedly irritating) way things are – the price you pay to buy from the bank. Realize that working with the bank on the bank’s terms is unavoidable when you buy a distressed property. Then, go into the deal with realistic expectations – including the expectation that the bank will drag its feet, despite expecting you to keep every deadline – and you’ll be less frustrated, and less likely to make poor decisions out of frustration. Also, make sure you do respond in a timely manner to the bank’s requests and your obligations under the contract. I’ve seen banks capitalize on buyer delays in returning signatures and removing contingencies to accept higher offers they received in the interim. Don’t lose your home on a technicality because you assume that the bank’s lackadaisacal timelines apply to you as well. ~
If you have questions regarding short sales or how I can help you, please call meat 303-898-9000 or you can email me at Steve@SteveJacobson.com I have hundreds of successful short sale transactions. Let me help you with yours!
Steve J
The 5 Most Common Complaints of Short Sale and REO Buyers (and How to Avoid Them) June 3, 2011, 2011 Roughly forty percent of the homes for sale on today’s market are short sales and foreclosures! Distressed properties are well known for their value (a reputation which is sometimes accurate, and sometimes not), but they also have a reputation for causing buyers to become distressed, too! 1. Run-on (and on, and on) escrows. When you’re buying a home (or selling one, for that matter), time is absolutely of the essence. And buyers reasonably expect that the big time suck in real estate is in the house hunting process itself; seems like once you find a home you want to buy and the seller agrees to your price and terms, things should move pretty quickly, right? Not so much, when it comes to some distressed property sales. I’ve heard tell of the occasional, swiftly-moving escrow on an REO (real estate owned – by the bank). But for the most part, these transactions take anywhere from a few days to a few weeks longer than “regular” sales, because of the extra signatures, supervisor-level approvals and even investor involvement required to ‘seal the deal’. Banks don’t have the same sense of urgency individual home sellers do, and it’s not uncommon for the people who need to sign on the dotted line to be on vacation or scattered across the country, adding days’ or weeks’ worth of time to the escrow. And short sales are also an entirely different animal when it comes to escrow timelines. While a standard sale from an individual seller to an individual buyer might take 45 days from contract to closing, a short sale can take anywhere from 45 days to 6 or 8 months (!) to get the deal closed, after the seller has accepted the contract. Avoid the drama by: expecting your escrow to run long, and being pleasantly surprised if it doesn’t. Expectation management is everything. Make sure you take these extended timelines into account when you’re working with your mortgage broker on the issue of when to lock your interest rate, and how long your rate locks will last. You might even need to plan on and/or set aside an allowance for the cost of extending your low interest rate, if rates are rising rapidly during the time you’re waiting for the deal to be done. 2. Bank won’t take lowball offer. If I had a dollar for every time I’ve received a question from an outraged reader to the effect that a buyer has had their short sale or REO offer rejected on grounds that it was too low, even though the bank has no other offers, I could buy a foreclosure myself (admittedly, it’d be one of those $150 foreclosures in some blighted town with tax liens and no plumbing, but still). Banks owe their shareholders and investors a duty to get as much as they can for these properties. Just because you see it’s on the market and listed as a short sale or a foreclosure doesn’t mean they’re going to give it to you for a fraction of its worth. The bank’s goal is to get a purchase price as close as possible to the home’s fair market value, as determined by the recent sales prices of similar, nearby homes, with some adjustments made for the property’s condition. Fact is, many banks would rather see the listing agent reduce the price by a moderate amount, and wait to see what offers come in, than to accept an offer 30 percent below the asking price just because there are no other offers on the table. Avoid the drama by: working with your agent to make a realistic offer, based on recent comparable sales in the neighborhood, not just on what you think you can get away with. You can waste a lot of time, spin a lot of wheels and lose out on a lot of properties making lowball offer after lowball offer on distressed homes. Sit down with your broker or agent, review the ‘comps’ and make a smart offer that reflects a good value for you, is within your budget and is not bizarrely out of the realm of the fair market value of the property. 3. Last minute postponements/cancellations. These transactions have an uncanny way of being delayed at the last minute – or never going through at all, through no fault of the wanna-be buyer. You signed docs yesterday, put your dog in the crate this morning and just hopped in the moving truck, only to get a text from your broker that the deal didn’t close because the escrow company which was selected by the bank flubbed the checkboxes on a single sheet of paper (it happens). Or, you’ve been in contract (with the seller) on a short sale for four months, and the bank refuses the sale entirely because the seller refuses to kick even $1 of their own cash into the deal, despite having a flush savings account. Avoid the drama by: staying as flexible as possible with your moving plans as long as possible. Best practice is to plan on some overlap between the time you can be in your last place and your scheduled move-in date. Also, if you’re in contract on a short sale, you should take the point of view that you don’t have a firm deal until you get the bank’s approval of the transaction. So don’t even think about starting to make moving plans or paying for home inspections and appraisals until you know the bank has green lit the deal and that the purchase price and terms they’ve approved work for both you and the seller. 4. The bank’s black box. Make an offer on a normal home and you’re likely to know what the outcome will be within a few hours or a few days, at the outside. If things take longer because the seller is out of town or some such, the listing agent tells you that, and you at least know what’s going on. Make an offer on a bank-owned property or a short sale? It’s a crap shoot – could be days, but could also, easily, be weeks or months before you know what’s going on. And no amount of calling, pleading, prodding or nudging is likely to get you much information on how your offer or the seller’s short sale application is being handled or what (if any) progress is being made. And that “black box” into which your offer disappears at the bank level is very frustrating. Avoid the drama by: continuing your house hunt until you have an answer back. Maniacally pestering the listing agent for answers or harassing your buyer’s broker into spending hours on hold with the bank is highly unlikely to get you any insight. (With that said, it does make sense for your agent to check in regularly – sometimes even daily – with a short sale or REO listing agent to stay updated on any developments with the property and to make sure your offer/transaction stays in the front of their mind.) Most of the angst in these situations arises when a buyer feels they passed on properties that would have really worked for them when they pinned their hopes on a distressed home. You can only control your efforts and activities, not the bank’s. So, consult with your own broker or agent about staying proactive in viewing and even pursuing other properties until you have a firm “yes” from the bank on your short sale or REO offer. Until that time, and usually for a short time after you get the bank’s approval, you have the right to back out of the transaction if you need to (make sure your broker briefs you on precisely when your right to rescind your offer or exercise contingencies – i.e., bail – will expire). 5. Double standards. In a “regular” equity sale with no bank involvement, both buyer and seller are obligated to meet various timelines. Seller has to provide disclosures by X date, open the property to inspections – with utilities on – by Y, and close and move out by Z. REO and short sale buyers, on the other hand, are often dismayed to find that even though the bank might take weeks or months to sign or handle its deliverables, the bank will insist that the buyer show up, sign or send a check quick-like. Avoid the drama by: chalking it up to the (admittedly irritating) way things are – the price you pay to buy from the bank. Realize that working with the bank on the bank’s terms is unavoidable when you buy a distressed property. Then, go into the deal with realistic expectations – including the expectation that the bank will drag its feet, despite expecting you to keep every deadline – and you’ll be less frustrated, and less likely to make poor decisions out of frustration. Also, make sure you do respond in a timely manner to the bank’s requests and your obligations under the contract. I’ve seen banks capitalize on buyer delays in returning signatures and removing contingencies to accept higher offers they received in the interim. Don’t lose your home on a technicality because you assume that the bank’s lackadaisacal timelines apply to you as well.
I am a short sale and REO expert! Call me with your questions and concerns about how to buy or sell a short sale! 303-898-9000 or as always you can email me by clicking here! Author: Tara Nicholle Nelson
Four Deal Killers - The Seller Home Inspection
If you have any question about having a SELLER Home Inspection, call or text me 303-898-9000 or drop me an email at steve@stevejacobson.com
Check this out!Interest Rates Chart Since 1991!
|
I normally provide information in two categories when it comes to pricing. Median & Average Sales Price. Here is the plain and simple explanation:
You've been hearing mortgage rates have dropped and I am here to confirm they have dropped a lot; however, just because interest rates have dropped doesn't mean refinancing makes the most financial sense. Before submitting a mortgage application or having your credit pulled, find out how much you will save by refinancing and what costs you'll incur.