Buyers in Parker, Colorado will now see a higher cost to their annual mortgage insurance premium. Mortgage insurance is generally required when a borrower doesn’t have 20% down payment for a home loan. If a person doesn’t have 20% down, there is an upfront mortgage insurance premium as well as monthly mortgage insurance.
The upfront mortgage insurance premium remains unchanged at 1%, but the monthly premium is increasing by .25%. FHA Case numbers assigned on or after April 18, 2011 are affected by this increase. The old premium with 3.5% down was .90% and the new premium is now at 1.15%
So what does that really mean? It means the monthly payment will cost more therefore buyers will be able to afford less!
For example:
$300,000 home purchase
$10,500 3.5% down
$217.13 MIP (old amount) per month
$277.44 MIP (new amount) per month
$60.31 ADDITIONAL COST PER MONTH Jared Carlson, Realtor, Your Castle Real Estate
I thought I’d write this because here in Denver, CO we are experiencing a situation that most probably thought couldn’t happen. The situation I’m describing is that Short sales are at such a high level that it is becoming more difficult to find properties that are “regular” sales. When I or my clients search homes it seems that 4 out of 5 are short sales. This creates a unique situation where the most ready, willing and able buyer can’t buy a home! Think about that. My definition of a ready, willing and able buyer is one that has money in the bank, has high credit, is qualified to purchase and most of all HAVE SOLD THEIR HOME. In previous markets, these buyers could turn right around and buy a replacement home…but now the situation is much different. These folks are finding themselves in a temporary living situation such as an extended stay hotel, living with friends or family or renting all with their possessions in storage and scattered at friend’s homes all over town. I call this temporary situation “camping” because they are living with the bare necessities and keeping stuff packed and ready to go for the next move. I have 4 clients living this scenario; one of which is my family! I am living what my clients are going through. The decent short sale homes either have offers on them that they’ve been working on for 6 months or if you are lucky enough to be the first offer, you are in for a long road. This forces many people into giving up and at best a lengthy process. My advice is to keep your spirits up, log the journey and find a good Realtor that understands the short sale process and hopefully there is a good Listing Agent; this can make all the difference in the world! It’s interesting where we are in our cycle and we’ll have stories to tell for years to come.
The Treasury Department has unveiled new rules for short sales starting in 2010. Troubled homeowners, either by loss of job, not enough money in savings, or just too high a mortgage payment may need to sell their home to get back in a realistic situation. Many of these homeowners need to sell, but they can’t get a price high enough to pay off their mortgages. According to the National Association of Realtors, roughly 1 in 10 homes was a short sale in 2009.
What the Treasury Department did was streamline the short sale process which will help the lenders, real estate agents, sellers and buyers reach agreements more quickly. It’s also designed to help fill the gap where homeowners don’t qualify for a loan modification program under the Obama administration.
A few highlights of the program:
1. Homeowners will be eligible for $1500 to help cover their moving costs
2. Mortgage companies don’t have to launch the program until April 5, 2010
3. The program is voluntary for 2nd lien holders such as home equity loans
4. Other secondary lien holders are eligible for $3000 to release their interest
5. Mortgage companies are eligible for $1000 to cover administrative costs
6. Mortgage companies will have to approve the terms, such as the minimum listing price which will help speed up the approval.
Lenders can implement this program immediately, but they will likely wait until the deadline because they will need to ramp up personnel, training and the processes.
Short sales help reduce the borrower’s credit record as it relates to a foreclosure, save the lenders the cost of a foreclosure and help the neighborhood property values. It’s estimated that a lenders average loss in a short sale is 40% vs. 70% in a foreclosure. Foreclosures cost more and the properties are sold for less.
Short sales are a way of life right now and unfortunately they are anything but quick. For Denver real estate, this new program is a breath of fresh air.
I’ve been to my share of Real Estate auctions through the counties and by third party auction companies here in Denver, CO. Every time I go, I see the same things happen. A lot of people show up in hopes of “stealing” a property to fix up or to live in and sometimes it happens, but most of the time it doesn’t. I’m not going to go over all the details of the different types of auctions, but give you some things to consider and watch out for at any auction.
1. Know when and where the auction is taking place: Auction companies will auction a number of properties at one location, usually at one of the homes being sold. Know the time and which property the auction will be held at. If it’s through the county, know the time and place. Know if you must show up early to register.
2. Do your research of the area: Know the neighborhood of the home you are going to bid on. Know the home values, if the community is in transition and increasing or decreasing in value, is it a desirable neighborhood? How many homes are being sold? How many are on the market and if there are a lot of fixer uppers.
3. Know the house you are bidding on: This is an auction and the homes are sold AS-IS! There are no contingencies or “outs” and if you missed a big ticket item, you could find yourself spending more than you thought. With auction companies there are open houses and if there aren’t you may hire a Realtor to help you gain access to look at the homes and help you with the transaction.
4. Auction rules: Know the auction rules, their contracts, what’s expected of you and most of all how you will fund the purchase if you are high bidder. You may have to have all the money that day or you may be able to finance the purchase 30 days later. You will have to give earnest money regardless. Talk to your financing source before you go to the auction.
5. Consider finding a Realtor and a general contractor or inspector: A Realtor can represent you if you are attending a third party auction but if it’s a county auction, Realtors don’t get paid so you may have to compensate them. If you aren’t comfortable with inspecting the house for potential potholes, estimating costs, and generally deciding if things are good or bad, bring along a contractor or inspector to point out items and give you an idea of costs.
6. Come up with YOUR max bid: Each person is going to have a different number based on their risk, their knowledge, and what they see. YOU have to know your limits and not get caught up in what other people are saying. You will hear conversations about fix up costs, after repaired value, but don’t listen-do you own thing!
7. Auction time & emotions: It’s now time for the auction, you’ve registered, you know all the rules, you know what you are there for and you are ready to bid. The excitement begins and the auctioneer starts pumping up the crowd trying to extract the most money for the property as they can. What I see almost every time is that it gets down to two or three people and they go back and forth. This is where your emotions and thoughts are going crazy. You think “they’re still bidding the property up, they must know something I don’t”, your adrenaline is running high, you say to yourself “what’s another few thousand dollars” and you keep going. Bad move! Keep your emotions and thoughts in check and don’t get caught up in this. I see many times where this takes over and people overpay; it’s easy to do.
Here’s an amateur video from an auction in Denver by yours truly that gives a snapshot of a third party auction company selling a house.
Do your due diligence, know what you are there to do, have fun and make it beneficial for you!
Whether its summer or winter, we need to do our job to reduce cooling or heating costs for the benefit of our world and our wallet. I don’t know why, but we tend to ignore places of cooling loss during the summer but we are in tune with heat loss and the cost of it during the winter. Here are some tips from easy to more difficult that you can do to help offset your heating and cooling loss and keep a few more dollars in your pocket.
Seal the leaks: Attics, floors, doors and windows typically are major areas of energy loss. Another area often overlooked is wall outlets and switches. Take advantage of a windy day, light some incense or something that smokes and walk around holding it next to doors, windows, outlets, switches and other places to see if there is air movement. If so, caulk, foam, or insulate those areas.
Keep the windows covered or open: Think about it, windows are the biggest holes in your house therefore if it’s going to be a cold day, keep them covered. Pull the blinds, curtains or if it’s a window that’s in a relatively unseen place put window plastic over it as well. On the other hand, if it’s going to be a warm, sunny day open the curtains or blinds on a sunny side and take advantage of the sun to warm up the interior.
Check your attic insulation: Heat rises, so checking to make sure you have adequate insulation depending on your climate is crucial. If not, you can have more blown in. This can have a dramatic affect on your savings.
Have your furnace and filter checked: Efficiency is key with anything, so why not check your furnace to make sure it’s operating correctly and creating good air flow through a clean filter?
Turn your thermostat down: I know, I know you want to be comfortable. Well every degree you turn down your thermostat has a great effect on how much your furnace runs which directly affects your energy use and wallet. Try a degree or two. I also suggest you have a programmable thermostat which makes it easy to program for different times of day or vacations.
Make use of blankets and warm clothes: Turning the thermostat down a little and adding one blanket or putting on a pair of sweats can keep you comfortable and save on the costs. You don’t need to be in the Bahamas inside your house!
Insulate and turn down your water heater: Go to your local home improvement store and purchase a water heater blanket. It’s no different than having insulation in your walls…the blanket helps with heat loss from your water heater. Check your temperature as well. It’s likely you can turn it down a few degrees and never notice the difference.
Check your basement or crawlspace insulation: If you have a basement or crawlspace, check or install insulation on the walls and in between the floor joists, especially areas without the dirt covering it.
Once a buyer and seller are under contract for the purchase of a home, there is an inspection period in which the buyer has the right to either go through the property themselves or hire an inspector to look at the property, although I would always advise a client to hire an inspector because they are the professionals when it comes to home inspections and this is probably the single largest investment of anyone’s lives.
The purpose of an inspection is to determine the condition of the property, educate and look for:
Serious Deficiencies
Replacement or Repair Items
Age and Life Expectancy of Major Components
Maintenance and Safety Information
Positive Aspects of the Home
So what about the furnace? This is a major system in the house and should be taken seriously, especially when buying a used home.
When the inspector gets to the furnace, he’ll look for items such as gas connections, exhaust venting, any leaks, electrical wiring, the age, the blower motor, check the filter, look at the flame, and run the furnace to make sure it operates correctly. A general rule of thumb is 15 years for the life expectancy for a furnace. Regardless of the age here’s where my word of CAUTION occurs. Make sure your inspector will not only inspect the furnace, but CERTIFY the condition of the furnace and if they won’t, find an inspector who will or have a licensed HVAC company certify the furnace. A lot of inspectors don’t want the liability of certifying the furnace and some just don’t know how.
There is one major component to be aware of in a furnace and that is the HEAT EXCHANGER. The heat exchanger is basically a metal plate that is heated up with the flames and once it gets to a certain temperature the blower starts and moves the air past the plate which warms the air and thus heats your house. The air movement and flames are on different sides of this plate. That plate is continuously heated and cooled which stresses it over time. What can happen is cracks can develop and this can pass carbon monoxide into the house. These cracks can be hard to see, but you must determine this! It can mean replacing the furnace. For the buyer, if this isn’t noticed they might find themselves replacing the furnace the first winter and for the seller, this may mean the difference between making or losing the sale.
Don’t get caught in the furnace trap; certify that everything works properly and don’t leave anything unknown.
Do you find yourself wondering whether or not to get all the disclosures from the listing agent prior to submitting an offer or after?
Prior to submitting an offer:
Getting all the disclosures from the listing agent prior to submitting an offer can be good because it allows you and your client to look over the disclosures that the seller has put together, especially the property disclosure. It’s at this point where you may uncover a red flag for your client and you can save yourself the time and work of putting together an offer if your client isn’t comfortable with an item. Another benefit is that you now have all the paperwork and can have your client sign the forms and include it with your offer therefore getting everything completed at once. One drawback is the time involved and depending on your market, you may not have time.
From a listing agent’s point of view, I want to make the process as easy as possible for buyers so I will at the very least put 5 packets together of all the disclosures with proper signatures at the home for buyers to take. For the more tech savvy agents, place these documents online such as on your local MLS for anyone to read or download at their leisure! Online is my preference.
After submitting an offer:
You never know whether or not the buyers and sellers are going to come to terms on the basics, primarily the price. If you can’t negotiate an agreement, then it’s worthless to go through the effort of gathering the disclosures. Also, if you are in a market where properties are moving fast and competition is high, you just need to get the offer in quickly! Yes, getting the disclosures after the offer is negotiated is an extra step in terms of getting with your client, but it’s really not that big a deal.
My preference when listing a home is to have these documents signed at the listing appointment and then have them readily available whether online, in the house or both to make it as easy on the buyer as possible. In my opinion it’s better to have them online because you don’t always know whether your buyer is considering making an offer until you’ve left the home and you may not have picked up a packet.
Let’s make a push to get all paperwork electronically via email, internet or efax to keep things efficient and from burning up paper!
As Realtors, during the purchase process we always suggest that our client have a home inspection right? Yes. As most of us know, the inspector goes through the entire house top to bottom, has a great understanding of what to look for in a home and will indicate if they see a potential problem where a “licensed” trade is suggested to inspect an item. These items usually include electrical, plumbing, HVAC and sometimes structural issues. It is not very common for the inspector to note the sewer line because it is not in a visual path and isn’t generally an issue…..unless you are working in an older neighborhood!
Today’s sewer lines are made of plastic (PVC), but older sewer lines were made of clay pipe. You would have to do some research in your area to see which neighborhoods have clay pipe by calling the local building department, asking builders or asking other Realtors in the area.
Clay pipe is a good pipe system that was used many years ago and is put together in sections where a “bell” hub is at one end which slips over the straight end of the next section. The problem is that it cannot withstand much movement, some pressures from additions and the joints are not as tight as today’s pipe. Because these pipes are old, they are most likely cracked, small pieces may have broken off, roots can grow through the pipe joints or cracks and this causes blockages.
It’s good practice to have a company “scope” the pipe with a camera all the way to where the city sewer ties in. They can create a DVD for you as well. This process will show if there is debris in the pipe, the condition of the pipe, if the flow is good and if there are roots. If the pipe looks like it’s in good shape, but there are roots or debris they can send a tool down the pipe that will clean it out and you’re good to go. If it’s damaged to the point of needing repair, you would need to get a sewer repair company to see what it would take. They can dig it up and replace the entire pipe with plastic, replace a section that’s damaged and even burst and re-sleeve the pipe if it’s in an inaccessible area.
