If I Sell My House, Will I Be Able to Find a New One?

If I Sell My House, Will I Be Able to Find a New One?

Well, there is good news and bad news in this crazy Denver real estate market.

The good news is that, in July, inventory increased by just over 4%. The bad news is that, even with that increase, July inventory still set a record low, with only 7352 total properties on the market.

That is not a lot of houses.

What does this mean? It means there are a lot more buyers than there are homes to sell them. And so, especially in the lower price points, good listings get multiple offers, one winner, and several disappointed “losers.”

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Merry Wire Fraud, and Happy New Year

Merry Christmas, Happy New Year, and wonderful 2017!  I hope you all had wonderful holidays, and that the return to “ordinary time” hasn’t been too traumatic.

My holidays were wonderful.  Nice time with family, a fun New Year’s Eve party in San Francisco, and then of course the obligatory week laid out with the nasty post-holiday bug that seems to have felled so many this season.

But the little “holiday” story I want to tell today happened during the holidays, but it wasn’t particularly festive.  In fact, it could have ruined a lot of people’s entire season.

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Of Discounts and Deception

Of Discounts and Deception

If you are one of my Facebook friends, you saw a stream of prayer request posts from me last month. I had clients who were in a very complicated situation. I didn’t go into detail on Facebook, and I won’t here, but basically title issues were threatening to cause them to lose their house to foreclosure before we could close it with our buyers.  The situation consumed me for well over a month.  I literally spent every day looking for new solutions — and pushing forward with the multiple potential solutions we were working on.  Which we eventually did — at the 11th hour— thanks to a whole lot of work, a lot of thinking outside the box, and more than a few prayers.

So imagine my displeasure when, a few weeks later, I heard a radio commercial for a “discount” real estate company that said “Most houses sell within a couple of days.  Why pay an agent 6% for just a few days work?”

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The Saga of Sisters Seller and Cousin Realtor

The Saga of Sisters Seller and Cousin Realtor

So here I am at 35,000 feet, watching a People's Court marathon on my iPad.  Things have sure changed from the days of my full-time travel. Back in my day, we had nothing but bad food and in-flight magazines to keep us occupied. But now, thanks to the miracles of modern internet technology, I can watch a parade of disaffected roommates and former lovers hash out their differences on national television.

The last case caught my attention, though -- enough to motivate me to turn off the streaming and start writing.

It was the case of a young couple who were new homeowners. After they bought the house, they discovered that the fireplace was in dangerous condition and needed extensive work. The couple were irate.  The sellers had told them the fireplace was fine.  And instead it was very not-fine.  They had children -- children -- living in a house with a dangerous fireplace.  Someone had to pay.

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"I'm From the Government, and I'm Here to Help"

Ronald Reagan once said that the nine most terrifying words in the English language are “I’m from the government and I’m here to help.”

Lord knows I’m thankful that we have a government. But they’re about to “help” the real estate community in a way that is going to make closing on a house a lot more complicated for all of us.

On October 3, 2015, the new TILA-RESPA Integrated Disclosure rule (TRID), also called the “Know Before You Owe” rule, will go into effect for any real estate transaction involving a mortgage.  The rule consolidates four existing disclosure documents into two — a Loan Estimate (LE) and a Closing Document (CD). 

So far so good.

BUT . . . the Closing Document has to be delivered to the buyer three days before closing, so that he or she has adequate time to review it. Which all seems well and good. But it means that closing can’t happen until three days after underwriting has issued a “clear to close” and figures are finalized. Which means that buyers and sellers who would like to — or who need to — close sooner, can’t. Even if everyone is ready to go.

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Of Shake Roofs and Shady Vendors

I’m sorry you haven’t heard from me in a while. I’ve been busy — selling houses, of course. And trying to find houses for buyers. And moving my parents, which has served as ongoing reminder to me of what you all go through when you move. God bless you all!!

Today my office hosted a “round table” where we agents had the opportunity to spend a couple of hours firing questions at a panel of experts — plumbers, electricians, roofers, HVAC techs, etc. It was fascinating. And I learned a couple of things that I thought were worth passing on to you.

First: wood shake roofs. Anybody remember these? They were the bomb in the 1970’s. You saw them in all of the upscale neighborhoods. Having a shake roof became a status symbol.

Today, not so much. Turns out those wooden shingles are prone to catching fire. Who knew? Hence, they have been rapidly declining in popularity. In the past few years, I have been advising sellers with shake shingles that the roof will need to be replaced before closing, as more and more insurers are refusing to cover them, or insuring them only for their current value.  Which, given their age, generally comes to about a buck eighty nine.

 

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But Can I BUY in this Seller's Market?

All of my messages to you recently have been about what a great time it is to sell, and all of the multiple offers and over-asking contract prices and crazy crazy market.  Which is very encouraging for sellers, but could paint a discouraging picture for potential buyers.  After all, why even try when you’ll be competing against so many others?

Well, the truth is that I’ve had a fairly good run with buyers lately.  In the past couple of months I have placed offers for five buyers, and put four of them under contract — all winning in multiple bid situations.

So yes, it CAN be done!

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It Was a Very Good Year . . .

It Was a Very Good Year . . .

Happy 2014!

I didn't send a letter with my Christmas cards, because I figured nothing particularly interesting happened to me in 2013.  But now, sitting here in my office, I am realizing that 2013 was a very good year indeed, and that I owe you, my clients and friends, some big thanks for helping make it so very good!  

First things first:  As many of you know, the real estate market took a big hit in the years following the "Crash of '08."  Like many other agents, I have been rebuilding my business ever since.  And, thanks to an improving market, a lot of hard work and some really great clients, I am happy to report that, as of the end of 2013, I am once again eligible for RE/MAX's prestigious 100% Club.  And I couldn't have done it without you

It was a great year.  I had a lot of fun with a lot of great clients, buying and selling properties ranging in price from $107,000 to $1.2 million.  I appeared in a RE/MAX International agent training video.  I earned the designation Certified Negotiation Expert.  And, I being this year as RE/MAX Alliance's "Featured Agent of the Month."

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Agents Behaving Badly

 

I hate it when other real estate agents make us look bad.

When it comes to public trust and confidence, real estate agents rank somewhere toward the bottom, alongside used car salesmen and U.S. Congresspersons.  Which is unfortunate, because I have met so many really good, hardworking, ethical men and women in this business.

But then there are the agents who give all of us a bad name.

In this continuing seller’s market, the hot topic du jour in real estate ethics has been the issue of “coming soon” marketing.  Which can be either a really good thing that helps a seller get more money for a listing, or a really bad thing that puts the agent’s interests above the seller’s.

 Here’s the basic premise:  Especially in a seller’s market, wide exposure to the general public is the key to obtaining the maximum price for a home.  Simply, you want everybody who may have interest in the home to know it’s for sale, and to have the opportunity to see it and to make an offer.  The more offers, the better position the sellers are in to choose the one that best suits their needs."

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Why MB May Never Make the Big Time . . .

So apparently I have my priorities all mixed up.

I didn't realize this, of course, until I took a class in "Time Management for Real Estate Agents."  I knew I needed help with time management, but I didn't know how very wrong I've been for all of these years.

I heard a lot of stuff I expected to hear -- about how I need to block my time, and how I'm supposed to budget more time for "income generating" activities and less for "administrative" activities.  And I learned what "administrative" activities are.  They're things I could delegate to someone else.  You know, things like filing and scheduling and filling out paperwork.

And working with my current clients.

You see, once I've "hooked" you, once you go from being a "potential" client" to being a "current" client, working with you is no longer an income-generating activity.  Apparently, according to the Gurus of Real Estate Time Management, that money is already in the bank and I'm supposed to spending my precious time out there with the people I haven't yet convinced to work with me.  Or not work with me, depending on how I budget my time.  That, I was told, is why the really successful real estate professionals hire buyer's agents.  They delegate the task of shlepping buyers around to find their new homes, so they can spend that time chasing new clients.

And I'm thinking "So why did I bother getting into this business in the first place?"

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Hutchinson: Great Homes, Great Memories

I grew up in a Hutchinson.

Many of you who grew up in Denver are nodding.  For the rest of you, I’ll explain.

Hutchinson Homes built houses here in the Metro Denver area from the 1950’s until the early ‘80’s.  They built a lot of houses.  If you’ve spent any time in Denver at all, you’ve seen a Hutchinson.  They all look alike.  Two bedroom windows, front door, picture window, garage.  Mostly brick.  Garage may be one or two car.  Kind of like this:

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Own a Piece of Denver History

I just listed this beautiful Potter Highlands Victorian home. It was built in 1896, and it has been lovingly restored/remodeled in a way that combines historic charm with modern amenities. There's a large beautiful kitchen, a master with walk-in cedar closet and master bath with Italian marble, a cozy attic/loft, a finished basement, and a full carriage house/apartment in the back! Check it out here.

Even Within Denver, Some Areas Are Doing Better Than Others

I have a buyer who's trying to decide between Thornton and the northwest Denver Highlands area. Well, he's actually pretty well decided, but I did some research anyway, to demonstrate that all real estate is TRULY local, right down to the neighborhood. I checked sold statistics for each area over the past 12 months. What I found was fascinating.

Let's start with Thornton, a suburb north of town. I have other buyers under contract up there, and I've been amazed at how much house one can buy up there for around $200,000. No wonder. Prices have come down significantly. Over the past 12 months, the average home price in Thornton has decreased 7.7%, while the median price is down 5%.

Meanwhile, in the Highlands neighborhood, the average price is UP 17%, while the median is up 16%.

Of course, it's important to keep in mind that there is a lot of scraping going on in the Highlands neighborhood, which can skew the price statistics. If you scrape a $100,000 house and erect a $750,000 house in its place, the average sold price in the neighborhood is going to skyrocket, but it won't reflect the increase in value of the individual homes. So, since my buyer is looking in the 200K price range anyway, I searched the Highlands for sold properties under 300K, to eliminate the "scrape effect." And I still found that the average sold price was up 1.3%, while the median was up a whopping 14.3%.

So, what's a buyer to do? Well, if he needs a lot of house for the money, and plans to stay a while, and wants to take advantage of recent price drops, he might want to look at Thornton. However, if he's buying with resale in mind (and wants a very cute, charming area) he might want to stay in northwest Denver, knowing that it has held its value even in a declining market.

This kind of knowledge is important, not just for buyers, but for seller, and for everyone who owns a home or who follows the market. So often we hear news reports that say "Home values in Denver dropped x% over the past year" or even "Home values nationally dropped x%", and we automatically think "Well, what's x% of the value of my house? That must be how much value it has lost."

But it doesn't work that way. Not only are different cities appreciating and depreciating at different rates, but so are neighborhoods within those cities. Often values can shift fairly dramatically within a block or two. Even though a metro area (like Denver) may be depreciating, neighborhoods within that metro area can be appreciating -- sometimes significantly.

Location, location, location.

Is Now a Good Time to Buy?

In a word, “yes.” Now is most definitely a good time to buy real estate in Denver. I remember Denver’s real estate bust in the 1980’s. I wasn’t living here at the time, but I’d come home to visit and see that I could buy a condo in Denver for less than I paid for my car. (Well, less than the average person paid for the average car. I don’t think my ride at the time was worth a whole lot.) I, of course, had no interest in buying any of these bargain-basement condos because a) I didn’t live here, b) I had no money, and c) I naively assumed that their value would always remain low.

If I’d only known then what I know now. If I had scraped together every dime I had, bought one of those condos and rented it out, I’d be thanking my young self for it today.

Unfortunately, my crystal ball is in the shop, so I don’t know at the moment when housing values in Denver will start to climb. The market indicators show that we’ve reached the bottom. So it should happen sooner rather than later. I don’t know if the wider economic crisis will delay it. I do know that Denver’s economy frequently runs counter to the national economy. Given that interest rates are likely to remain low, and that Denver’s employment situation looks good, I have every reason to be optimistic about the Denver market.

So yes, I believe that this is an incredible time to buy. Market conditions have driven prices down in many areas. Housing is “on sale.”

Get in on the sale while you can.

The "Smart Money" is on the Denver market

Haven’t I been telling you that the Denver market was ready to turn around? The Wall Street Journal’s Smart Money magazine has confirmed it. In their November issue, they published their list of cities most likely to rebound. And guess which city was in the top seven? You guessed it. Our very own Denver.

According to the article:

Denver’s overall outlook is sunnier than for most western cities because neither inventory nor prices spiraled out of control during the boom. Dinged by a telecom bust earlier in the decade that cost the city 5 percent of its jobs, the local economy wasn’t primed for irrational exuberance. Now with six months’ worth of homes in inventory—the level most experts judge to be roughly in balance—the city offers considerable upside.

So why do we find this so hard to believe? The media tends to focus on national averages, which are dragged down by the hardest hit markets – Phoenix, Las Vegas, Miami, etc. These are the markets where prices spiraled out of control during the boom. If the four hardest-hit states – California, Arizona, Nevada and Florida – are taken out of the mix, the statistical picture for real estate looks much better.

Thinking of buying with no money down? Better hurry!!

So if you’ve been thinking about buying a house (condo, townhouse, duplex, etc.) but weren’t planning on putting any money down, the time to do that would be now. As in right now. Why? Because, according to the provisions of the “Housing Rescue Act”, no-down-payment loans will be disappearing. Actually, these types of loans have been gone for some time now, but there was a loophole.

Up until now, there have been a handful of loan programs in which a 3% down payment is required, but the seller has been allowed to make that down payment on behalf of the buyer. In other words, the seller credits that 3% of the sales price back to the buyer at closing, and means they need to borrow 3% less than the sales price, so that’s considered the down payment.

A lot of mortgage “hucksters” have been advertising recently that this is the last opportunity for buyers to take advantage of “free money.” But that’s a bit of a stretch. There is no such thing as “free money” in the real estate world. If a seller knows he is crediting 3% back to the buyer, he’s going to add that 3% to the lowest price he will accept for the house. Which essentially means that the seller tacks an extra 3% onto the price, and them gives it back to the buyer.

Of course, tacking 3% on to the price of the house doesn’t work so well if the price was already close to top dollar. I’ve had listings where buyers offered 3% more than asking price, in exchange for the down payment assistance. But we couldn’t do it because they property wouldn’t appraise for the additional 3%.

Nevertheless, these programs helped a lot of first time homebuyers. And as of October of this year, they are going away. Buyers will be required to bring their own money, not the sellers’, to the table for a down payment. And the FHA minimum down payment will increase from 3% to 3.5%.

So if you’ve been thinking of buying but don’t have the cash on hand to make a down payment, you will want to move ahead now. As in immediately. Obviously, you shouldn’t buy if you’re not financially prepared. But if you’re confident you can handle the payments and you want to buy with no money down, you’ll have to find and close your new home by the end of September.

That’s not a lot of time. But given the large inventory of houses, condos and townhomes on the market, and given how many of those are foreclosed or for some other reason vacant, closing a property by the end of September would be quire do-able.

And there are some danged good deals out there!!

Will the Housing Bill Rescue You?

Today, President Bush signed the “Housing Rescue Bill.” So it seemed like as good a time as any to learn about it. There’s a lot to it, and a lot of fine print. But a couple of things stood out to me, as someone who represents buyers and sellers here in the real world:

Foreclosure “rescue”: Homeowners facing foreclosure can refinance into low-cost fixed rate loans insured by FHA. But “can” is a tricky word. There are a lot of hoops to jump through first, and not everyone will be able to clear them. Homeowners must be spending at least 31% of their income on the mortgage. (Where do they come up with these numbers?) They must be able to prove that they can’t continue to make the payments. They must “retire” any second mortgages or lines of credit taken out against the home’s equity.

AND – here’s the biggest “but” – the new loan cannot exceed more than 95% of the current appraised value of the house. This is the whole reason homeowners are in trouble in the first place – their current mortgage balances are for more than the home is worth, and they don’t have the cash reserves to make up the difference. So if the new loan will be used to pay off the old loan and the new loan can only be up to 95% of the value, then the new loan won’t be enough to pay off the old loan. Which means the whole system will only work if banks are willing to accept less than the full value of the loans and “write off” the difference. I don’t know if government pressure will make them more likely to do that, but my experience with “short sales”, where the lender agrees to take less than the full balance when the home is sold, it won’t be easy. Short sales are notoriously difficult transactions.

Also, seller down-payment assistance will go away. There are several loan programs, including one FHA program, where the seller can contribute up to 3% of the buyer’s down payment. I’ve never been a huge fan of these programs, because what ends up happening is that the seller just adds 3% to the price they expect to get from the sale. But in today’s market, appraisals are a lot closer than they used to me. Adding 3% to the price can mean the house doesn’t appraise and the deal dies. That happened to one of my listings last spring.

Nevertheless, it seems like most first-time buyers these days – at least those in the lower price ranges -- are using these programs. On October 1st, when they’re no longer available, my guess is that a lot of those buyers will be looking to rent instead. Not only will they have to come up with the down payment money, but the amount required will go up from 3% of the purchase price to 3.5%.

That, of course, might be a good thing in terms of keeping people from buying homes when they can’t afford to buy homes. But I don’t see it doing anything to stimulate housing sales.

The flip side is that first time buyers will be eligible for a tax credit of 10% of the purchase price of their home, up to $7500. That sounds great, too, until you read the fine print. You don’t get to keep the money. It has to be paid back to the government, in equal payments over 15 years. It’s really more of a no-interest loan.

Buyers don’t get the credit until after they’ve purchased their homes, so it won’t go toward the purchase price. It’d be charming if they put it into an interest-bearing account or invested it or something, but most people will probably just spend it, and then face an extra $500 on their tax bill every year for the next 15 years. Of course, if they sell the home, they have to pay the remaining balance back in one lump sum. Which will make it even more difficult for them to break even if housing prices don’t rise.

There are other provisions, of course. A bail-out of Fannie Mae and Freddie Mac. Money for states to buy homes and fix them up for sale. Etc., etc.

As I read about this, my main thought was a) this is sort of ridiculously complicated, and b) what do these Congresspeople really know about real estate in the real world?

Whatever. They’ll keep passing laws, and we’ll keep selling houses.

Mary Beth: Senior Real Estate Specialist

I became a realtor right after I helped my parents move out of my childhood home. They had lived there for 40 years (almost to the day). They had reached a point where the house didn’t fit their needs any more. They wanted a new home with minimal maintenance. They didn’t want a condo or a townhouse or anywhere they had to share walls. They still wanted to have a yard. But they didn’t want to maintain it. I found the perfect place – a new patio home community where the HOA handles the yard work and shoveling. (In fact, I did such a good job finding them a home that I moved into the same neighborhood the next year!)

And then I spent two months helping them with the move. We prepared the old house for sale. We sorted through 40 years worth of belongings. We packed some of it. We gave some of it away. We sold a lot of it – in antique and “retro” shops on Broadway, on Craigslist, and finally at our family garage sale. (If there’s a way to sell or donate household items, I know about it now.) We made decisions and chose mortgages and I did everything I could do to make this really enormous transition easier for them.

And I enjoyed every minute of it. (Well, almost every minute!)

After that experience, I decided I’d like to have the opportunity to help other peoples’ parents the way I’d helped my own. I had learned so much, and I’d found it all so rewarding, that I wanted to do it again. (Well, okay, I wanted to do most of it again. The packing part I didn’t so much need to repeat!)

I got my real estate license six months later. And the first specialized designation I received was as a Senior Real Estate Specialist.

My dad served in Europe during World War II. My parents are part of the “Greatest Generation.” I really love working with that generation, our “seasoned citizens.” They’re straightforward. They look you in the eye. Their handshake is their word.

I have made a special effort, as a real estate agent, to learn a lot about the senior market. I know the types of housing available to them. (I’m a big fan of the patio home concept!) I know the programs available to them. And I know the unique challenges they face in transitioning from a home shared with a family to a home that fits their needs in their retirement years.

I’d like to help your parents the way I helped my own!