More Details on Home Buyer Tax Credit

As you may have heard, Congress did extend the $8000 first-time home buyer tax credit. They also allow the tax credit to be used at closing with an FHA loan! There are some income limits to qualify for the full tax credit.

Congress also opened the tax credit to repeat home buyers who've lived in their homes for 5 consecutive years of the 8 years prior to this purchase--up to $6500 for a primary residential purchase! And no, the old home doesn't have to be sold first. This among other quirks gives all home buyers a great potential bonus.

The deadline is purchasing a home between 6 November 2009 and 30 April 2010.

Get the full scoop here: http://www.federalhousingtaxcredit.com/faq2.php#

Consider how you or someone you know might you benefit. Feel free and email me with your questions at BethBakerOwens@comcast.net

Gardening for Colorado

Before the snows flew last week, I realized some of my plant choices have fared better than others this year. Do you notice the same thing? The dry extremes in temperatures make this a challenging climate for gardeners. Some gardners, like my friend Pete, are able to develop microclimates around his yard. His results are amazing. Mine are not so great. I'm forever looking for hardy plants that have year round appeal, low water needs, noninvasiveness, and insect resistance. Now, here is a resource for Colorado and other mountain and high plains gardeners. In a joint effort by the Denver Botanic Gardens, Colorado State University, and area horticulturists and nurseries, we have Plant Select. Check out the web site for durable and lovely plant suggestions, nurseries, and more. Or, if you like books with beautiful plants, especially for winter garden planning, consider their colorful volume with suggestions. You can order the book at the web site. This coming spring, ask your nursery if they have Plant Select varieties for you to consider adding to your garden.

http://www.plantselect.org/index.php

$8000 Tax Credit Extended?--It's TBD

Many people have asked me if news reports about the US Congress extending the $8000 tax credit for first time home buyers are true or not. The bill containing language to extend the $8000 first time home buyer tax credit is in the middle of the legislative process. Last Friday I received a request from NAR to send letters to my 2 Senators and US representative. That request was the clear sign that the final votes had not yet been taken.

Here's an excerpt from an email with a colleague who called Linda Goold at NAR, the National Asso of Realtors, for clarification.

"Linda Goold serves as the Director of Federal Tax Programs for the National Association of REALTORS® and works for the NAR in Washington, DC. She is an advocate for NAR tax policies that protect and enhance ownership and investment in both residential and commercial real estate.

The current news reports are misleading. Senate has agreed to the content of the home buyer tax credit extension with some modifications, BUT senate not taken vote on final passage. It will be GOING UP FOR VOTE MONDAY EVENING at 5:30pm. Then it would have to go back to the house, but expectation is that the House will take it up the next day and approve it without amendment, and then it will go to President.

When I asked how long it might take to go before the President, Linda said that sometimes it takes a while, and sometimes it will occur the next day – it has to be printed on parchment and go through an administrative process. This bill extension of home buyer tax credit is included in an extension of unemployment insurance benefits, which Linda says she has "to think the president will want to sign it as soon as possible. Hopefully it’ll be accomplished a week from now, but no guarantees.""

So, the extension is to be determined (TBD).

I'll let you know what the results are after the bill is signed and the dust settles.

Know How Real Estate in Your Neighborhood is Selling

Indeed the real estate market is changing again. The Denver and suburban neighborhood matters. So does the price range. Remember absorption rate? If there are <6>6 months supply, then we call is a buyer's market. In general, homes less than $210,000 with a absorption rate less than 3 months. These affordable homes have a strong seller's market due to decreased inventory and constant demand. Homes from $210,000-$315,000 have a fairly balanced inventory with the most volume and much pent up demand (an absorption rate of 5 months). Homes from $315,000-$460,000 have a slight buyer's market (an absorption rate of 8 months). Homes priced above $460,000 have a very strong buyer's market (an absorption rate of 20 months).
For the details of your specific neighborhood, just ask me for a quarter 3 2009 heat map. I'll email it to you free of charge.

Market Update for September

The entire MLS had a 5 month supply of homes on the market in September 2009, making it slightly a seller's market. 3,846 homes and condos sold in September out of 19,834 listings. An overall decrease in sales volume reflects the slow down in processing pending foreclosures by banks unwilling to flood the market and fewer homeowners choosing to sell in the depressed market. The 4.9% increase in average home sales price reflects the bidding wars in the least expensive neighborhoods, as prices begin to bounce up a bit in the SW and NE parts of the city. There is a strong sellers market in the lower end of the market that is pitting eager investors with first time home buyers trying to close before the Nov 30th deadline for the $8000 tax credit. Even where prices are slighty up, there is much ground to regain after the losses from recent years. Parts of the market that previously were resisting downward market forces (the upper end and certain neighborhoods) are now feeling the effect of distressed home sales (foreclosures and short sales). The upper end of the market is still depressed and has a strong buyers market. So, ask the most important question, "What is the market in my neighborhood?"

Do Homes Sell in Fall and Winter?

Colorado had snow last week and is having shorts weather this week. Fall is truly here. As is the perennial question I hear from folks about real estate, "Do homes sell in Fall and Winter?" The short answer is yes, at a slower rate. In the neighborhoods where investors reign king, the rate barely drops, except at year end. The peak of activity is still in early summer.

The more important question to answer for a savvy buyer or seller is, "What is going on in the neighborhood where I care about the real estate?" Looking at our latest heat map of neighborhoods in the Denver Metro area, I see several healthy neighborhoods, some beginning to feel the declines caused by distressed homes, many seeming to slow the descent or even turn around. The variation is really better measured on a neighborhood level. (If you want a copy of the heat map for your part of town, just contact me with your email and the address or neighborhood, so I can send you your map.)

Another valuable question to answer is, "How fast are homes selling in my area?" The adsorption rate quantifies this and is easy for anyone with the data to calculate. Adsorption rate is how many months it would take at this rate of sales to sell the current inventory. The number is described in terms of "months of supply". Ask your realtor for the adsorption rate. (Here's a more thurough explanation of adsorption rate.) If you're participating in a buyer's or a seller's market your strategy should shift.

There are some other important questions that are purely subjective. Questions around your ability to move, timing around other events in your life, your finances compared to what is needed in the market (a buyer and a seller consideration), and how you choose to position your home in the market as a seller all inform your decision to buy and/or sell.

For first time home buyers wanting to capture the $8000 tax credit, you have to get a home under contract to close by end of November. October is your time to snag the tax credit. Congress may or may not extend this savings.

First Time Homebuyer Beware

This reminder is timely and well worth considering:

Want the Home Buyer Tax Credit? Don’t Shop for Furniture
Dow Jones Newswires, By Dawn Wotapka
September 18, 2009

Excited to move into a new home, some of these first-timers start hitting the stores shopping for new furniture, appliances or curtains.

Big mistake.

Real estate agents are reminding buyers to wait until the close to start buying stuff.

The reason: Lenders are occasionally running credit reports on closing day, and they might not like to see an increase in credit card debt or indications that debt could soon increase, says Lew Reich, a Realtor with Keller Williams Realty in Plano, Texas.
Buying is off the table, but so is serious looking: Don’t even think about checking out that new car or boat because even an inquiry on a credit report might raise red flags. Too many inquiries, Mr. Reich adds, might be detrimental, particularly for those who just met the lender’s minimum requirements.

“If someone’s squeaking by and, all of a sudden, they may be looking at increasing debt, the lenders will have a keener eye in looking at your loan,” he says.

“Don’t look until you’ve closed is basically what it comes down to. That’s the safest way. Stay out of the stores.”

While such measures have been used over the years, lenders, still dealing with the fallout from the boom’s lax lending standards, are being especially particular these days. Even buyers with great credit scores face scrutiny.

Agents also advise not moving money between accounts, so don’t join two savings accounts, transfer large sums out of savings or add more funding to checking. Emptying out an account could look like money’s being spent, and lenders might request a paper trail for the money flow, Mr. Reich explains. That could delay the closing or, in rare cases, terminate the loan. That wouldn’t necessarily free the buyer from the obligation to buy the home, he warns.

Dan Rider, a broker with Dickson Realty in Reno, Nev., says one of his recent closings was delayed by five days when lenders spotted a $500 deposit in a buyer’s checking account. It wasn’t a gift – it was a repaid loan from her mother – but it sparked concerns that the buyer needed help to close the deal. Though the buyer had a healthy checking balance, the lender wanted canceled checks and bank statements and both parties had to write an explanatory letter.

“The simplest things can create fairly major delays,” Mr. Rider says, adding buyers could face financial penalties for late closings.

And of course, with the clock ticking on that tax credit, there’s also the penalty of missing out on eight grand.

Although, delayed buyers could still get lucky: A Senate bill introduced Thursday seeks to extend the credit for another six months.

What Do Buyers Want? 6 Keys

FREE Information Can Save Sellers Thousands, Frayed Tempers, and Lost Time



Many homeowners got caught in the shifting market when they tried unsuccessfully to sell their homes. Others just got "lucky" and sold their homes. But was it really luck? Before starting to sell, consider the six key reasons home buyers chose the homes they did buy in 2008. Put knowledge of their patterns to use for your benefit. The Denver real estate market is shifting again--in many neighborhoods the number of expired and withdrawn homes is dropping and the market is picking up. There is more to selling than just the price war and the beauty contest. Yes, these are 2 of the factors according to a recent National Association of Realtor (NAR) survey. What are the 4 other keys? How do Denver buyers compare to the national norms?

...Find out Denver Buyers' 6 keys to insure your success.

Attend either FREE class:

*Saturday 9/12 from 10am-noon at Your Castle Real Estate conference room, 9085 E Mineral Cir, Englewood, 80112

*Wednesday 9/23 from 6pm-8pm at Jefferson Co Asso. Realtor, 950 Wadsworth Blvd, Lakewood 80214

RSVP here to secure your free materials. For more information call Beth (303-962-4272 x626).

Fall Garden Prep

Here are Fall garden tips courtsey of John Tedrick, one of our trusted property inspectors at National Property Inspections. His regular newsletters are full of tips. Feel free to ask him for your free copy at npiweb.com/tedrick.

Fall is the time of year to prepare your garden for the winter months ahead. Here are some tips to help you with your winter garden prep.

• Bring tropical and other plants inside for the winter.

• Dig and store summer and fall-flowering bulbs.
• Avoid heavy pruning of trees and shrubs going into the winter months.
• Apply a layer of mulch about 2 to 4 inches deep to the floor of the garden.
• Apply mulch or a wrap around the base of bushes and trees to protect them from the cold temperatures.
• Rake up any leaves that may have already fallen.
• Turn off the water supply to your hose tap and irrigation systems.
• Winterize garden furniture if necessary.
• Fertilize to give your garden one last nutrition boost before winter.
• Empty out and bring in any pots that could break in cold temperatures.
• Plant spring-flowering bulbs with their roots down.
To find out more, visit HGTV.
back to the top

Awesome Loans for moderate Income Buyers

Colorado Housing Enterprises is a non profit organization that helps Coloradoans with low to moderate incomes get affordable home loans. CHE has partnered with Northern Trust and Key Bank to offer 2 remarkable loan programs for qualified buyers. The qualifications are not the usual set of crazily high hurdles that many buyers are finding elsewhere when looking for loans. Both loan programs are at low interest rates for 30-year fixed loans with minimal loan closing costs, have no mortgage insurance, and require low to no downpayments. If the highlights interest you and you wonder if you qualify, please contact George Apodaca at CHE to find out more details (720-542-6568 or george@crhdc.org). Tell him where you heard about these loans, please.

Northern Trust's Neighborhood Home Ownership Loan, originated by CHE:
*30-year fixed at a competetive interest rate (call for current rate)
*No Maximum loan amount
*97% Financing (loan to value)
*Combined Loan to Value cannot exceed 100%
*No Mortgage Insurance
*Ratios: 38/45
*Normal closing costs apply, less $1000 closing cost credit for attending Homebuyer Education Class (can be used towards closing costs (except for escrow and pre-paids, borrower is required to pay at the time of closing)
*No credit score required, but 3 sources of credit or alternative credit required.
*All collection accounts and derogatory accounts paid in full--no bad debt in the last 24 months
*Medical collections that have been satisfied need a letter of explanation
Restrictions:
*Must be owner-occupied, primary residence
*Annual Household Income not to exceed $60,800 or 80% of the Area Median Income (AMI) or home to be purchased is in a low-moderate census tract (as defined by HUD)
Upfront Costs:
*$25 for credit report to CHE
Other Considerations:
*Process for purchase can take up to 4-6 weeks from the time Northern Trust receives the purchase contract to closing
*Process for refinancing can take up to 6-8 weeks
*Cash-out refinance for home improvements only
*Student loans are considered in the debt ratio
Loan Fees (paid at closing):
*1% origination fee to CHE paid by Northern Trust
*Standard closing costs apply plus 3% down payment (CHE Down Payment Loan is an acceptable 2nd)
*Appraisal is paid at time of closing

Key Bank's Key Community Mortgage Loan, originated by CHE
*30-year fixed, below market interest rate (call for current rate)
*Up to 100% financing of purchase price with +620 credit score, 97% financing for 600-620 credit score
*No mortgage insurance nor mortgage insurance premium
*Collections and judgements must be resolved (no late payments in the most)
*Loan amount up to $250,000
*Annual household income not to exceed $60,800 or 80% of the Area Median Income (AMI) or home to be purchased is in a low-moderate census tract (as defined by HUD).
*Borrower cannot own any other property at the time of closing.
*Alternative credit is acceptable (3 trade lines plus VOR)
*Traditional credit--must show a minimum of 4 trade lines for at least 24 month age each.
*24-month history on rental is required (without late payments in the most recent 12 consecutive months)
Upfront Costs:
*$25 for credit report to CHE
*Once property is under contract, borrower pays $325 for appraisal and $11.75 for credit report to Key Bank
*NOT a refinance loan
Other Considerations:
*Process can take up to 45 days due to the underwriting process
*Seller contribution allowed up to 3%. Borrower needs to have at least $500 of their own funds to contribute (earnest money counts), and one month of reserves. Closing costs 3-5%.
*Funds required to close may be a grant, a gift from a family member, or provided through a down payment assistance program
*Borrower required to open a bank account with Key Bank with at least $50
*Borrower required to attend a CHFA approved Home Buyer Education class
Loan Fees (paid at closing):
*1% origination fee
*1% discount fee
*$300 application fee
*$90 recording fee
*Title insurance ($3.50/$1000 borrowed)

Please note that all loans are subject to the buyer's ability to meet the underwriting qualifications.

How do these loans compare to what you're finding?

Top 10 Home Staging Tips

Top 10 Home Staging Tips
By Stacey Davis

1. Curb Appeal: Capture potential buyers with a well maintained and inviting 1st impression. From the curb to the door inspect it all.

2. Appeal To All The Senses: Address any odor issues such as, pets, plants, and cooking. Clean and in some places replace problem areas

3. Ageless: By keeping things like appliances, carpet, and paint, buyers view the home as classic instead of “old”.

4. Lights!: Open the shades and turn on the lamps. They want to see what they are buying.

5. White Glove Clean: That means everything…cabinets, doors, baseboards, light switches, etc.

6. Be Ruthless: If you don’t use it, or love it, lose it. Clean out closets, cabinets, counters, and basements. Donate to local charities and receive tax deductions. Then you don’t have to move it.

7. Direct Traffic: Create clear traffic flow with proper furniture placement. Accentuate focal points with stylish accessories, and art.

8. Don’t Leave Them Guessing: Give valuable square footage a purpose. Buyers need to know how to use each room.

9. Fresh Flowers: People love them and remember them.

10. Great Photos: Over 80% of buyers shop online 1st. Have your home professionally staged and entice buyers from the first moment the see your home.

Enticing buyers and adding value to the home
REAL ESTATE STAGING & INTERIORS REDESIGN
303-842-1723
www.StacesSpaces.com

How Do Buyers Choose a Home

Recent NAR survey of home buyes nationwide indicates 7 key factors in chosing the home they bought

Remember the old joke? What are the 3 most important things in real estate? Location, location, location. Not much has changed, even with today's tech savvy buyers who have access to more data than ever before when scouting for their new home. Here are the top seven factors buyers stated they considered when choosing a new home in their recent purchase.

* 74% Neighborhood So yes, location makes a huge difference. To that end, how well are listing agents marketing the benefits of the neighborhood to prospective buyers? When you're buying, how would you describe the neighborhood where you want to live?
* 71% Price Of course, with the largest investment most people make in a lifetime, price matters. As neighborhoods are hammered by sales of distressed properties (short sales, foreclosures, REOs, HUDs, etc.) the average sales prices have decreased the past year or so. Still, in the Denver Metro market several neighborhoods are showing a stabalization of prices and a couple are even experiencing a slight increase in average sales prices!
* 34% Commute With gas prices bouncing around and people often working longer hours, the commute times are becoming an issue. Environmentally conscious people want to decrease their carbon footprint, so decreasing commute time is key to making that happen.
* 32% Schools Parents regularly state that good education is important to them for their children's future. Peceived quality of local schools and proximity to schools can be a huge factor in the decision of which neighborhoods to consider.
* 23% Nearby Friends and Family For many people, it is important to be close to family and friends. Whether it is to help a parent or child or be near like-minded people with whom you spend time, our closest relationships often guide where we consider living.
* 15% Recreation Whether it's proximity to the ball park or concerts or skiing, active adults choose to live where the living is convenient to their life style. People in the Denver Metro area enjoy many local and area parks, excellent recreation centers, professional and amateur sports teams, and commuity activities.
* 13% Shopping From convenient grocery shopping to easy access to boutiques or big box stores, like Costco or Home Depot, local shopping makes a difference for many home buyers. Several neighborhoods are known for their pedestrian-friendly shopping and restaurants which provide gathering places for neighbors.

Which of these do you think are most important to you?

What else was important to you when you bought your home?

I was wondering, how much of the marketing of your home addressed these items?

Let me know! Send your thoughts and comments to me at BethBakerOwens@comcast.net.

Title Insurance Class

If you'd like more detail and answers to questions about title insurance, consider attending a FREE class, Title 101, offered by Jerrold F Spaeth, the General Counsel at 1st Integrity Title, Wednesday, July 29, from 10-12am. Sign in here on my web site. One of the things to like about Your Castle Real Estate is the variety of classes offered to buyers, sellers, investors, and realtors alike!

Title Insurance Insurance Required

WHY?
Every real estate buyer expects to get a title that is free and clear. Lenders don't want to risk their first position to claim the title they're lending on in case of default. To make sure there is nothing to taint the title, all loans using the property as collateral and judgements against previous owners must be removed before the buyer can have a clean title. It could be an expensive, legal mess if someone showed up claiming a legal right to your new home!
WHAT?
Title insurance is one of those common closing costs you expect when buying and selling real estate or refinancing a loan. Lenders and informed buyers require a legal review of a property's chain of title to determine if there are any outstanding claims on the property or against the current owner (or previous claims against previous owners when they owned the property). So the title company researches public records for mortgages, secured lines of credit, possible judgements against the owners, similarly named people with judgements, unpaid taxes, mechanic's liens, easements, HOA rules and records, rights of way, and other items that could place a claim on the property being sold. Lenders require a policy to cover the value of the loan and buyers require a policy to cover the purchase price of the property. So, there are usually 2 policies written for each transaction. DORA (the Colorado Dept of Regulatory Agencies) has a more indepth explanation of title insurance at http://www.dora.state.co.us/pls/real/Ins_Survey_Reports.Report_Selection_Criteria?p_report_id=TITLE&p_label. The title commitments for each policy are delivered to the buyer and lender after the title transfer is recorded in the county where the property is located.
WHO PAYS & WHEN?
Title insurance is paid once, at closing. The fee covers costs of the title search, examination, policy writing and risk. By law, in Colorado, the buyer and seller can choose their own title insurer. Practically, however, since discounts are given when the same company provides the title insurance for the lender and for the buyer, usually only one company handles each transaction. Since most people deal with title insurance infrequently, it is customary for the realtor or lender to suggest a company. Further, in Colorado, it is usually the seller who chooses the company in a transaction, since they usually pay for the property title commitment-the more costly of the 2 policies written at closing. More importantly, a lender's policy has different provisions than a buyer's policy and is written more to assure the lender they have a valid first position claim against the property. Buyers want assurance that there is not and will not be any hinderance to transferring the title to them and that the transferred title will be marketable later.
HOW MUCH?
Each title insurer is required to post their rates. However, rates tell nothing about the closing services nor the depth of the coverage of the insurance policy. Rates are posted at http://www.dora.state.co.us/pls/real/Ins_Survey_Reports.Report_Selection_Criteria?p_report_id=TITLE&p_label .

There's much more to title insurance, so feel free to ask or comment.

Denver Real Estate News

Are you a real estate news junkie? Some of my readers are real estate insiders. This new venture may just give you the fix you need. Written by John Rebchook, former real estate reporter for the Rocky Mountain News, and Oliver Frascona, a well-known Colorado real estate attorney, the posts so far have been informative and spot on with timely information. Check it out, if you want the first scoop. www.insiderealestatenews.com
Recent articles include:
* Foreclosures subside, but job losses a worry
Denver-area foreclosures, growing like a cancer a for years, are showing some strong signs that they are receding. Go to Full Article
* Foreclosure investing hot
Outside investors with cash or lines of credit, are increasingly picking up foreclosed homes at public trustee auctions. Go to Full Article

New Colorado rules for CO detectors

Did you hear? As of July 1, 2009, carbon monoxide detectors with alarms are now required for homes that are for sale or rent in Colorado. You may remember the publicized CO deaths in the Lofgren family last November 2008 at a vacation home in Aspen and in the Johnson family last January 2009 of their daughter attending college in Denver. These deaths lead to the recent law (CRS 38-45) . Approved CO detectors need to be located within 15 feef of the entrance to all bedrooms. Also, in multi-family rentals, an approved CO detector needs to be within 25 feet of any fuel-fired heater, appliance, fireplace, or garage.

What makes a CO detector "approved"? It follows the Consumer Product Safety Commission (CPSC) standards. Read the label and look for: UL standard 2034 or IAS standard 6-96 .

How do you know it is working, since CO is a colorless, odorless, toxic gas? When installing it, of course, follow the manufacturer's instructions. Make sure an alarm is within 15 feet of each sleeping area and has a working battery or is tied into the home's electrical wiring. CO mixes with air, so the detector needs to be in the open and can be placed at any level. There is a test button, like those on a smoke detector, to make sure the alarm sounds when the circuit is closed. The CO detector works by closing the circuit and turning on the alarm when CO levels of a certain amount are present for a set amount of time. The amounts of CO are measured in parts per million (ppm). Below 70 ppm CO, most people don't have any symptoms. CO blocks the body's ability to use O2. The CDC has a good explanation of this. Symptoms of increasing CO poisoning include headaches, dizziness, fatigue, nausea, up to chest pain, unconsciousness, and death.

What do you do if the CO detector alarm sounds and you're not feeling the symptoms listed above? Open the windows, turn off the heater or whatever is burning fuel and call the qualified technician for that fuel burning device. If you're feeling the symptoms above when the alarm sounds, evacuate the house and call 911. The fire department has equipment to measure CO levels and can provide needed first aid.

Sellers, landlords, buyers, and renters have one more safety device to be aware of in their residences. Home sellers and landlords are to install these devices. Home buyers and renters need to check for these, as they would for smoke detectors. Distressed homes being sold "as-is" may not have CO detectors installed and may not have sellers who will/can install the detectors, so buyers be aware of that additional fixup the property will need.

New Financing Rules:HERA, HOEPA, HVCC

In 2008 the Congress, Fannie Mae and Freddie Mac put in place new sets of rules that affect home buyers and timelines for closing a home purchase. Buyers and sellers need to be aware of the provisions in these rules, so they can expect what will now be a reasonable time line and charging of fees. The goal of the efforts is to "provide a more transparent, level and fair regulation of the real estate industry; to add additional steps to help prevent deceptive lending practices; and to protect consumers by making them more informed--and therefore more confident--in their home financing choices."

HERA amends the Truth In Lending Act setting early and final receipt of the Truth In Lending disclosure part of the timeline for closing. It requires a 7 day review of initial mortgage disclosures before closing. Lenders must also provide a final Truth In Lending Disclosure to the homebuyer if the Annual Percentage Rate (APR) increases by more <0.125% at least 3 days prior to closing. Floating the interest rate on a loan can change the APR, so loan rate locks will be needed 10 days prior to closing. If this document is mailed by USPS, it is deemed received in three mail days (Mon-Sat). HERA also modifies when certain fees can be charged to homebuyers. The credit report fee may be collected by the lender up at first meeting. The appraisal fee may only be collected after the initial loan disclosures are received by the homebuyer. HERA is effective tomorrow, June 30, 2009.

HOEPA is the Home Ownership and Equity Protection Act.

HVCC is the Home Valuation Code of Conduct designed by Fannie Mae and Freddie Mac to shield appraisers from undue influence and require buyers get a copy of their appraisal no less than 3 days prior to closing the loan for the new home. A lender must now request the appraiser from an appraiser clearing house, cutting out direct communication between the lender and the appraiser. This middle man raises the cost of the appraisal, often increases the amount of time it takes for the appraisal to be completed, and makes it very difficult to question the appraiser's valuation. Further, either for quality control checks or if an appraisal is questioned, a second appraisal must be ordered. (This costs the homebuyer an additional appraisal fee.) The homebuyer must be provided with a copy of the appraisal at least 3 business days (Mon-Fri) prior to closing. HVCC went into effect May 1, 2009.

All together, the quickest a home purchase using a loan can close is 7 business days after having an accepted, executed offer. For most home purchases the appraisal fees will be more expensive and a standard closing will take a little longer--from a whole month to two months. (Remember FHA and VA loans close at the end of the month.)

Habitat for Humanity-Affordable Housing Option

Denver's need for affordable housing is as real as the need is elsewhere around the world. Studies show that affordable housing helps break some of the cycles of poverty. Children who grow up in homes owned by their parents do better in school, their families are more involved in the community and in the democratic process. These children are more likely to get better jobs, become homeowners, and stay off welfare when they grow up. Yet, it takes 2.5 minimum wage jobs ($38,000/year) for a family to afford the average rent in Denver! Section 8 rentals are one lower cost option for some families. So are some of the buyer assistance programs I've written about in earlier blogs. Still, for families earning less than $31,000 annually, more than 21,000 affordable units are needed for people who currently live in substandard housing. Imagine working 2.5 jobs and still having to live in substandard housing. When 33% or more of you income goes to lodging, there's not much left over for food and other living expenses. Since 1976 when Millard Fuller started Habitat for Humanity, there has been a growing force for giving hard working families a safe place to sleep and live. Habitat is addressing this need directly in 30 Colorado cities today. Around the world a new Habitat for Humanity home is completed every 21 minutes! Each home is soundly built with local supplies and in local styles.

Habitat for Humanity is very active in the Denver Metro area. Last Wednesday I was able to help with a day of labor on one of the local projects. This one is a modest duplex. The materials and labor for this home are all donated. It's not a "give away" however. After a rigorous selection process, the homeowners invest between $1200 and $1500 downpayment on the home. They then put in between 250 and 500 hours of labor in building their new home. They also take classes in home maintenance and agree to volunteer on other projects later. Once the home is complete, the family will be able to move in with a low interest mortgage that is set at 25% of their gross monthly income. Crews of volunteers from churches, businesses, and civic organizations are coordinated by local Habitat for Humanity coordinators. VistaCorps members direct and teach the volunteers who descend on the work site each day, putting them to task on whatever needs to be completed next. Licensed trades people do the technical work (plumbing, electrical, etc.). Quality building materials and standards are used throughout the building, so the end product is a safe, sound, energy efficient home. Green building products and methods are used in the home and during the building process. But, more on that later.

If you're interested in doing something about affordable housing and working with people who are dedicated to helping others help themselves, consider volunteering for Habitat for Humanity. I'm glad I did.

If you don't care to hammer, saw, and paint, perhaps you could donate furniture, old or unused building materials after a home project, or time to the local Habitat Outlet Store. Of course money donations are also accepted. If you care to make more quality housing affordable, Habitat will put to good use whatever you can give: time, talent, materials, or money.

MONTHLY MLS UPDATE

Good news in May 2009 for home and condo sellers around the Denver Metro area: 1 in 6 homes sold. Of the 20,734 active properties (single family homes and condos), last month 3,623 sold. Equally positive, we're seeing the expected seasonal increase in number of homes for sale and activity. This means overall we have an active and balanced market. The number of sellers and buyers is smaller by about 20% from this time last year. The average days on the market is 104 days, up a bit from this time last year. Even though May 2009's average sales price is up 4% from April 2009's average sales price, prices this year are down about 5% compared to prices last year in May 2008. Home sellers are still needing to compete in the beauty contest and price war to be chosen by today's buyers. Homebuyers are finding loans requirements more strick, fewer homes to choose from and stiff competition with investors for value-priced homes. Most of the changes are due to the number of foreclosed and short sale homes throughout the past couple of years. Hopefully, the number of foreslosed and short sale homes will continue to decrease as 2009 progresses, so our real estate sector of the economy can continue to recover. Since real estate is very local, much like our Colorado weather microclimates, contact me for the specifics in your neighborhood!

Should You Buy Now or Wait? 7 Home Buying Points to Consider

Should you buy your first home now or wait? The decision's best made by exploring your personal answers to the following 7 financial and emotional questions:
*Are you pre-approved for a mortgage you can live with? Even though loan requirements are tougher than they were a couple of years ago, there is money available for people with good credit and not too much debt. If you don't know, ask your Realtor for a qualified mortgage lender, so you can determine whether or not you can afford a mortgage. Real estate loan rates vary, so you want a fixed mortgage you can live with for the long term. A good mortgage lender will go over all the costs of owning a home with you (mortgage, taxes, insurance, mortgage insurance, and possible HOA costs). Did you realize that 30% of the homes in the US are paid off and have no mortgage? Further, did you know that 96.7% of the home mortgages in the US are NOT in foreclosure? The current instability discussed in our news is about less than 5% of US homeowners.
*Do you have your down payment money saved? You will need about 3.5% of the purchase price for the lowest down payment loan out there, an FHA loan. That's $5250 for a $150,000 home. If you can put 20% down, you'll avoid mortgage insurance and save yourself that monthly expense. That's $30,000 on a $150,000 home.
*Are you ready to start building your own wealth rather than your landlord's? Over time real estate is less volatile than stocks. Using US Census data from 2005, a home worth $18,000 in 1963 was worth $226,933 in 2005 and if the homeowner didn't keep refinancing it past the normal 30 year mortgage term, it had been paid off for 8 years! Real estate has a better return than savings accounts, as you know. The Federal Reserve Board estimates that homeowners' net worth has ranged between 31 and 46 times more than that of renters in the years 1998 to 2007! The combination of increased home value over time and paying off your loan builds your wealth in the long run.
*Do you want a place to call your own? Do you want to choose your own colors and finishes? Have pets? Take pride in your home? Have a yard? Work on your projects? Have your own space?
*Do you want the $8000 tax credit? The US government is giving up to $8000 to first time homebuyers who close their transaction before December 1, 2009. Since the money can be claimed against your 2008 taxes this year as soon as you've closed, you can have that money this year! There are income limits, so check out the details.
*Do you want to pay more for a mortgage when the rates go up further? For the past few years mortagage interest rates have been kept artifically low. Just last week rates burbled up about 0.25% of a point. If bond prices continue to fall, the interest rates will rise. Right now interest rates are hovering near the 40-year lows.
*Do you want a bargain? Prices have softened all over. Homes are more affordable than at any time since NAR started tracking this number! While the supply has decreased a bit this quarter, there are still more homes to choose from than there are buyers in many segments of the market. Ask your Realtor for specific details in the neighborhoods where you want to live. Find out what is available in your price range.

So what are your answers to the 7 questions above? Is now your time to buy? Let me know what questions you have and how I can help you with this important decision.

WOHA! Tax credit available AFTER closing.

You're planning to use the $8000 tax credit for your home purchase. Just when can you get that money? I published earlier that Donovon wanted to make the first time home buyer tax credit available as funds for closing. No one has figured out how to do that. Here's the lastest from a lender I've worked with whose +20 years of experience in working with first time homebuyers makes her a very reliable source!

http://www.lendingahand.com/2009/05/tax-credit-for-down-payment/

In a nutshell, count on the money after closing and filing the amendment to your taxes.

Job Hunting? Stand out from the crowd.

Can you relate? Every week, when I'm calling past clients and friends, I hear about another person who is un- or under-employed and looking for a new job. What makes it possible to stand out from the crowd that's job hunting?



Pat and Sandy Padbury, past clients of mine, have put their years of experience getting jobs for professionals into a format that today's job seekers can use to successfully get employment! Here's their information:




Reachmycoach.com Inc. was created for one reason:
Help people find employment!!

This “How to” Marketing Program was developed after Training and Coaching Headhunters, Executive Recruiters, Staffing and Consulting organizations throughout the United States for over 30 years. It is now available just for you; starting with a Confidential One Hour Telephone Session rewriting your Resume, developing a personal 10/13-second (Telephone & Email) presentation to employers and later sending you our Non-Aggressive Coaching Manual and Interviewing Program.


Before you begin, understand these techniques have been “field tested” with many Companies and individuals (Testimonials below). You must follow each and every STEP in order to increase your odds of success. This program or methodology cannot be “skipped, changed or modified.”



Stand out, don’t be like everyone else!!

TULSA, OKLAHOMA- Senior Operations, Production, Reservoir Engineer
“I really liked what you did and the format is excellent! Thank you very much! I did receive the “coaching” manual and the intro templates-very nice! Here we go!
I am very impressed with your system and approach! Good Job! Steve

KNOXVILLE, TENNESSEE-John F. Yu, President, Technical Staffing
“Your ideas are on the leading edge of technology for the industry and yet simple to implement. You allowed for individuality to prevail while creating an environment where your techniques can be successful for anyone who commits to embracing them.”

DENVER, COLORADO-David Perry, President, Momentum Resources, Inc.
"If you are seeking expert advice about what really works in our industry, from a nationally recognized specialist, don't delay in calling. I have found Reachmycoach to be through, knowledgeable and painfully honest."

DENVER, COLORADO-P. Heatherington, Manager, Oppenheimer Funds
“I consider you a wonderful leader! Hope you don’t mind, I told my students at the University of Denver about your interviewing strategy. If there is anything I can help you with, please don’t hesitate to let me know.”

Contact: (303) 922-9379 or ppadbury_1@msn.com - ask for Sandy

2008-2009

Smart Homeowner Videos by David Bach

Want some advice from a real financial advisor with a proven track record. See and hear David Bach share tips on buying and selling homes. Let me know what YOU think!

What About Loans for Homes above $450K?

A friend was wondering about loans for larger homes...When researching what loans are available for homes above conforming limits (any loans above $417,000 per Fannie Mae requirements), I found the rate and closing costs are higher than for conforming loans, but the money is still available.

Here is the scoop, per one of my favorite lenders, Bernie Zanoni of Briston Capital Mortgage:
There are only a few lenders willing to lend above the conforming limits. So we have higher interest rates and higher closing costs on the now tougher to get jumbo loans. So here it is in a nut shell - 10% down on loan limits up to $650k and the rate is a couple of points higher than conforming loans on a 30 year fixed loan with 5 points up front! The next best loan is a 20% down jumbo loan up to 1 million with rates a couple of points higher than conforming loans with regular closing costs and just 1% origination. (Lower costs for more money down...)

So here is the best way to work with things. For 15% down you can use a 1st mortgage up to 417k and use a 2nd mortgage for the balance. Both of these rates would be on the higher range or normal conforming loans. This combination would have normal closing costs and only 1% origination fee on each of the loans. There is a cap on the max loan amount of the 2nd mortgage (HELOC) of $250k depending on credit.

If you want more details, let me know and I'll put you in touch with Bernie!

Denver Identified as top city in US for Recovery

Great news for our Denver Metro area from the Today Show's real estate analyst. We're in the trough and on our way out. How fast will vary from neighborhood to neighborhood since a recent increase in the number of bpo (broker price opinions) indicates we still have many distressed homes in the market.

Use First Time Homebuyer Tax Credit for Down Payment

Tax Credit Can Be Used For Down Payment.


Tax Credit Can Be Used for Down Payment
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change. "We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment," Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..He says FHA's approved lenders will be permitted to "monetize" the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.Other Solutions for Today's MarketDuring his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. "I do think we have some early signs that the market overall is stabilizing," Donovan says. "Since January we've seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate."The morning session included a panel discussion that was moderated by CNBC's Ron Insana. Panelists examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation's taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort. "Right now the Federal Reserve is the market," said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. "What will be the effect when the Fed stops buying?" Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely."We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy," said NAR President Charles McMillan. "We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond."The real estate summit is part of the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo. During the week ending May 16, more than 8,500 REALTORS® will attend meetings, visit lawmakers and inspire action on Capitol Hill.

Source: NAR

For first time homebuyers we have an unprecedented government gift! This means FHA borrowers will have a zero down loan in effect! Exactly when you'll be able to use it is not clear. Now that the announcement has been made, the institutions and government need to work out the specific way to transfer money at closing from the government to your closing! What we do know is you must close on your new home before 1 Dec 2009!

Feel free to call me for more information and details on how you or someone you know can benefit!

The Buying Process, part 4

First, you started with saving and figuring out your better loan options (in the first installment ). Next, you proceeded in your home search with the aid of a professional realtor (in the second installment). Then, you and your realtor wrote and negotiated an offer on your first choice and went through the due diligence to make sure the home would work for you (in the third installment). In some states a lawyer is also used for preparing the contracts. Since loans and property ownership have tax and legal requirements, you may consider including your tax accountant and your lawyer when evaluating offers and what's required of you after you purchase a specific property. When in doubt, ask and check it out! After all this work, you're satisfied this is will be your home. You're ready to close the sale and move!

11. Reserve the movers or a truck.
Try to do this as early as possible. Make sure you won't be charged if something happens at the last minute to delay the moving date. Since the end of the month is the busiest time for truck rentals, schedule early! Whether you're moving across the street or across the country, it's labor intensive. For moves that involve a delay where your goods need to be stored, consider the moving boxes that you pack yourself. PODS is a company our clients have used successfully. My clients get a discount when using PODS, so remember to ask your realtor about promotional discounts they may have for their clients. Many of our clients have used the Moving Coach to get competetive bids for longer moves. We have discounts for our clients here, too. Here's a timeline for your move. When packing, consider this is an excellent time to purge and give away things you no longer need. There are some items movers don't transport, so review these packing tips.

12. Contact your insurance agent.
Have you heard that being a homeowner can result in discounts for your other insurances, like car insurance? Ask your insurance agent for a quote that includes your new home and your other posessions. Your realtor will also know some good insurance agents, so you can get a couple of reliable quotes to compare. Your lender will need to know who your insurance agent is shortly after you have finished the home inspection, because the lending institution will require that your first year of homeowner's insurance is paid at time of closing.

13. Contact the utility companies to change your service locations.
No doubt you've already determined whether or not the cable/internet/power/water/trash utilities and services that you need are available where you're buying. (Yes, some people are off grid and not every location has the same services!) You need to put a change/cancellation order into your current utilities for the day you're moving. For the home you're buying, you need to put in a change/setup order, too. Ask your realtor what utilities you're responsible for in your new home. Your realtor will also have the names of utility and service providers in the area. Many people who work out of a home office will need to setup their internet service as soon as they know when they'll be given posession at the new home. For brand new homes, phone service can take a long time to set up, so start early on this.

14. Contact the post office for change of address.
You can either fill out the change of address form at your post office or do so on-line. Also, for any magazines, periodicals and regular bills you receive by mail, you'l want to submit a change of address with them before you move.

15. Gather materials for the buyer of your home.
If you're selling your current home, gather warranties, receipts for appliances and major home repairs, HOA newsletters, names of neighbors, trash day, service providers, and any other materials you feel would help the new owner in the future. Put them in a kitchen drawer or bring them to closing on your the house you're selling.

16. Close the transaction.
A day or so before closing, your should receive the buyer settlement sheet or a copy of the HUD. These documents show your closing and loan expenses and what money you need to bring to closing. Your realtor will review this document with you before closing. When you compare the loan closing costs to your good faith estimate, there should be no surprising expenses. Under Colorado law, you must bring good funds (cash, wire transfer, or cashier's check) to closing. Title companies have tightened up the requirements even more. For cash transactions, they are requiring the funds be wired to closing from your bank to the title company's bank. (Have your realtor get the routing instructions for you.) For all other transactions, a cashier's or bank check will also provide the good funds. Days of bringing cash to closing are over. Lately, some lenders have been slow to get the loan figures, documents, and funding wire to the title company. A delay in any of these can delay your closing date and posession of your new home. Have the good funds ready for closing and keep in touch with your lender this last couple of days before closing.

By the contract you will also be given the right to have a final walk-through of the property. This allows you to verify the condition of the property before closing and work that was supposed to be completed before closing was indeed done.

Along with the good funds (money), bring a photo ID (a drivers license or passport will do). Some of the real estate and loan documents that you'll be signing must be notarized. You will sign all the paperwork required to transfer the real estate over to your name (called the warranty deed) and all the loan documents to put the loan into your name and make it secured to your new home (called the deed of trust). While the closing can seem a daunting task, the escrow officer at the title company and your realtor can explain the steps along the way. Expect your lender to go over figures with you before closing, too. In some states your lawyer will be preparing your documents and going over them with you. Be sure the loan and property are what you were expecting. Once you sign the papers, it's yours. Keep your paperwork for at least 7 years. You will want to reference them at tax time. The 2008-9 tax credit has specific requirements, and can be applied THIS YEAR in an amendment on your taxes! Congratulations!

17. Move and clean.
In some cases, you'll get the keys to the property at closing, upon delivery of deed (dod). In Colorado, it's standard to get posession from 24-48 hours after closing, if the seller needs to move out and you negotiate that transfer for after closing in your offer. It's also standard that you'll leave your current residence in broom clean condition (per your lease or selling contract). So plan on some time to clean up after the movers are done. You can expect the same for the home you're buying. Some people prefer to have a thurough cleaning before moving in. Your realtor will know some dependable house cleaners, if you want to get help with this task.

18. Settle in.
Congratulations! You're in your new home and ready to get settled. The hubbub of moving often draws out the neighbors. Make time to say, "Hi, what do you like most about this neighborhood?" This will give you a talking point when you see them again and fill you in on good things to look forward to after the boxes are put away. Feel free to contact your realtor with questions you have as you get settled.

First Time Homebuyer Tax Credit 2008 and 2009

So you're wondering whether or not you can get this $8000 tax credit. Do you qualify as a first time homebuyer, if you've not been paying a home mortgage for 3 or more years? How does this tax credit differ from what was offered last year? Consider speaking with your tax accountant about how this tax credit may or may not benefit you.

There is a table that summarizes both the 2008 and 2009 tax credit details. The tax credit is only good for a homebuyer's primary residence (no investments nor second homes). A first time homebuyer is someone who has not been paying a mortgage on their primary residence for the previous three years nor has been married to someone who is paying a mortgage for their primary residence during the previous three years. People earning less than $75,000/single person or $150,000/joint tax return couple are elibigle. The benefits phase out for singles earning up to $95,000 and couples earning up to $170,000.

In a nutshell, for April 9-Dec 31, 2008 buyers, the credit is really a loan. The maximum a homebuyer can get is 10% of the home price, up to $7500. Then, from 2010-2025 the homeowner will pay back a prescribed portion of the credit in their taxes. If the 2008 homebuyer sells the home before 2025, the unpaid balance of the benefit must be paid back then. If the 2008 homebuyer got help with bond money to pay the downpayment or loan closing costs, then they do not qualify for the tax credit.

Changes for homebuyers from Jan 1-Nov 30, 2009 remove the annual payback requirement, increase the maximum amount to $8000, allow homebuyers using bond money to qualify for the tax credit. But, if the 2009 homebuyer sells the home within 3 years, then the full tax benefit is due back to the government, "recaptured", at time of sale. So if 2009 homebuyers stay put for 3+ years, they don't have to pay back the amount! If the do move earlier, they have an additional payoff to cover.

Furthermore, did you realize that whether you are applying for the 2008 or 2009 tax credit, you can file an amendment to your taxes now? That's right, people purchasing from Jan 1-Dec 1 2009 may claim the tax credit THIS YEAR! The tax form to fill out is simple, but you would be wise to verify with your accountant exactly how this benefit will impact you.

Call Beth at 303-796-1238, if you wonder how to make this work for you.

Homebuyer Assistance Still Available

Several people have asked me lately whether or not they can qualify for the $8000 first time homebuyer tax credit. Many buyers are wondering how much money they need to purchase a home. Where are those buyer assistance programs that were available?

First, the tax credit is summarized best on this site. First, make sure you qualify to get a home mortgage. Then, if you have not been paying a mortgage (or married to someone who has) for the past 3 years you may qualify. There are also time and income limits to this program.

Next, there are local bond programs with home buyer assistance. Not all programs are for first time home buyers. Most however have income limits and other restricitons, like where you live or work or that you own no investment properties or that this only be applied to your primary residence. In the Denver Metro area here are some programs to check out:
CHAC for people purchasing their primary residence all over Colorado
CHFA for people purchasing their primary residence all over Colorado
Douglas County Housing Partnership for people living or working in Douglas County when purchasing their primary residence
NEWSED for people living in Denver County when purchasing their primary residence
FUNDING PARTNERS with a variety of banks and programs throughout Colorado
HOAP for Aurora's first time home buyers and seniors choosing a reverse mortgage

Since these programs have very specific restricitons and requirements, I usually bring in experts on buyer assistance programs, Cindy Howeth and Scott Wynn of First Priority Lending.
When you think you might qualify for these programs, and have questions, they're great trusted advisors.

If you wonder how the Homebuyer Assistance fits into the process of buying a home, call me. For over a decade I've helped people purchase homes through buyer assistance programs.

The Buying Process, part 3

In the first installment you read about how much money to save and choosing a lender and the best kind of loan for your financial goals. In the second installment, last week, you read about choosing a Realtor and your home search. This week, in the third installment, you'll read about writing, negotiating, and due diligence for your offer.

8. Decide which home you want and what's a fair value for it. In your home buying process you'll have the opportunity to consider many homes as you find the best fit for you. When you know the market and yourself well, finding a home can take only a couple of weeks! Once you've identified "your home", you and your Realtor will write an offer for that home. Consider carefully how you want to negotiate for the home. Investors calculate the ROI (return on investment) over the period they intend to hold the property with little concern for the emotional value of the property, since they seldom live in the property and don't emotionally bond to the property and area. A rule of thumb is that they need to purchase the home at a price below market value to make the profit they expect. Is your home purchase simply a real estate investment or more? Your realtor can show you the data your lender's appraiser will use when determining a fair market value for the property. You don't want to overpay nor will the seller be wanting to undersell the property. Every contract includes: people, property, price, terms (inclusions, dates, contingencies, who pays for closing costs, etc.), and consideration (earnest money). When purchasing a home FSBO, for sale by owner, the offer will also include who pays your realtor and how much that will be. (As you know, realtors using the mls advertise coops for agents bringing them a buyer. This means when purchasing a home in mls you, the buyer, don't have to pay your realtor's commission at closing-the seller does!) Your offer will include a check for earnest money. This check will be cashed and put into a trust account until the contract closes or is terminated.

9. Know your timeline and due diligence rights and responsibilities.
In a normal sale you'll have several dates tied to investigations you may perform to make sure the property fits what you want and can live with after closing. This is called your due diligence. It includes:
Title investigations-Research on the title to the property and any related liens, judgements, or deficiencies is done by the title company and delivered to you, the buyer. Read your title commitment and ask questions if something is not clear to you. It is a summary of the recorded legal documents linked to the property. On some occasions a real estate lawyer is needed to clarify title questions. A seller must clear the title of all encumbrances (liens or judgements) before s/he can transfer title to a buyer at closing. You may have something show up on you, too, during the title search. If so, you will need to "cure" the title by proving the person is not you or by paying the judgement and documenting the payment before closing.
Inspections-Every buyer should perform a property inspection to verify s/he knows the state of the property and its improvements. Consider paying a licensed inspector (about $250-$400) for a home inspection. If your property has severe or specific problems/concerns, then consider having these evaluated as well (some common areas investigated further are the roof, sewer line, animals or insects, environmental issues like radon, mold or methamphetamine lab organic levels, structure, electrical, furnace, plumbing, septic, well, plants, zoning, building permits and codes, etc.). This is the most common area when "round 2" of negotiations takes place over what to repair and how.
Survey-Have a surveyor determine the boundaries and easements on your property, so you don't have problems later with building or neighbors (about $250-$350).
HOA investigation-Read any covenants, HOA meeting minutes and financials, so you know you'll be ok living with this very local governance that can put liens on your property if you don't pay the HOA dues or fines.
Appraisal-Your lender will set up an appraisal for the bank lending you money to verify the home is worth at least the purchase price. You don't have any work to do here. You'll make a check to your lender for the appraisal at the time you complete your loan application. You should get a copy of the appraisal at or just after closing, since you've paid for it.
Loan Conditions-Most loans today require full documentation of your finances. Provide the documentation your lender requests as quickly as possible. Since the underwriting guidelines on loans are changing, don't be surprised if there are some last minute requests from your lender. Remember to refrain from any credit purchases or changes until after you've closed on your home purchase. Sadly, some people who have bought things before closing changed their FICO score or debt/income ratios and lost the loan for the home they intended to buy. They sometimes lost their earnest money, too!

10. Some special sellers have additional requirements.
If you're buying property at an auction, know the specific rules of the auction before you go! Know ahead of time what you expect to pay in fix up costs and set the top price you'll pay. Most purchase contracts at auctions do not include an inspection clause or any due diligence, so you'll have to have already inspected the property as much possible earlier. The title is supposed to be preevaluated for any liens and deficiencies. Do your homework, too! Ask your realtor to recommend a title company to work with you on this title investigation before the auction! There will be a cost associated with that title report (each title company sets their own prices for that). Also, ask your realtor what other due diligence may be advisable to consider when purchasing a property. For most auctions, remember the price you bid is not the full price you pay. The auction rules will specify what percentage on top of the price you bid, you, the buyer, will pay for commissions to the auction house and to your agent. Some auction rules also require certified funds for the full amount to purchase if you have the highest/best bid, so plan ahead accordingly. More about auctions later...

In a sale where a bank is involved as the seller (short sale, preforeclosure, foreclosure, lender owned, HUD) expect the timeline until acceptance to be long. When you write the offer on a bank property no one knows exactly when the bank will agree to/counter your offer, so dates can be written using "x days + mec" (mec is mutual execution of contract by all parties). These bank offers can take from 30-180 days for mec! Colorado has a short sale addendum you should include if the home you want to buy is a short sale. (A short sale is one where the bank(s) the sellers used will be shorted funds at closing. Since the banks have to determine how much of a loss they can absorb, it takes time for them to respond. A short sale often happens because home prices fell below the amount of the loans on the home.) Few buyers have the patience to wait for bank short sale processes, so listing agents will gather many offers on a short sale, hoping one will still be in place to close when the bank's processes are complete! Sometimes a buyer's offer is too low for the bank to accept, so a backup offer gets a chance to buy! Sometimes the bank's counterproposal is unacceptable to the sellers on a short sale and the home then is foreclosed on. Banks also have their own addenda that are attached to any contract they accept. Often these addenda include an "as-is, where-is" clause. This spells out what inspections are or are not allowed; how the home can or cannot be dewinterized and who pays for this; what the bank will or will not do if the buyer is not satisfied with the inspection results; how funds will be delivered at closing; whether or not the bank will pay for buyer loan closing costs; etc.

Getting from the offer you've written to the closing table is quite a process. Even in smooth transactions, there are a couple of things that must be completed on time and to everyone's satisfaction. Work closely with your realtor and you'll be able to be confident that you're buying a home that will work well for you from day 1.

Next week, the closing process...

The Buying Process, part 2

Picking up from the first part which discussed financing, the next steps are about using the right Realtor for looking at homes.



4. Choose your Realtor, if you haven't already.
Yes, this was in step 2, and reality is many buyers don't ask a Realtor about financing, because they're not wanting to commit yet. Since the home you purchase is likely to be where you'll be for the next 10 or so years, your choice of Realtor matters. The Home Buyer Bill of Rights sets forth reasonable expectations for you. You deserve a person who listens and will take the time to understand what you want and need. Ask if your Realtor has earned the Acredited Buyer Representative (ABR) designation. To become an ABR, an agent must study buyer representation and services. They demonstrate success working with a number of buyers. And they continue learning and improving their ability to serve you, their home buying client. You hear our real estate market and loan market are in flux. Choose a professional who can guide you well despite the changing markets! Ask your ABR about your FREE Homebuyers Tool Kit, too!

5. Meet with your Realtor to discuss what you want and create a wish list.
Your Realtor should be able to find out what style of home and which locations best fit your needs from an in-depth interview. Sometimes you know exactly what you want and that it's available! And sometimes, if this is your first home or if you are undecided about what you want, a quick tour of five or six different types of homes can help you clarify your thoughts. Some agents say that buyers are liars. Not so in my experience! I've found most buyers are learners-of what they really want, consciously and unconsciously, in a home. This learning is a process for most buyers, so what you want will become clearer as you work through the process of finding your right home in this market.

6. Review the homes your Realtor previews and suggests for you to view.
Based on your interview, your Realtor can look at all the homes in the marketplace and select the homes for you to consider. Our great computer search and on-line tools include arial views and neighborhood information. Expect to get updates as new homes come on the market that fit your general parameters. You can screen what you're most interested in seeing, too. With so much inventory available, it is important to focus. The homes your agent suggests will fit your parameters of quality and be priced at fair market value or lower. A good Realtor will not show you overpriced homes. A good Realtor will also make suggestions of properties that may not fit your initial search, but may fit your desired outcomes.

7. View the best homes with your Realtor.
Set aside three to five hours for a tour of the best homes available. Consider different neighborhoods that meet your wish list. You should feel comfortable selecting one of the top homes you tour to buy and should be prepared to do so. Often buyers find their best home early in their search. In some price ranges and neighborhoods the market has shifted from a buyer's market to a seller's market. Discuss the market where you're looking with your agent, so you don't lose out on getting the right bargain nor move too quickly when deciding! Homes for sale today include traditional sellers, banks, short sales, foreclosed properties, auctions, for sale by owner sellers, lease-purchases, and exchanges. Your agent can help you determine what homes best fit your needs and how the purchase process works for each kind.



Coming next week, placing and offer and negotiating. Click here for Part 3, and Part 4.

Absorption Rate-What does it Mean?

In this changing market, some tools remain for evaluating an area. Read on to better understand the tool we call Absorption Rate.

Real estate methodology has changed over the years. In the “old days” title to property was executed via an abstract. An abstract for a property was like a Cliff Notes version of War and Peace. It was a written record of who owned the property, when they owned it and what was being transferred. Each abstract was a brief history of a variety of people’s lives at it related to a specific property. As ownership of a property changed, the abstract was passed onto the new owner. Then title insurance became more prevalent and abstracts eventually followed the path of the dinosaurs and slowly became extinct.
In a similar vein, the marketing of real estate has experienced a shift in perspective over time. Historically, the three words that characterized real estate were Location! Location! Location! You had your condition and financing, but location ruled supreme in the mind of the consumer. Today, location continues to be a critical element in making a final decision whether or not to purchase a particular property, but location has more to do with emotional appeal and the value aspect of a property.
From a factual standpoint, the two most important words in real estate today may be Absorption Rate! The dictionary defines absorption as to “take in and make part of an existent whole”. In real estate terms it could be defined as “taking in homes for sale and making them part of the inventory of sold properties”. The word rate then represents the amount of time at which absorption occurs.
If one were to analyze specific neighborhoods, communities or geographic areas, the Absorption Rate could be determined for both today and the past. By going through this process, it could be established if the real estate market in those areas is up, down or flat. We use this data to tell if an area has a hot market. The same can be said on a larger scale when looking at the entire real estate market. The National Association of Realtors (NAR) uses Absorption rate to determine whether the market is a buyers' market, a sellers' market or balanced. A balanced market has a 6.0 month absorption rate. Anything higher is a buyers' market. Anything lower is a sellers' market. Please remember that real estate is local, so even within an MLS area, some neighborhoods may be selling like hot cakes while others not so quickly. For neighborhood specific data, ask me or your agent for the latest data!
Therefore, below is a brief overview of listings and sales through February of each year for single family homes in the Metro Denver real estate market. All information is from Metrolist, the area Multiple Listing Service. It shows that we are again near a balance in the overall market.


Active Listings Sales Absorption
Year Listings % Change Sales % Change Rate *
2004 2008 --------- 577 --------- ----------------
2005 1780 -13% 549 - 5% 6.4 Months
2006 2157 +21% 603 +10% 7.0 Months
2007 2211 + 3% 651 + 8% 6.7 Months
2008 2548 +15% 597 - 9% 8.4 Months
2009 1848 -38% 570 - 5% 6.4 Months

· Absorption Rate: Assuming sales activity would remain the same, and no new listings were to come into the market, this is the number of months it would take to “absorb” i.e. sell the entire inventory of new listings for each year.

Obama's Loan Restructuring Policy

Here's the scoop from CNN on the government's program for homeowners who want to renegotiate their home loans to be able to save their homes from foreclosure. Obama's loan restructuring policy begins with home owners contacting their lenders. Lenders just got the program specifics last Wednesday, so will take some time getting up to speed. Be persistant and patient...If you need a current home market valuation, just call me.

Curious about causes of the bank/mortgage crisis? Want a laugh about the international market's role in our current crisis?
Want details about the first time homebuyer tax benefits?
Check out my latest blog at http://ping.fm/kdfDX

The Buying Process

Are you a first time homebuyer wanting to get the tax benefit for purchasing this year? Here's the scoop on the particulars of the first time homebuyer tax benefit. Even vetern homebuyers are finding this market different from past markets. For one thing, the timing is GREAT for buyers-the best we've seen in generations! Interest rates are low, prices are low, inventory is high, and, except for the less expensive investor properties, we have a buyers market! For another change, lenders are back to requiring more money down and more documentation to support each buyer's loan request. The other new thing is how many lenders and banks have been having problems. Here's a link that describes in clear terms what happened to banks in our current credit crunch and mortgage crisis. For a look beyond the morgtage loans themselves, here's a funny BBC version of the international involvement in the credit swaps which involved bundled home mortgage securities.

Home buyers keep reading. Below are the first 3 steps to purchasing a home.

1. Save your money for a downpayment and loan closing costs. The least you need to have saved is about $1300 (this is for a HUD home in specific areas for a person's primary residence to cover the $1000 required earnest money and a suggested home inspection). A standard FHA loan requires 3.5% of the purchase price for downpayment. This is paid in 2 payments. First the earnest money (for an FHA home ranging from $500-$4,000 depending on the cost of the house and the seller). The balance is due from the buyer at closing. Some grant and bond programs will help with all but $1000 of this cost. Next, loan closing costs range from 3% to 5% of the loan value. This amount is determined by the kind and size of loan and by the buyer's FICO scores. So, how can you know these variables? Go to step 2! If you're selling your home and intend to use part of the profit for the downpayment on your next home, go to step 2!

2. Select a Realtor!
If you don't know about loans already, your Realtor will and can guide you. Choose a real estate professional who is committed to more than helping you get the right home. Your realtor should also help you realize your short-term and long-term financial goals. Did you know that for most Americans, their home is their largest single investment? You want to get choose this investment wisely, right? A home is the long-term investment that most of the middle class used to grow wealth in the 1900's. You deserve a buyers agent who can give you insights in the market, loans, service providers (including lenders), things to be aware of throughout the home buying process and beyond. (Coming later will be the Top 7 Questions to Ask When Interviewing a Real Estate Agent.)

3. Contact and choose a Mortgage Lender.
Your mortgage lender will find out what you make, what you have saved, what you owe, and run an infile credit report. Based on your qualifications, your lender will discuss which loan options are best suited to you and your financial goals. Now you will also find out if there are any errors on your credit report and can get them fixed. Ask for a good faith estimate and go over it with the lenders you're interviewing. This will tell you the loan closing costs you can expect. Lenders have expenses and get paid when making loans, so there will be some loan closing costs. Different loans have different loan closing costs, so if you have saved more than the minimum 3.5% downpayment required by FHA and are considering different types of loans, ask for a good faith estimate for each loan! There are still county, city, and state bond programs for borrowers of modest means, fitting the program's criteria. Ask your lender whether or not you qualify and could consider one of these programs. You are welcome to work with any mortgage lender you choose. If you don't know a good lender or want to shop around, we have had great experiences with the several lenders and recommend them. Tell them Beth sent you to them:
Bernie & Deb Zanoni, Briston Capital Mortgage (303-597-1700) dzanoni@bristoncm.com
Pyper Lund, Colorado Mortgage Alliance/Wells Fargo (303-796-1270) pyper.lund@coloradomortgagealliance.com
Scott Wynn & Cindy Howeth, 1st Priority Home Loans (303-523-0786) swynn@1sph1.com

3. Make the decision! How do you want to finance your home?
For your long term financial and emotional well being, it's a good idea to set a budget on your new home purchase. Based on your qualifications and downpayment, the loan options you are considering will have an upper end that you can qualify for. You may want to set the ceiling a little lower on your own. The decision is yours. Set your budget and decide which loan best fits your needs.

Coming later this week, the next 3 steps in buying a home. Go here for Part 2, Part 3, Part 4.

What Really Happened to Denver Real Estate in 2008?

How does Denver Northeast compare to the Denver Northeast Suburbs, like Green Valley Ranch and Montbello? Is it really a seller's market in Denver Southwest? How has Ken Caryl been affected as a Denver Southwest Suburb? Why does Douglas County show such a loss in average home price? Has Aurora hit the bottom of prices in 2008? How was the upper end of the market being affected? Did parts of Denver Southeast and Denver Northwest Suburbs, like Westminster and Golden, really hold their own and post a modest gain? and other conundrums for Denver real estate watchers....

READY for YOU-our Denver Real Estate Market Study for 2008. Link to this site and then check out the report for your area of town. Be sure to tell us how this data fits your subjective experiences of the market, since each transaction is personal, even though the market it not. When you read do you see where your opportunities lie right now?

We'll be updating the data monthly, so you can follow the trends more closely, if you wish.



Click on this link for the report. It will take a bit to download, since the report with all the graphs and explanations is long.

Check out my first blog at HomesByBethOwens.blogspot.com on what really happened in 2008's market.

So how IS the market? Really?

It's the first question my clients want answered. It's even what most of my friends and acquaintances ask me shortly after catching up on our other news. How do you see the market in your neighborhood? Why do you come to that conclusion? How does your area compare to the rest of the Metro area? For that, keep reading...

As active realtors with buyers and sellers in the fray, Kent and I decided to report what really happened to real estate in 2008 in the Denver Metro market. Tired of conflicting reports that skewed the data, we put together MLS data to measure the pulse of the market in 9 areas: Denver NE, NW, SW, SE; Suburban NE, NW, SW, SE; Douglas county. We graphed key monthly data and annual data back to 2007. Yes, rumors are true that some neighborhoods actually showed a slight increase in average sales price last year! Yes, rumors are true that some neighborhoods actually showed more than a 25% drop in average sales price last year! Yes, some areas are showing a balance between demand and supply, while others are strongly a buyers' market. More important than any of those numbers is an analysis of what caused those statistics. Thus, we'll be able to identify better the trends in today's real estate market in your part of town. This is what we provide with the statistics in the report for each of the nine areas.

From our report: Metro Area Summary
With the caveat that all real estate markets are local and that your
neighborhood may be behaving out of the ordinary, here are the overall
trends in the Denver residential Real Estate market in 2008.
*Foreclosures and short sales continue to keep downward pressure on
prices in most neighborhoods.
*The supply of homes for sale has dropped in many areas; sellers are
waiting for the market to improve. This is putting upward pressure on
prices.
*Investors are competing to purchase the bargains in distressed
properties.
*Tighter lending requirements have slowed the high end of the market
and it is difficult to sell more expensive homes.
*There is much pent-up demand to purchase homes across all price
ranges. When buyers accept the new tighter lending requirements and
investors snap up the distress sales, demand for normal properties will
increase.
*We are beginning to stabilize at the bottom of the market. Look for
shorter days on the market, smaller gaps in list to sold prices, and
larger percent of list to sold prices to know that your area of town is
rebounding. This report will be updated monthly so you can check.
*Now is the time to buy investments.
*Now is also the time to purchase up, if you have enough equity in your
current property. The upper end of the market is lagging the lower end
and there is a great opportunity for some real estate arbitrage for
savvy homeowners.

Tomorrow we will be e-publishing the whole document. Then you can check out your area. If you want a copy, just email me your request. (We're trying to save trees and use email as much as possible, but will send you a copy via regular mail, if you give us your name and address.)

What else are you wondering about the real estate market?