Buyer Bragging Rights

Colorado Real estate inventory is at a 20 year low right now from Denver to Boulder and beyond. This means buyer demand is far outpacing available listings. Houses are coming on the market and going under contract within 24-48 hours and receiving multiple offers in that time often times as much as 10% above asking price. In 2014 I saw properties with over 20 offers in a couple of days and I saw houses go under contract in under 12 hours of being put on the market. If you are looking to buy and you don’t have a real estate agent who knows how to handle these kinds of situations, prepare yourself for a lot of heartache and frustration.

However, even with a great Realtor on your side, many buyers will still lose out on homes that they like due to the competition that comes from other buyers and cash investors. If you are submitting FHA or VA loans be prepared to have your offer pushed to the bottom of the pile behind conventional and cash offers. There are however methods to gain advantage in this hyper-competitive market that work.

To that end, I worked with buyers in a number of different price points last year and here is a sampling of my results:

-Beat out 18 competing offers on a single family home in Arvada, many of which were higher priced.
-Bought a Boulder foothills mountain property for $20k less than appraisal price.
-Successfully bought a single family home in Broomfield, in a multiple offer situation and beat out an all cash offer for $9k more.
-Successfully bought a Broomfied 3 bedroom condo at asking price before other offers were allowed (i would estimate this saved my buyers $5k-10k on a $190k price tag)
-Successfully bought a single family home foreclosure in Thornton for approximately 20% less than market value
-Successfully bought a 2 bedroom condo in Boulder in a multiple offer situation beating out a higher priced offer.
-Successfully bought a single family home in Denver using an FHA loan and beating out 6 other offers, 2 of which higher.
-Successfully bought a single family home in Westminster using an FHA loan in a multiple offer situation beating out a higher priced cash offer.
-Successfully bought a home in the Boulder Foothills that was not listed on MLS for $15k less than appraisal.

Also on the listing side:
-Successfully sold a town home in South Boulder for the highest price ever paid in the subdivision
-Successfully sold a single family home in Thornton for the highest price ever paid in the subdivision (for that size home).

I am happy to provide references from buyers and sellers.

If you are interested in buying a house or selling your home in this competitive market make sure you have someone who knows how to navigate the offer and contract process smartly, aggressively and quickly.

CT Tamura | Realtor
Wright Kingdom Real Estate
Boulder, CO
(720)564-6026
ct(at)wkre.com

CT Tamura - Real Estate Agent, Boulder CO

How To Buy A Mountain Home In Colorado- The Basics

When considering buying real estate in the mountains in Colorado there are a number of things to be aware of that differ from buying a conventional home. These are some of the mountain home buying basics that you need to be on top of. Its also important to note that there are additional costs associated with inspecting mountain properties. I have outlined some of those approximate costs below.

Mountain Homes are typically not on city water or sewage so instead you have a well for water and a septic system for waste. So in addition to a regular home inspection (that you should ALWAYS do on any home you go under contract to buy), there are several other types of inspections for mountain and/or rural properties you will want to pay attention to.

Well:

well

For the well, you want to get it tested for potability and flow rate. The potability test tells you if the water is drinkable and if there are any bad bacteria in the well. Bacteria can come from contamination from nearby septic systems for instance and its very important to know that the water you may be drinking and bathing in is safe.

Click HERE for more information on how a well works.

You may also get or want to get the hardness of the water tested – which will tell you the about how much dissolved minerals there are in the well water. Click HERE for a link to an article about hard water.

Well tests will generally run around $400 to cover the basics.

In Boulder County, John’s Well Service is a reputable well service and testing company:
www.johnswell.com
Phone:(303) 444-7237

Septic System:

septic system

Septic Systems process waste water and it is very important to get them inspected before buying a home because a new septic system can easily be a $15-25k problem. Typically a septic inspection will include pumping and testing of septic system. Septic systems should last about 30 years with proper maintenance, sometimes longer. Click HERE for a link to a septic system basics page.

In Boulder County, septic systems must be certified through the county’s Septic Smart program. This is something you should require the seller of the house provide in order to move on with the sale of the house. You can read about the program and check the Septic Smart status of any address in Boulder County by clicking HERE

Septic pumping, inspection and certification runs about $750 (hopefully the seller will do this). In Boulder County Acme Septic and Suc N Up are two good companies:

Acme Septic, ask for Steve
www.acmesepticinc.com
Phone: (303)459-1106

Suc N Up
www.sucnup.com
Phone: (970)674-9134

Surveys and ILCs:

surveys and ILCs

It is good practice to get a survey or an ILC (Improvement Location Certificate) done for mountain properties. In some cases the seller of the property may have one. If not, hiring a surveyor to check the bounds of the property can be a good idea to reveal any encroachments or easements on the property. Here is a story of some problems found via a survey:

The home back yard had fencing going around it completely. Due to the location of the house it bordered up to a few other homes. Those other homes had fenced in their yards. This particular homeowner kept the style of fencing up and added on to the areas the fence did not cover. Upon doing a survey of the property we found that three of the neighbors built the back of their fences on her property. In fact two of them intruded onto her property by over 10 feet. This caused a nightmare for the seller and the new homeowner. Because now we had issues with the property begin properly surveyed and neighbors encroaching on the property. The seller had purchased the house a few years earlier and did not order a survey to save on cost. Now, it is costing him a lot more money than that. The buyer will not close on the property without the fences being moved and the seller did not have a survey so he was not protected by any insurance and the neighbors are suing claiming they have rights to that property spots. The seller will be paying a lot more money to get the home sold now and in court costs than if he had just ordered a survey.

For the full article go HERE

Surveys are not cheap– an acre survey could easily run you $1,200-$2,000. And properties with complicated plots, or mining claims on them can run into the multiple thousands of dollars. Improvement Location Certificates (ILCs) are “light” versions of surveys that do not hold up in court and are not as exacting as full surveys but are cheaper and can give you a general idea if there might be any issues with the property lines. ILCs will usually run in the $600-$1,000 range.

In Boulder County Green Mountain Surveying and Flagstaff Surveyors are recommended:

Flagstaff Surveying, talk to Lee Stadle (who is also the Boulder County Surveyor)
www.flagstaffsurveying.com
Phone:(303) 499-9737

Green Mountain Surveying, talk to Sam Knight
www.greenmountainsurveying.com
Phone:(303) 601-8588

Insurance and Fire Mitigation
With mountain properties, it is important to get an insurance quote before your insurance objection deadline– mainly because of the possibility that you will need to do fire mitigation. Sometimes insurance companies will require fire mitigation– the clearing of trees near the house– in order to insure the home. Sometimes this is not a big deal, and sometimes it can cost thousands of dollars. Unless you are handy with a chainsaw… Also insurance quotes on mountain properties can vary greatly in price and some companies won’t even insure mountain homes so be sure to shop around on quotes.

Horses and Other Animals:
In unincorporated Boulder County (ie. not in a city proper), any property that has more than 1 acre of land is by regulation allowed at least 2 horses. However, water rights for watering your horses is another issue. You may not be allowed to water your horses using a “domestic well” (which is a common type of well in the mountains). If there is a stream running through your property then you should be ok. But for the sake of regulations and out of consideration to your neighbors it is a very good idea to not assume that just because the property is larger than 1 acre you will be ok with horses.

And before you go about setting up your sustainable mountain farm you should note that other animals such as chickens or cows, can be prohibited by the subdivision’s covenants – even if there is no HOA so be sure to read the title work that you get once you are under contract regarding any restrictions on the property.

In summary:
Well Test:
-Potability test
-Flow Rate test
-Optional: Radon, Copper, Lead, etc.

Septic System:
-Septic systems can easily be a $25,000 problem.
-Should be pumped and inspected.
-Boulder County Septic Smart Certification is a must.

Surveys & ILCs:
-ILCs (Improvement Location Certificates) are cheaper but don’t hold up in court.
-Mining claims – can be complicated and costly to get a survey done.

Insurance & Fire Mitigation
-Make sure to get insurance quotes before your insurance objection deadline.
-Fire mitigation is sometimes required by the insurance companies and can be costly.

Horses & Other Animals:
-Unincorporated Boulder County- 1 acre allows for 2 horses – check each Town/City for regulations
-But water for horses can be problematic and don’t forget about the neighbors.

There are nuances to buying properties in the mountains, things to be aware of and things to check on but the things listed here cover the basics and will get you asking good questions and headed in the right direction.

Have additional questions? Feel free to email C.T. at ct(at)wkre.com

What Website You Use To Search For Real Estate Matters

Here in Colorado, our available housing supply is at a 20 year low. After taking a couple years off building new homes, builders are now scrambling to build new homes as fast as they can in places like Frederick, and Erie. Millennials, (currently aged primarily from their early 20s to early 30s) are finally moving out of their parent’s basements and looking for their first homes. Combined with still historically low mortgage rates, this confluence of events is conspiring to create an unbelievably competitive and aggressive market for buyers, particularly in the sub $500k range.

What this means to sellers is that more often than not, they are listing their homes at the high end of their price range and receiving multiple offers, often over list price, often within 24 hours of the house being listed on on the MLS (multiple listing service). So if you are a seller, then lucky you. You chose a good time to sell.

Conversely however, for buyers, this means that more often than not, their strong offers are either getting rejected, or even worse, they are not even getting a chance to put in an offer because the house is under contract within 48-72 hours after being listed.

In a super tight market like the one we are experiencing now, those first 24 hours that a house is listed are critical. Real estate professionals pay to have instant access to the MLS and have up-to-the-minute information so working with an attentive buyer’s agent can do more than anything to help you find new listings the day, or even the hour that they become available. But if you rely on a site like Zillow to tell you when new listings come on to the market, expect a delay of hours or even a day before those “new” listings show up on the site. Those precious few hours can make all the difference.

On top of that, in order to seem like they have more inventory, sites like Zillow choose not to make a distinction between “active” listings and “under contract” listings which means that you are further wasting your time looking at or trying to set up showings of homes that are already under contract to be sold.

Why is this and how can you get the most up to date info? It is because sites like Zillow and Trulia are what are called syndication sites– they are not the source of their listing data, they receive their data from local MLSs all over the country including the ones here in Colorado. So if you want up-to-date listing info, go to the source. Start by asking your agent for automated search results sent to you immediately for whatever kinds of homes you are looking for. Beyond that, use sites that are fed directly from the local MLS. In Northern Colorado from Boulder to Fort Collins for instance, www.corealestatesearch.com, and www.coloproperty.com have the most up-to-date information freely available to the consumer. In the Denver market, a site like www.recolorado.com is the equivalent.

Its not to say that sites like Zillow and Trulia aren’t useful. They may have some FSBO (for sale by owner) homes listed that are not easy to find otherwise. And they are great for looking at large swaths of data, general market trends, neighborhood statistics etc. But if you are serious about finding a home, every hour counts so get as close to the source of the information as you can.

Why Technology Hasn’t Made Real Estate Brokers Obsolete

This is a great little article in Inman news about the role that Real Estate agents/brokers play in the home buying process and why they are still and will continue to be around for the foreseeable future. It also discusses the significance of the discrepancy of age between the average buyer (35) and the average real estate agent (57) and their respective adoption (or lack thereof) of technology. Which is a BIG deal on both the buy side and the sell side. You want to work with an agent who not only knows what Pinterest and Instagram are, as well as why Pinterest is better than Instagram to reach your target home buying audience..

Full article here:
http://www.inman.com/2014/04/11/can-you-explain-to-buyers-and-sellers-why-technology-has-not-made-real-estate-brokers-obsolete/

NAR’s 2013 member survey found the average age of a Realtor to be 57 years old, yet the average age of homebuyers was 35. Age certainly does not dictate your technical prowess, but it is fair to say that many in our industry have seen themselves dragged into this new information age kicking and screaming.

They have hardly adapted their business model from what worked in decades prior, and they have essentially done the bare minimum required to keep their business functional in terms of technology. Forget optimized landing pages, drones for virtual tours or a social media mix being part of your business plan — these agents do not even have email set up on their phone.

We all know these agents, and most of us work with a few of them. Few agents will look you in the eye and say that the industry does not need to do a better job as a whole in adapting to changing client expectations, mortgage regulations and technology. The industry will do these things, or the industry will suffer the consequences.

Where does this leave us? Is an online auction model the way to go, as the author seems to suggest? Do agents go the way of the dodo bird?

– See more at: http://www.inman.com/2014/04/11/can-you-explain-to-buyers-and-sellers-why-technology-has-not-made-real-estate-brokers-obsolete/#sthash.Va8JhRTa.dpuf

Housing Inventory In Boulder At A 20 Year Low

Buyers and Buyer’s agents are having one heck of a time getting properties under contract. Absorption rates are at a 20 year low which means that there aren’t enough homes up for sale for the number of buyers that are looking. What this translates to is competitive multiple offer situations with houses often going under contract above asking price.

This means its a great time to list your house if you are a seller, but be sure you know how to price your home in a low inventory market. You don’t want to leave money on the table. If you are buyer, be prepared for the statistically strong possibility that you will have one or more strong offers rejected, regardless of whether you submit a full price or even over asking price offer.

Particularly in the 2 bedroom, under $300k price range, it is imperative to get in to see properties as soon as they become available and often times, you will have to submit an offer later that day if you want it to be considered. In the past three weeks, I have seen as many as 15 two bedroom condos in Boulder/Broomfield go under contract in 2-3 days on the market. Most offers have a 24 hour expiration which means that the buyers are seeing the properties in the first 24-48 hours on market and making offers immediately afterwards. So if you are looking to buy a home in this ultra tight inventory market, make sure that your agent is available, attentive and ready to go. Otherwise you may not even get the chance to submit offers, much less get a house under contract.

Here is an article from Boulder County Business Report regarding the lack of inventory in the Boulder area:

http://www.bcbr.com/article/20131122/INDUSTRY27/131129981/0/EVENTS04

Qualified Mortgage (QM) and Ability-To-Repay Rule 2014

Here is a great little primer from the Consumer Protection Bureau www.consumerfinance.gov regarding some of the changes to lending that have gone into effect in 2014. There a bunch of fictions surrounding this Rule some of which are outlined below:

Ability-to-Repay Rule Protecting Homebuyers from Debt Traps

On January 10, 2014, the Consumer Financial Protection Bureau’s Ability-to-Repay Rule will go into effect. This rule protects consumers from debt traps by requiring mortgage lenders to evaluate whether borrowers can afford to pay back the mortgage before signing them up. The rule was required by Congress, as a response to the financial crisis and nationwide foreclosure epidemic.

Under the new Ability-to-Repay Rule, mortgage lenders must look at customers’ income, assets, savings, and debt, and weigh those against the monthly payments over the long term – not just a teaser or introductory rate period. As long as they check the numbers and the numbers check out, lenders can offer any mortgage they reasonably believe a consumer can afford. These are common-sense practices that most lenders already follow.

Certain types of mortgages are more likely to become a debt trap for the borrower, so the new rule lays out basic guidelines that lenders can follow. Loans within these guidelines are called “Qualified Mortgages,” and they give lenders greater certainty that they are meeting the Ability-to-Repay requirement. If lenders choose not the follow these guidelines, they can still make a loan based on their reasonable, good-faith determination that the borrower has the ability to repay it.

To be a Qualified Mortgage, the loan:

• Cannot have excessive upfront points and fees;

• Cannot be longer than 30 years;

• Cannot have certain risky features, such as paying only interest and not principal, or paying less than

the full amount of interest so that the total debt grows each month; and

• Must be in one of three categories:

1. The monthly loan payment, plus the borrower’s other debt payments, does not exceed 43

percent of the borrower’s monthly income; or

2. The loan qualifies for purchase or guarantee by a government sponsored enterprise (Fannie

Mae or Freddie Mac), or is insured or guaranteed by a federal housing agency; or

3. The loan is made by a small lender that keeps the loan in portfolio.

Bottom line: The Ability-to-Repay rule is intended to prevent consumers from getting trapped in mortgages that they cannot afford, and to prevent lenders from making loans that consumers do not have the ability to repay. It’s that simple.

Fact vs. Fiction

1. Fiction: The CFPB’s Ability-to-Repay Rule will cut off consumers’ access to credit by requiring all loans to be Qualified Mortgages.

Fact: The Ability-to-Repay Rule does not require lenders to offer any specific type of mortgage. Lenders can offer any mortgage they believe a consumer has the ability to repay, as long as they have documentation to back up their assessment. Not all loans will be Qualified Mortgages.

2. Fiction: Banks aren’t going to make any loans that are not Qualified Mortgages.

Fact: The Ability-to-Repay Rule is designed to protect consumers without disrupting the U.S. housing market. Some of the nation’s largest banks have already said they plan on making loans that fall outside of the Qualified Mortgage guidelines.

More importantly, however, the vast majority of loans being made today are already compliant with the Qualified Mortgage guidelines. The CFPB estimates that roughly 92 percent of mortgages in the current marketplace meet the Qualified Mortgage requirements, and reports by independent economists have confirmed the Bureau’s calculations.

3. Fiction: The Ability-to-Repay Rule requires all mortgages to cap debt-to-income at 43 percent.

Fact: The Ability-to-Repay Rule does not mandate debt-to-income ratios. The rule simply requires lenders to evaluate a borrower’s debt-to-income ratio and use their judgment about how much debt a consumer can afford to take on.

Nor does the Ability-to-Repay Rule require all Qualified Mortgages to meet the 43 percent debt-to-income ratio. A loan can also be a Qualified Mortgage if it meets standards for loans backed or purchased by Fannie Mae or Freddie Mac, if it’s insured by a federal housing agency, or if it is offered by a small lender that holds the loan in portfolio. Right now, roughly 92 percent of mortgages fall into one of those three categories.

4. Fiction: The new rules have excessive documentation requirements, and are going to make it nearly impossible for anyone who’s self-employed or has an unusual financial situation to qualify for a mortgage.

Fact: Under the new rules, lenders do have to verify that consumers can afford to repay their mortgage – that’s the whole point. Lenders will make that determination by looking at documents such as payroll stubs, tax returns, student loan statements, credit history, and other financial information. These documents help lenders weigh borrowers’ debt against the income and assets available to pay off the debt. Without this information, lenders cannot make an accurate assessment of affordability, and borrowers could wind up in over their heads.

Looking at this kind of documentation is something that responsible mortgage lenders have always done, and the new rule makes sure that every lender follows prudent underwriting practices.

The rule is designed to preserve consumers’ access to credit, and the CFPB has issued guidance to small lenders with advice on how to verify seasonal or irregular income.

5. Fiction: The new rule requires 20 percent or 30 percent down payments for new mortgages, which will price many borrowers out of the market.

Fact: The Ability-to-Repay Rule and Qualified Mortgage guidelines do not establish a minimum down payment.

6. Fiction: The points and fees cap is going to put mortgage brokers out of business, and ultimately will harm consumers who will just end up paying higher interest rates.

Fact: The Ability-to-Repay Rule does not cap all points and fees. Loans that are not Qualified Mortgages have no restrictions on the total amount of points and fees.

If a loan is a Qualified Mortgage, it cannot include upfront points and fees greater than 3 percent of the total loan amount. Excessive upfront fees can encourage a “take the money and run” business model, where lenders do not have a big financial incentive to evaluate the riskiness of the loan because they make most of their money at the closing table. The 3 percent cap on Qualified Mortgage fees is a reasonable limit that protects consumers and gives lenders the incentive to evaluate affordability over the life of the loan. The rule also makes allowances for smaller mortgages to ensure that responsible loans are not unintentionally affected.

7. Fiction: Lenders haven’t had enough time to update their systems and get ready for the new rules.

The CFPB has amended the rules repeatedly, making it impossible for lenders to adapt in time.

Fact: The Ability-to-Repay Rule was finalized in January 2013, a full year before it was scheduled to take effect. The CFPB has issued various amendments over the course of the year, with a single aim in mind: to ensure the effectiveness of the rules by making it easier for lenders to comply. The Bureau recognizes that coming into compliance with the rules is a significant challenge, and it has worked closely with the industry to answer questions, provide resources, and address concerns.

Housing industry experts have predicted that most new mortgage originations will not be affected by the new rules when they take effect on January 10, and the Mortgage Bankers Association has said that “many lenders are already acting as if the rule is in place.”

Effect Of Flooding On Boulder Home Prices?

There are a number of competing theories about what will happen with the home prices and inventory in Boulder County given the recent flooding and part of that is because there is data to suggest a number of possibilities.

Check out these articles:

http://www.dailycamera.com/boulder-business/ci_24345181/

http://budgeting.thenest.com/effects-natural-disasters-home-buying-prices-us-32270.html

http://www.forbes.com/sites/morganbrennan/2012/11/01/how-hurricane-sandy-will-affect-the-housing-markets-nascent-recovery/