Recent Testimonials

Recent Testimonials

I love my clients! Being a Realtor is a multi-faceted career, but my most favorite part is getting to know my clients in a meaningful way. I love gaining the trust and respect as we go through the process of buying or selling a home.  Here are what some recent clients have said about working with me.  THANK YOU!

“Neil helped us sell a house in Longmont. He did the research necessary to arrive at an appropriate listing price, he promoted the property effectively, and he managed the sales process professionally. He made the sale a quick, easy, and successful process. Neil is hardworking, honest, and trustworthy. His communication is clear and his perspective is client-focused. I will not hesitate to use him again when we have real estate to sell in Boulder County.” Tim Satterfield

“We found Neil through a search on the Boulder/Broomfield real estate professionals. His personal website is very impressive. It shows Neil is very knowledgeable and passionate about his career. After an initial video meeting, we decided to go with Neil.
In the first phase, Neil was very responsive and patient. He picked several properties that may interest us. When showing the properties, he never pushed us.
After the first several showings, we quickly found a dream home. Neil acted very fast to help us set up the showing. He then finished the preparation of the paperwork efficiently. With his professional advice, we got our dream home easily.
All in all, Neil is a very professional, knowledgeable, passionate, and patient agent to work with. If you are also looking for a home in the Boulder area, Neil is always the best choice.” Amanda Xu

“We totally enjoyed working with Neil. In this world of Covid, he made sure everyone was safe during this process. He listened to our needs (getting our home sold within a weekend) and made the process very smooth and easy. We created a situation where we were out of the house for that weekend and he kept control of the entire process. One of his ‘buzz’ words is Integrity…We found him to be one of the most honest brokers we have ever dealt with. I definitely would recommend Neil to anyone needing and honest, easy to work with broker. I would use his services again should the need arise.”  Leslie Rosczyk

“We worked with Neil to find homes to buy in and around Boulder County, CO. He was flexible, diligent, hard working, and professional throughout the entire process. He patiently stuck with us for months, persisting through this challenging real estate market. He’s also highly ethical, and an all around nice guy.

I would highly recommend Neil to anyone looking to buy or sell a home in or around Boulder. He’s a great partner when you are looking to buy or sell real estate.”  Mike Bruner

Click here to read more testimonials.

 

Hail and The Real Estate Transaction

Hail and The Real Estate Transaction

When the weather gets hot and the big thunderheads grow in the afternoons along the Front Range of Colorado, there is a chance that ice will fall from the sky.  Most of the time these hail storms are very localized and most of the time the size of the hail isn’t large enough to cause property damage.  But when the conditions are right, the hail stones can grow to be quite large and cause massive damage to cars, roofs, fences, windows and gutters (not to mention damage to plants, flowers and crops).

Last year we had a series of hail storms in Boulder County that caused extensive damage.  I was working on a number of home sale transactions when the storms took place, so I have a good sense of the contractural obligations and practical steps needed in order to keep the sale moving forward.  Before I go any further I’d like to say that I’m not an attorney and I can’t give legal advice.  Use this article as a guide, not as gospel.

The good news is that with most roofs and with most insurance companies, if there is enough hail damage it will be covered by your homeowners insurance.  Your only obligation is to pay your deductible.  The first step after a hail storm that has caused damage is to call your insurance company.  One clue that damage has been done (besides the earsplitting sound of hail on your roof) is that you might start seeing roof contractors in your neighborhood, they may even knock on your door and ask to inspect your roof.

If your home is listed for sale but has not yet gone under contract with a buyer, your main obligation in terms of the real estate transaction is disclosure.  In addition to communicating with your agent and revising your Sellers Property Disclosure, I would recommend taking the steps necessary with your insurance company quickly so that you know if the damage is covered by the insurance policy.  Once you know it is covered start taking steps so that a new roof can be installed.  Having the time to interview contractors and get bids is a luxury that becomes more rare once a buyer is involved.  A new roof is a good selling feature and any damage will come up during the future inspection process once you find a buyer, so taking proactive steps is a smart way to go.

If the hail storm happens after you are already under contract with a buyer paragraph 19 of the Colorado Contract to Buy and Sell Real Estate (CBS1-6-18) is a good guide as to the rights and obligations of both the Buyer and Seller.  It is printed below, but here are a few of the high points:

  • Once the property is under contract, the seller has an obligation to deliver the house at closing “in the condition existing as of the date of this Contract, ordinary wear and tear excepted”.
  • If the damage is less than 10% of the price on the contract and the Seller can repair or replace the damaged item with something of at least similar size, age and quality, then the contract moves forward.  Be sure to disclose to the Buyer what has happened and what is being done.
  • If the damage is more than 10% of the price of the home or the repairs cannot be made in time to meet the scheduled closing date, the Buyer has the right to terminate the contract and get their earnest money back. Buyers rarely choose this option because if they hang in there they will get the house and a new roof.
  • Paragraph 19.1 deals with property damage that will be covered by insurance.
    • Option 1: If work can’t be done by the closing and Buyer and Seller do not agree to extend closing, and the Seller has received the insurance proceeds, the Buyer has the right to the insurance proceeds in the form of a credit including the amount of the deductible. In practice, if there is a lender involved they don’t like this option.  They require to see the roof completed prior to the closing or an escrow set up that ensures that the roof will be done.  The insurance company also holds back a portion of the proceeds to make sure that the roof is done.
    • Option 2: If acceptable to the insurance company and the Buyers lender, an agreement stating that the the insurance proceeds will be assigned can be agreed to.  In practice if there is a lender involved they don’t like this option for the same reasons stated above.
    • Option 3:  Enter into a written agreement drafted either by an attorney or the parties to the contract (Buyer and Seller, not the agent) that outlines what will happen, when it will happen, who will pay, who gets to choose the style, etc.  In the transactions I worked on last year where there was not enought to to install a new roof prior to closing, this type of agreement was signed by the parties.  In one case the Seller wrote it and in the other the Buyer hired an attorney to write it.

From the Colorado Approved Contract to Buy and Sell Real Estate:

19. CAUSES OF LOSS, INSURANCE; DAMAGE TO INCLUSIONS AND SERVICES; CONDEMNATION; AND WALK-THROUGH. Except as otherwise provided in this Contract, the Property, Inclusions or both will be delivered in the condition existing as of the date of this Contract, ordinary wear and tear excepted.

19.1. Causes of Loss, Insurance. In the event the Property or Inclusions are damaged by fire, other perils or causes of loss prior to Closing (Property Damage) in an amount of not more than ten percent of the total Purchase Price and if the repair of the damage will be paid by insurance (other than the deductible to be paid by Seller), then Seller, upon receipt of the insurance proceeds, will use Seller’s reasonable efforts to repair the Property before Closing Date. Buyer has the Right to Terminate under § 25.1, on or before Closing Date, if the Property is not repaired before Closing Date, or if the damage exceeds such sum. Should Buyer elect to carry out this Contract despite such Property Damage, Buyer is entitled to a credit at Closing for all insurance proceeds that were received by Seller (but not the Association, if any) resulting from damage to the Property and Inclusions, plus the amount of any deductible provided for in the insurance policy. This credit may not exceed the Purchase Price. In the event Seller has not received the insurance proceeds prior to Closing, the parties may agree to extend the Closing Date to have the Property repaired prior to Closing or, at the option of Buyer, (1) Seller must assign to Buyer the right to the proceeds at Closing, if acceptable to Seller’s insurance company and Buyer’s lender; or (2) the parties may enter into a written agreement prepared by the parties or their attorney requiring the Seller to escrow at Closing from Seller’s sale proceeds the amount Seller has received and will receive due to such damage, not exceeding the total Purchase Price, plus the amount of any deductible that applies to the insurance claim.

19.2. Damage, Inclusions and Services. Should any Inclusion or service (including utilities and communication services), system, component or fixture of the Property (collectively Service) (e.g., heating or plumbing), fail or be damaged between the date of this Contract and Closing or possession, whichever is earlier, then Seller is liable for the repair or replacement of such Inclusion or Service with a unit of similar size, age and quality, or an equivalent credit, but only to the extent that the maintenance or replacement of such Inclusion or Service is not the responsibility of the Association, if any, less any insurance proceeds received by Buyer covering such repair or replacement. If the failed or damaged Inclusion or Service is not repaired or replaced on or before Closing or possession, whichever is earlier, Buyer has the Right to Terminate under § 25.1, on or before Closing Date, or, at the option of Buyer, Buyer is entitled to a credit at Closing for the repair or replacement of such Inclusion or Service. Such credit must not exceed the Purchase Price. If Buyer receives such a credit, Seller’s right for any claim against the Association, if any, will survive Closing.

What happens if the hail damage is discovered after the closing?

This happened to me last year as well.  The Sellers were not aware of any damage and we had a successful closing.  Soon after closing the Buyers noticed roofing contractors working on their street and had a contractor look at the roof. Damage was found.  The Buyer’s contacted me and I in turn contacted the Sellers.  The insurance company was called and it was determined that there was damage and that the last storm (they track these things closely) happened while the Sellers still owned the home and their policy was in place.  The outcome was that the Buyers got a new roof and the Sellers had to pay their deductible and their insurance company funded a new roof.

Lessons learned:

  • Keep the lender involved in the discussions.  Different lenders handle this situation differently.  Some allow credits and post closing escrows and some don’t.
  • It’s helpful but not required to have a contractor meet the insurance adjuster at the house for the initial inspection.
  • Some policies have depreciating coverage as the roof ages.  This does not relieve the obligation of the Seller to replace the roof.
  • After a hail storm it is really difficult to schedule contractors.  Real estate contracts are time sensitive.  Call quickly and be first on the schedule!

As I mentioned before, this is not exhaustive but I hope it does give you some useful information regarding hail and how it affects a real estate transaction.

Some Recent Testimonials

Some Recent Testimonials

I love what I do because I get to interact in a meaningful way with some fantastic people!  Here are a few testimonials that have come in from clients that I have had the privilege to work with over the past few months.

“Neil’s wealth of knowledge, combined with his relaxed, no-pressure manner, make for a more-than-winning combination. He is completely familiar not only with the benefits and drawbacks of different geographical areas, but he also knows about houses from the inside out! He can explain electrical and  plumbing issues; materials; grades and everything else. Neil is a keen observer, often pointing out things we missed. He went above and beyond by creating a special spreadsheet for us when we were stuck on a pricing issue. You never have to wait for a response from Neil either, so important during any real estate experience. Buying or selling a house can be a trying time, but we loved working with Neil, and highly recommend his services.” Suzanne Dingwell  

“Our family is so grateful to have had Neil help us sell our home. He went above and beyond what one would expect from a real estate agent. His professional approach in nailing everything down from market trends in our area to providing helpful suggestions to set up our home for sale was one of a  kind. Neil was always available to answer questions, ease our minds and even lending a hand with sale preparation tasks. He always welcomed our input and and made things very clear and understandable. We can truly say that Neil became like family. Again, his professionalism and amazing knowledge of real estate markets topped off with his genuinely kind and caring approach cannot be beat. We could not have made it through any of this process without Neil. Our family will only recommend his agency and will never consider anyone else in the future when the time comes around for us to buy or sell any property. Neil is not only a wonderful person, but also the best agent in Boulder and the surrounding area. THANK YOU NEIL!!”  The Kosenski Family

“We would highly recommend Neil Kearney and would not hesitate to use him again. We have worked with Kearney Realty for over 20 years and received incredible service in four real estate transactions over the years. Neil recently worked with us for several months and was very patient until we found  our perfect home. He was very knowledgeable and a strong advocate when we were ready to buy, and he was not afraid to point out potential problems or assets with homes when we were looking.”  Bill and Connie Barclay

“I can not recommend Neil highly enough! I have dealt with many agents over the years, and working with Neil was an A+ experience. He answered all my dumb questions, and he answered immediately, at all times of day or night. He took care of innumerable details, and went above & beyond, even  weeding the property to make it show better! I would not hesitate to recommend him 100%, and I would definitely employ him again. Especially if you have had a bad prior experience with a real estate agent—give Neil a try. His integrity is unimpeachable.”  Marsha Conway

Click here to read more testimonials

In 2017 Boulder Real Estate Negotiation Tipped Toward Buyers

In 2017 Boulder Real Estate Negotiation Tipped Toward Buyers

In 2017 in Boulder County, the average negotiation off of list price for all sales was 1.3%.  In 2016 it was .36%.  However, when you look at it more closely both over time and across price ranges there are some good market insights.  The chart below shows the sales in each of the last four quarters separated into three categories; those that sold for below the list price (blue), those that sold for exactly list price (orange), and those that sold for above list price (grey). As an example, let’s look at the second quarter of 2016 which is the second group from the left.  During that quarter Boulder County was ranked #1 in the nation for appreciation by FHFA.gov.  During the quarter, 30% of the sales went for less than the asking price, 20% went for exactly the list price and 50% of the sales sold for a price in excess of the asking price.  This past quarter 56% sold for less than list price, 23% went for exactly asking price and 21% went for above the list price. The overall take away is that buyers have gained some traction in negotiations.  There are two trend lines that intersect.  The upward trending blue line represents the trend of properties selling below the asking price.  The downward trending grey line shows the trend for homes selling at a premium. 

With the information above we can conclude that the overall market is trending away from a strong sellers market.  But in real estate broad generalities are not always accurate.  When we look at individual price ranges we find that the lower range is still very strong and in the luxury ranges the market has shifted more strongly toward the buyer.  During 2017 the average sales price to list price ratio was 98.7%. In other words, on average buyers were able to negotiate 1.3% off of the list price.  However, when we break this down by price range we find that during 2017:

  • Homes that sold for $500,000 or less sold for .9% above list price.
  • Homes that sold between $500,000 and $1,000,000 sold for .4% above list price.
  • Homes that sold between $1,000,000 and $2,000,000 sold for 2.75% below list price.
  • Homes that sold for prices above $2,000,000 sold for 4.17% below list price.

The bottom line is that if you are buying a house in the entry level of any of the Boulder County communities you won’t have much wiggle room on price.  If you are in the market for a home in the luxury range you will have much more room for negotiation.  Don’t be fooled by averages.

The Tax Bill And Its Affect On Real Estate

The Tax Bill And Its Affect On Real Estate

The recently passed federal tax bill will definitely have an impact on real estate.  In general markets with high taxes and high values will be most affected.  Despite the recent increase in local property taxes, Boulder County is considered a low property tax area compared to other parts of the country.  However, we are a high value market.  Here is a summary of the main points of the tax bill that affect real estate.

Mortgage Interest Cap – This is in regards to how much of the interest paid for mortgages can be used as a deduction.  For those whose mortgages balances are less than $750,000 this will not affect anything.  Previously the cap was $1 million and it has now been reduced to $750,000.  Not many people have loans in excess of $750,000, but in our area where the luxury home market is very robust, we may see fewer buyers able to make those purchases. The interest on the first $750,000 is still deductible.  This may dissuade some luxury home purchasers to buy a less expensive home, thereby reducing the demand for the very high end.

Local and State Tax Deduction – The Boulder County Treasurer was inundated before the new year with property owners pre-paying their property tax bill in advance.  This was in response to the section of the tax bill which caps the deduction for state and local taxes at $10,000. Previously, homeowners were able to deduct from their federal tax return the amounts paid for state income tax, various ownership taxes and property taxes without limit.  Now the deduction is limited to $10,000.  Buyers may shy away from a house with a large tax bill knowing that payment will no longer reduce their tax bill.

Other Related Items – Those who own investment real estate may be getting a tax break on their real estate investment income.  Income that comes through pass-through entities such as LLC’s get a tax break.  20% of that income can be deducted.  You may have heard that the capital gains exclusion time limit had been expanded to require living in a house 5 of the previous 8 years in order to use the $250,000 for a single or $500,000 for a couple when selling a principal residence, this was overturned during the last few days leaving the existing rule of occupying the home two of the past five years.

This is just a high level outline, please contact your tax professional for more details.

The Real Estate Cycle – Where Are We Now?

The Real Estate Cycle – Where Are We Now?

The Real Estate Cycle

The Real Estate Cycle

Approximately 2500 years ago Heraclitus of Ephesus said “The only thing that is constant is change”.  In the moment we sometimes forget that forces larger than we can see are slowly moving culture, markets and people.  Everything we see is changing, however the rate of change makes a difference. We notice more readily the melting of an ice cream cone than the erosion of a mountain.  It’s normal to only take note of what we can readily see.  However, there is wisdom in taking a longer view.

Real estate is cyclical.  There are many factors involved, but the peaks and valleys of the real estate demand and value have been shown to have a relatively consistent cycle of approximately 18 years.  Economist Homer Hoyt made a detailed study of the Chicago real estate market and the broader United States real estate market and found that it has run its course in a steady 18 year rhythm since 1800.  There have been exceptions that have disrupted the normal cycle such as The Great Depression, World War II and the post war boom but on average, the business cycle and the real estate cycle have been very consistent including the 18 year cycle than ended in 2008.  

The infographic above shows the four phases of the real estate cycle.  Here is more information on each of the stages of the cycle.  Most studies present Recovery as the first phase of the cycle, but since the last recession was so memorable I think it makes a good starting point.

Recession 

Think back to what was in the news in 2008 – 2011: Foreclosures, unemployment, short sales, mortgage reform, lowering interest rates, 40% drop in real estate sales, stock market losing value, declining home prices (Boulder was one of the few markets to hold most of its value), consumers reducing spending, rental vacancies, lower rents, incentives to buy and lease, etc. etc.  The situation was shocking, many of the US real estate markets had just climbed to all time highs, buyers were using easy credit to buy multiple homes thinking that the easy money would continue indefinitely.  And it did, until all of a sudden it crashed. Fortunes were lost. Especially for those who couldn’t hold on for the recovery.  This was the low point in the economy and the real estate market.  The signs to look for when recession is on the horizon are; interest rates are raised to slow an over heated economy, increased inventory of unsold homes, higher rental vacancies, new construction shows with more unsold inventory and higher interest rates (although some developers who are late to the party always get caught), mortgage delinquencies increase which leads to more foreclosures.  During the recession it is a buyers market.  Those with the wherewithal should purchase real estate at a discount.

Recovery

This is the bounce off the low point.  During this phase the inevitable march of population slowly increases the demand for real estate and other goods. Accumulated inventory gets absorbed, vacant rental units get rented, adult children slowly move out of their parents basements, the Fed lowers interest rates to stimulate demand. With favorable interest rates businesses expand.  They hire more employees, make capital investment.  During this phase, prices stabilize, excess inventory gets purchased and there is virtually no new construction (developers are licking their wounds), in the aftermath of the recession, banks are very careful about lending.

Expansion

Recovery turns to expansion when most of the available inventory has been absorbed by individuals of businesses.  Rental occupancy rates are higher than average, new construction finishes are at a low and stalled projects finish out, built up foreclosure inventory is all but gone.  Once the expansion is recognized developers scramble to fill the new demand by planning new projects. However, developing property takes 2-3 years from start to finish so this isn’t instantaneous, there is a lag. With very little new construction the demand for re-sale homes is very strong.  This results in rising prices and in some markets the supply demand discrepancy results in multiple offer situations that further exacerbate price increases.  In times of unusually low inventory during this phase (before the new construction projects which have been in development are complete) prices tend to reflect an anticipation of where the market is headed rather than the current market price.  This is a sellers market.  As the expansion phase matures buyers and renters have increased choices but continue to find new places to live.  Positive pressure on prices slows. The real estate market falls into a phase of balanced activity. As long as the broad economic forces are stable, this phase can last quite some time. People have jobs, they start families, they buy cars, the buy houses, they buy refrigerators.  Companies are making profits, they continue to invest in infrastructure.

Hyper Supply

The delineation between market expansion and hyper supply is marked by an increase in unsold inventory and and increase in rental vacancy.  The projects which were started late in the expansion phase continue to come available but to an increasingly tepid response.  Growth in prices is decelerating.  If developers recognize the turn in the market and stop building, the coming recession can be softened considerably.  In this phase, housing, rental units and office space become over built.  As interest rates rise we are then led into another recession.

Where  Are We Now?

First let’s eliminate where we know we are not.  We are not in recession, nor are we in recovery.  Over the last ten years, the Boulder area real estate market has come through the recession phase and then quickly moved through the recovery phase.  I say quickly because we were fortunate not to have a big back log of foreclosure homes that needed to be sold.  Since mid 2012 we have been in the expansion phase.  Throughout the Denver Metro Area we have seen unprecedented construction of rental apartments.  We have seen a steady stream of new residents drawn to our area by a good economy and a great lifestyle. We have seen compounding double-digit real estate appreciation that rivals the top markets in the nation.  Early this summer, the temperature of the expansion seemed to have been turned down a few notches and we are now seeing a slowing in price appreciation and a bit less demand.  However, our inventory is still very low and the overall economy is still doing well.  We seem to be at the beginning of a cycle of increasing interest rates but a 30 year mortgage is still at around 4%.  To me it seems like we are still in the expansion phase, but if each phase was a day we would be definitely in the afternoon.  Here are the next signs we need to look for which would indicate a shift toward the hyper supply phase: 1) increased vacancy rates on rental properties 2) Meaningful increase in interest rates 3) Increased inventory of resale homes for sale 4) New home builders offering incentives and price reductions.  

If we are to believe that the real estate cycle runs in an 18 year cycle, we would expect our next major recession in 2024.  If you would like to discuss a personal strategy as it pertains to the real estate cycle I invite you to contact me.  Neil Kearney, Kearney Realty Co. Neil@NeilKearney.com  303-818-4055