by neil kearney | Nov 17, 2009 | For Buyers |
Purchasing a home is a huge undertaking and is most likely your 
largest investment. It is therefore wise to do everything in your power to minimize your risks. The first step is to hire a competent Realtor, that is where I come in. Your Realtor can then lead you through the process of intelligent due diligence. Some common items to consider: Is the asking price justified for comparable sales? How does the homes condition compare to others on the market? Are there any obvious flaws? What is the potential resale potential of the home? If the property is part of an HOA, can I live with the rules and the assessments? Can I live with the neighbors? etc…
Once these basic questions are answered a buyer usually then looks at the home more in depth. In our area a general home inspector is hired to look at plumbing, roof, electrical, appliances, foundation, drainage, furnace, etc. If there are any “red flags” he recommends that the buyer bring in a specialist to assess the situation and possibly bring in a bid. Another usual inspection in our area is a radon test. Usually the inspector administers the test for an added fee and provides the results of a 48 hour test.
Another inspection that is seldom used but very useful in older homes especially, is the video sewer line inspection. Some plumbers have a special camera that video tapes the sewer line as it exits the house, runs under the yard and enters the city line. The cost for the test runs around $300, but if it is an older home or one with a bunch of trees in the front yard, it can be well worth the cost. At the conclusion of the test the buyer ends up with a video of their sewer line with any breaks in the line marked in the yard. Costs to re-do a sewer line are usually above $4,000 so this is something that is best found out before closing.
The image above actually shows roots growing into a sewer line.
by neil kearney | Nov 14, 2009 | Colorado Lifestyle |
I was watching TV the other night and came across a rerun of the movie “You’ve Got Mail”. In the movie, the characters played by Meg Ryan and Tom Hanks, work their way through many cute and funny situations. One of the main themes in the movie shows how charming local bookstores are getting replaced by national chains.
Boulder is lucky to have The Boulder Bookstore, a local bookstore that has been doing business on the Pearl Street Mall for a very long time. One of the advantages of having a good bookstore in town are the events they hold.
Every week, The Boulder Bookstore holds book reading events. Just this past Thursday The Grammer Girl (Mingon Fogerty) appeared in person to read from her new book and I was there. She puts together one of my favorite podcasts
but that’s not the point. The point is, that every week, three to four authors come to Boulder to read from their books This just another small piece of the puzzle which makes the quality of life in Boulder so.
by neil kearney | Nov 10, 2009 | For Buyers, General Real Estate Advice, Real Estate 101 |
In Part 1 of this article I outlined the initial steps a buyer needs to take in the home buying process. In this post I will explain what happens once a buyer finds “the” right home.
The Offer
After viewing a few homes or many homes, eventually you will narrow your choices down to one “best” house. It’s time to make an offer. Your Realtor’s expertise will now be most helpful. Together you will evaluate not only the other homes on the market (the relative value of the other choices), you will research the value of the home in question. A seller can ask anything they want from a home so it is important that your offer is based in reality, not a seller’s fantasy. After checking the comparable sales it is a good idea to evaluate the position of the seller. How much do they owe? How long has the house been on the market? Have they reduced the price? What other clues do we know about motivation? With all of this knowledge you can with your Realtor formulate an offer strategy.
Once the strategy is in place your Realtor will then prepare a written offer. In Colorado we use a standardized form approved by the real estate commission. Most of the contract is pre-written and we have just to fill in some blanks. Your Realtor will advise you on reasonable contingency dates, contingencies, inclusions, financing and any additional provisions that are unique to this particular property. Once the offer is written, the buyers sign and date the agreement. The offer is then delivered to the listing agent and/or the sellers for review.
Earnest Money
So you will not be placed in an uncomfortable position when you purchase a property, an understanding of the earnest money deposit is important. At the time a written offer is initiated, you will be required to include a personal check or cashiers check as a good faith deposit. The check is deposited into the listing broker’s escrow account upon contract acceptance and will remain in escrow until the time of closing. This amount is credited towards your closing costs and down payment at closing. If the offer is not accepted, the deposit is returned to you. The amount depends upon the sales price of the property. The amount is negotiable, but a good rule of thumb is 1% or more of the offer price. You can only loose your earnest money if you change your mind or if you do not perform to the dates or the provisions of the contract. Your deposit will be returned to you if your loan is disapproved or an inspection resolution cannot be reached. So long as these are done in a timely manner.
The Contract Gets Accepted – Now What?
After the buyer and seller reach agreement on the details of the contract and both have signed either the original offer or a subsequent counterproposal, the focus turns to fulfilling the various contingencies set forth in the contract. The major contingencies are loan approval, inspection and title documentation.
The first order of business is to alert your lender and provide to them a copy of the contract. At this point you will have the opportunity to lock-in an interest rate and firm-up the details of the loan program in which you will pursue. As the lender prepares your file for submission to their underwriters you will be asked to provide documentation of assets, income and anything else they feel that they will need. They will also be asking for money to pay for your credit report and appraisal.
Inspection
The inspection of your home is most important and setting up a general home inspection should be done as soon as possible after contract acceptance. During the typical 10 day inspection period a buyer has the right to inspect the house, check on crime reports, check with the city regarding future development and any other inspections that any particular house may need. After the inspections are complete the buyer has three options: terminate the contract, move forward with the house in as-is condition or provide the seller a list of unsatisfactory conditions. The most common is the later. Once a list is provided a negotiation ensues between seller and buyer to find an acceptable solution. If an agreement is not met the buyer has two options: to let the contract expire or to waive all inspection objections and move forward as-is. To learn more about the inspection process click here.
In Colorado the seller is required to provide to the buyer title insurance which insures clean and merchantable title. Basically, the house must be transferred without any title disputes. The title company will do a title search and disclose to the buyer any recorded documentation that will transfer with the house. Common examples of the exceptions to title insurance are homeowners association covenants, development documentation and utility easements.
Appraisal
Your lender will order an appraisal on the property. Having a third party asses the value, helps the mortgage company evaluate their risk in their investment. If the appraisal comes in less than the purchase price (this is happening quite a bit), the buyer has three options: re-negotiate with the seller, put additional money down to keep the loan-to-value ratios in line, or to terminate the contract.
Final Walk-Through
Just before closing it is a contractual right for the buyer to do a final walk-through. This is the time to check that all inspection items have been completed as well as check on the overall condition of the house. If something were to happen to the house between inspection and closing the seller is obligated to fix it.
Closing
Once all of the contingencies have been met you are ready for closing. The closing day is set forth in the original offer but the closing time is usually worked out by the Realtors about two weeks in advance. The closing takes place at the title company and it usually takes a little more than an hour. A day or so before closing the title company will provide to the buyer a settlement statement that will show exactly how much the buyer will need to bring to closing in the form of good funds. Good funds can be a cashiers check or a bank to bank wire. At the closing the title officer will guide the parties through the various documents which need to be signed. After all of the signing is complete and all of the money is accounted for the place is yours! It’s time to move in.
by neil kearney | Nov 10, 2009 | For Buyers, General Real Estate Advice, Real Estate 101 |
Moving in to a new home is one of the more exciting things we can do. The process seems simple enough – choose a house, write a big check and then move right in. Of course there is more to it. In fact, after selling homes since 1992, I know that no two transactions are the same. Knowing what to expect and doing it in the right order goes a long way towards archiving your goal. The following is my home buying 101.
Have a Firm Financial Foundation:
The foundation of a successful home purchase begins long before the home search. It begins with having a sound financial footprint. In today’s credit environment, a buyer needs both good credit and a sizable down payment. At least a few months before the contemplated purchase you should check your credit and make sure that there are not any surprises lurking. The days of 100% loans are gone, so you will need at a minimum 3.5% (FHA loans) plus closing costs ready to put down. If you are getting a conventional loan or buying investment property you will need a much larger down payment.
Find a Good Realtor
The internet gives you all of the information you could ever ask for at the click of a button. But when it comes right down to it, you need the assistance of a professional who has been through the process time and time again. Most people end up working with a Realtor, so why not engage one early on in the process? Realtor’s have tools that will save you time and put you on the right track sooner. I can set up an automatic email search and a password protected website that work together to give you all of the details about all of the houses you may be interested in. A good Realtor will help you navigate the process, get you the information you need and allow you to concentrate on your family and your job. Make sure you have found a Realtor who is more interested in helping you find a great house for the long haul rather than a quick sale for them. It takes patience and persistence to make sure you get the job done right.
Get Pre-Approved
The next step in the process, before you even view a home is to find a good lender and get pre-approved. Your Realtor should be able to recommend a few local lenders who have proven themselves to be responsive and know how to get the job done. Using a local lender is important, not only are they accountable but they are there to solve problems at the closing table if anything comes up at the last minute. Your earnest money is at stake! If your lender is delayed at the last minute or their money doesn’t make it to the closing table on time and the seller chooses not to give you an extension, you lose your earnest money. You cannot go back to your lender and recover those lost funds. Choosing a lender is more than finding the lowest interest rate, it is finding an advisor who will help you make a sound financial decision given your unique circumstances. The credit rules change often and it is important to use an experienced lender to help you get the job done in a timely manner.
Viewing Homes
The next step in the process is setting your criteria and starting to view homes. At any one time there are hundreds if not thousands of homes available in any given area. Believe me, you don’t have the time or the patience to see them all. The broadest categories in which to sort homes are: location, price and size. Your Realtor can narrow your search by using literally dozens of features but in the beginning it is best to keep it as broad as possible. A good practice is to look at a good cross-section of homes and then communicate your likes and dislikes with your Realtor. They will then be able to suggest other homes to see. When viewing homes it is easy to get overwhelmed by information overload. If you look at ten houses on a Saturday by the last few it is hard to remember if it was the second one or the fifth one that had the good view. I like to keep it to six or fewer. Take notes, ask questions and communicate your likes and dislikes.
Click here to view Part 2 which will take you from offer through closing. To get started call Neil Kearney at 303-818-4055
by neil kearney | Nov 10, 2009 | For Sellers, Uncategorized |
In order for a house to sell in today’s market it must have a lot going for it. The competition is intense and a successful seller is one who competes and wins on many different fronts. This article will provide the prospective seller tips, ideas and best practices that will help you sell your home, not just list it.
Curb Appeal
No matter how beautiful your home is on the inside, the first impression will always be made by how the house looks from the street. Many times if the house does not look up-to-snuff on the outside buyers will chose to not go inside. You don’t get a second chance to make a first impression. Here are some tips to make the exterior of your house look its best:
- Cut the grass,
- Trim the hedges.
- Rake the leaves.
- Sweep or shovel the sidewalks.
- If you have rocks around your house make sure it’s not 1 part rock and 2 parts old leaves and sticks.
- Trim and remove any dead flowers, or shrubs. Dead and dormant are not good buyer thoughts as they wait for their Realtor to open the door.
Cut The Clutter
People tend to accumulate things. The mail arrives and we make a pile. Grandma gives you a chair and we squeeze it in. After a few years, what is imperceptible to the owners is a maze of furniture, junk and accessories. You have to cut the clutter! Buyers will love to see Sally’s photo montage from kindergarten to marriage but they will remember Sally’s dress and her husbands blue tux and won’t remember that this is the house with the beautiful wood floors. Remove 7/8ths of the personal photos. I realize it is still your house but buyers have a hard time picturing themselves in “your” house. The rooms will look bare and not “homey” to the seller but believe me, this is how buyers like to see a house. They want to be able to picture their stuff in the house.
Staging
Once you cut the clutter it is time to think about staging each room. The idea is to make each space pleasing to the eye. Work from the perspective of a buyer at the entrance to each room. There should be a balance to the room in terms of weight of the furniture (you don’t want everything piled in one corner) and hardness. By hardness I mean that there should be a balance of hard and soft surfaces. If a room has hardwood flooring there should be a rug to soften it up a bit. If there is a couch, a love seat and a lazy-boy the room is probably too soft and you will need to add a coffee table or replace the lazy-boy with a harder chair (think Windsor). I am not a staging expert but I know people who are and even if you have plenty of your own furniture it is worth a couple of hundred dollars to have an expert come over to put it in the right place. Beware, sometimes the right place for some of your stuff is at the curb. In order to get it right you sometimes have to hear what you don’t want to.
Clean Like You Have Never Cleaned Before
Buyer’s look at your house differently than you do; they are comparing it to all of the others out there. Not only are they looking for the facts of a house (number of bedrooms, square footage, etc.) they are waiting for an emotional connection with a house. It is hard to get emotionally attached to a house that has flies in the window tracks, a dusty top of the refrigerator (just because you can’t see it doesn’t mean a buyer can’t see it) or a ring around the toilet. It takes near constant vigilance to keep a house in pristine showing condition. The idea is to have the buyer ask if someone actually lives there. Before you put your house on the market it’s time to wash all of the baseboards, clean the silver in the hutch and wash the windows. It’s also time to clean the window wells, dust the light fixtures and shine the sink. Your going to love your house so much you are going to hate to leave. But then again, it’s hard work selling your house and you will be relieved when that offer gets accepted.
This is not an exhaustive list but it will get you thinking along the right lines. Time and time again I hear from my clients who get the highest and quickest offers that this happens to them each time they sell. Why does this happen? Are these people lucky? No, these people have the knowledge, planning and persistence to put their house in great showing condition. Call me whenever you need an extra pair of eyes to check over the progress.
largest investment. It is therefore wise to do everything in your power to minimize your risks. The first step is to hire a competent Realtor, that is where I come in. Your Realtor can then lead you through the process of intelligent due diligence. Some common items to consider: Is the asking price justified for comparable sales? How does the homes condition compare to others on the market? Are there any obvious flaws? What is the potential resale potential of the home? If the property is part of an HOA, can I live with the rules and the assessments? Can I live with the neighbors? etc… 
