Source: Tara Siegel Bernard of the New York Times
Throughout the US there are countless people who would love to buy a home, but continue to pay that rent check to their landlord every month instead. Why is this?
For the average aspiring homeowner, the largest obstacle to overcome is the down payment. Several companies, including San Francisco-based Unison, have found an opportunity in this challenge: shared equity.
Shared equity allows homeowners to split their down payment with an investor in exchange for a piece of the appreciation when the home sells.
How shared equity benefits homeowners:
- Increase buying power
- Retain some of your savings and buy a home
- Avoid costly private mortgage insurance and high interest rates
The average loan to value (the percentage borrowed to purchase a home) for a first-time homeowner is 92.6%. Homebuyers who borrow more than 80% of a home’s value upfront are seen as risky by lenders. Traditionally, they overcome this with unfavorable interest rates and mortgage insurance. Shared equity allows for buyers to afford a large enough downpayment to avoid these costs.
The downside? By sharing equity with a firm like Unison, a home buyer saves upfront but ends up giving up a cut of their proceeds from sale if their home has increased in value.
Regardless of whether you are the type to give up some of your equity to allow an outside investor to alleviate some of the capital-intensiveness of home buying, shared equity is catching on. Unison invested alongside 450 homebuyers last year, and they project to invest with roughly 2,500-3,000 more people in 2018.
Check out the full article to dig deeper into the mechanics of shared equity.
Source: Sally Mamdooh of the Denver Channel
While browsing listing sites for a rental property to call home, Stephanie and Matthew Leschen stumbled upon a Trulia listing they thought could be the one. A man claiming to be the listing agent sent the Leschen’s a security code to the home, and they went to tour the place by themselves. Several conversations and a $3,400 later, Matthew and Stephanie found out they were the victims of a rental scam.
Unfortunately, this is not the only instance of such a scam. Watch the video below to see the rest of the Leschen’s story, and incorporate our tips for avoiding a scam into your next search for a rental home.
Tips for avoiding a rental scam
Do your research.
Trulia, like many apartment listing services, is widely used and trusted. However, this does not prevent scammers from posing as real estate agents. View the listing agency’s website and verify their legitimacy by searching for reviews and testimonials from other independent sources.
Beware of agents who ask for money before they show you an apartment or home.
An “admission” cost for a showing or open house should be an immediate red flag.
Meet with a landlord or listing agent in person.
A legitimate agency will always be willing to send an agent or manager out to a property to meet with you.
Beware of unusually high fees or security deposits.
Application fees are commonplace in a competitive market. However, if you are asked to pay a security deposit that is several times higher than one month’s rent, or to pay fees that seem unreasonably high, this is cause for concern. A legitimate agency will clearly explain any and all deposits and fees for you.
Admittedly, before venturing into real estate as a profession, selling a home without representation crossed my mind a few times. Now, I frequently take calls about For Sale By Owner (FSBO) listings and inquiries on properties where the buyer only wants to talk to the listing agent because they are representing themselves. Having peeked behind the curtain to see the intricacies of the real estate transaction, I’m glad to have hired a Realtor® to guide my way to the closing table.
Selling Your Home without a Realtor®
When selling your home, the “commission carrot” can cloud your judgement and tempt you to go it alone. A good real estate broker will provide value that far exceeds the fee charged at the closing table. Here are the three main steps in the home selling process where utilizing a professional can most benefit you:
The biggest mistake owners make is setting the listing price incorrectly. They usually base their pricing on the internet, typically by Zillow’s Zestimates. Big mistake. Nearly 25% of Zestimates are off by more than 10% from the sale price. Zillow even states in the fine print that these estimates are a starting point for determining value. Overprice your home, and the phone might not ring after your listing goes live. Underprice it, and you may leave money on the table at closing.
You found the perfect home and simply must have it! Your real estate broker is going to present your very strong offer to the seller’s broker and found out that there are several other offers on the home. You are very emotionally tied to getting this home. In this hot real estate market where homes can go within hours of being listed, some buyers are desperate to get the home they want. They may have written offers on several homes but weren’t successful. Writing a letter to the seller “pleading their situation” has occasionally been a tactic of buyers in such situations. Should you as a buyer write a letter to the seller in an emotional appeal for the seller to accept your offer? Consider the following.
What a Buyer’s Letter Is + When to Present It
A buyer’s letter to the seller is just that: a letter written by the buyer to the seller of the home that the buyer wants to purchase to encourage the seller to accept his offer. Letters are most often used when competition for homes is strong, there are multiple offers on a home, or when the buyer feels there is a special reason that the seller should accept his offer. The buyer may explain how this home fits him perfectly, what it would mean to his family to live there, tell the seller how well the home would be taken care of or restored, complement the seller on particular features of the home, etc., all aimed to get the seller to accept his offer. The buyer may also talk about his solid finances, job status, down payment, etc. to confirm his financial strength to purchase the home. The letter should be presented by the broker at the same time as the offer is being presented to the seller.
In some instances a seller may request a letter from prospective buyers. A buyer can include any of the items in the previous paragraph as well as a photo of the buyer and family. However, the seller must be cautious about basing his decision on any discrimination that could violate the Fair Housing Act.
The Metro Denver real estate market is hot! Even so, buyers don’t want to overpay for a home. Likewise, sellers want to get the highest price they can for their home.
When looking at homes buyers often ask, “What is the price per square foot for the home?” Likewise, sellers may say, “The home down the street sold at so much per square foot, so why shouldn’t mine sell for at least that much?” These seemingly simple questions can actually be quite complicated. Solely using price per square foot may not be a good basis on which to compare home prices. Here’s why:
Square footage can be measured in a variety of ways
It’s important to know whether the measurement includes:
- above ground square feet only
- below ground square feet
- main level and upper level
- finished square feet only
- finished or unfinished square feet in a basement
- all or some levels in a tri-level
- any garages
- the surrounding lot.
Unless price per square foot is based on exactly the same criteria, the comparison may not be valid.
It’s important to compare “like” homes
“Like” means homes approximately the same style (i.e. single family or condo), age, number of bedrooms and bathrooms, stories, location, lot size, and price range. Factors such as views or special amenities can be important to review. If you don’t compare “like” homes, you can get a substantial range in square foot prices. (more…)
According to the National Association of Realtors® (NAR) 2012 Profile of Home Buyers and Sellers, 66% of all buyers hired and interviewed only one agent. There’s nothing wrong with hiring the first agent you meet, but make sure you ask the right questions and more importantly, that you get the right answers. We’ve compiled a list of questions to ask any potential real estate suitor to help get the conversation started.
Why Are You in Real Estate?
It has been proven time and time again that to be good at what you do you have to love what you do. This is a great conversation starter, and it lets you get to know the agent and their background that led them to their real estate career. If the agent deflects and just wants to ask his or her questions about your price range, number of bedrooms, location, etc., then they probably think they have you in the bag. Business is about relationships, you will be spending a lot of time in person and on the phone with this agent over the next several months. Personality conflicts will add a barrier to effective communication and can make it hard to respect the real estate advice that you receive.
Are You Full-Time or Part-Time?
You don’t hire a part time lawyer, surgeon, dentist, or pilot so why would you hire a part time real estate agent? To be great at a trade you need to be 100% invested in that trade and practice it day in and day out. When was the last time you re-programed your all-in-one TV remote from memory? Chances are if you don’t do it multiple times a week you will have to reference someone for help.
Sometimes the jargon used in real estate seems confusing, and words appear to be interchangeable. When looking for a condo, loft, apartment, or cooperative apartment, this may help clarify for you. What’s the difference?
A condominium is a type of ownership. Often shortened to “condo”, it is a collection of individual residential or commercial units and common areas as well as the land upon which they sit. A condo can be attached to other units or can be a collection of detached units.
Individual ownership within a condo is construed as ownership of only the air space confining the boundaries of the unit. The boundaries of that space are specified by a legal document known as a Declaration which is filed with the local governing authority. These boundaries will typically include the wall surrounding a condo, allowing the unit owner to make some interior modifications without impacting the common areas. Anything outside this boundary is held in undivided joint ownership interest by a corporation established when the condo was created. The corporation holds this property in trust on behalf of the unit owners as a group and does not have ownership itself.
By guest author: Christian Durland of Homeowner’s Blueprint
Here in Denver, Colorado, things have been quite exciting in the local world of Real Estate. While many other parts of the country are still struggling in terms of foreclosures and short-sales, and an over saturated Real Estate market, here in Denver, we’re actually enjoying some home appreciation with certain pockets of the Metro area going up into double digit appreciation rates over the last year, along with home inventories (homes currently being offered for sale) being at a 23 year low.
With all this positive news, many are now thinking that this maybe the right time to dive into Real Estate and purchase a new home, but many of those who are making this decision must also sell their current home before purchasing a new home, which is still (even though the market has “healed” quite a bit) not as easy as it once was before “mortgage meltdown” and the subsequent housing crisis of 2007-2010. Then there will be those, who will opt to retain their current home and convert it into a rental property, either by necessity, or because they choose to, however this transition may not be as simple as one might think either. (more…)
You’ve negotiated a successful offer, resolved all the inspections items, and done your due diligence. You are so close to ownership that you can feel the new keys in your hand. The only thing standing between you and moving into your new home is the closing table. Whether this is your first real estate closing or you are a seasoned veteran, the following will point out what to expect in a real estate closing in Colorado.
PRE-CLOSING ITEMS: 12 TO 48 HOURS OUT
Depending on how condensed your contract period is, you may receive the final settlement and HUD-1 statements with enough time to review them with your lender and real estate broker. It isn’t uncommon, with the volume of new mortgages and refinances, to receive these documents just hours before closing. Either way, you will have time at the closing table to have all your questions answered about the details and account for every penny of the transaction.
Prior to your closing, you will do a final walk-through of your new home with your broker to inspect its condition. This is your opportunity to ensure all agreed upon inspection items have been completed, the condition of the home hasn’t changed from when you went under contract, and all contractual items are in the home. The final walk-through is not an opportunity to re-inspect the home. (more…)
Buying a home can be one of the most exciting (and costly) purchases you will make during your lifetime. One of the most important steps in the process is determining how much you can afford. Yet, many people wait to secure financing until it is absolutely necessary. In a competitive housing market, having your financing in place before you start your home search gives you the ability to place an offer immediately after viewing the home of your dreams and making that offer stronger. It also allows you to focus on the more enjoyable decisions like choosing a neighborhood.
PRE-QUALIFICATION VS. PRE-APPROVAL
Pre-qualification and pre-approval are two common words thrown around in the mortgage industry. Pre-qualification is an unofficial estimate of how much you can borrow and repay for your home purchase. The amount lending institutions will pre-qualify you for is derived from the information you provide on your finances, credit history and income. Obtaining Pre-approval requires you to submit financial documents, such as tax returns, business licensing, and bank statements. Lenders will analyze the documents, run credit checks, and verify employment. The pre-approval process verifies you have the ability to repay the amount for which you are approved and carries more weight when you submit an offer to purchase a home. Although it takes more steps to obtain pre-approval, it verifies to the seller that you have the financing available to follow through with the purchase. (more…)