Buying a Home

The lowdown on buying a home.

Should I Represent Myself When Buying or Selling Real Estate?

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:

Determining Price

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. 

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Should You Write a Buyer’s Letter to the Seller?

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.

Letter to Seller

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.

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Evaluating Price Per Square Foot as an Indicator of Value

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:

Measuring Price per Square Foot

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…)

How to Interview and Hire a Real Estate Agent

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.

How to Hire a Real Estate Broker

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.

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The Difference Between Condos, Lofts, Apartments, & Co-ops

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?

Condos, Lofts, Apartments, vs. Co-Ops

Condominiums

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.

Boundaries

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.

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Rules for Buying a New Primary Residence without Selling Your Current Home

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.

Buying a Second Home without Selling Your First

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…)

As a Buyer, What Can I Expect at the Closing Table?

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.

What to Expect at Closing

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…)

Home Financing Options Explained

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.

Home Financing Options

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…)