Category: Buying Properties (3)

1.) What is the market like? Selling your home in as is condition or choosing to do work prior does matter in terms of what your market is like.  It also matters what buyers are looking for as well as what location you are in.  This is largely where a Realtor can help you navigate this question.  In short, if the market is in a sellers market, you may not have to do as much.  However,  if you are in a price point or neighborhood where it consists of mostly first time home buyers, you may want to think about making some updates/repairs.  You also might be in an area where you shouldn’t do much because the new owner may end up gutting, scraping or adding on.  Lots to talk about here.

2.) Selling the home in as is condition. There is a point where you should consider selling your home in as-is condition.  For example, if your furnace doesnt work, sinks and toilets run, floors are urine soaked, dead rats are on the floor and most of the windows are broken or boarded up,  you might want to consider selling as is.  Why, because this home probably needs a full remodel and not necessarily a refresh of paint, flooring or cabinets.  This is typically a home where you price it to sell and most of your buyers will be investors or fix and flippers.  First time buyers won’t touch this with a 50 foot pole.

3.) Do buyers want fixers or homes that are ready for them? Most buyers that are looking for deals are really looking for properties that need cosmetic items done,  not typically large remodel projects.  I have not dealt with any first time buyers that tell me, “find us something we can take to the studs”.  Most buyers are going to be looking for homes where the systems, plumbing, roof and structural are intact.  Most buyers now days do want a turn key home, ready to move in to and with minimal repairs.

4.) Before fixing up your home.  Make sure you speak with a knowledgeable trusted contractor and your Realtor, TOGETHER.  They know what people want, what colors and where to put it as well as the cost benefits of things you should do.  Most sellers take their projects too far, when really all they needed to do was upgrade the flooring, not order an imported marble from Italy.  You won’t see the return for it and buyers most likely have different tastes than you do.  Keep it elegant, bright and simple.

5.) What work should you do?  Here are 10 things you should think about doing if you do plan on fixing up your home prior to selling.

  1. Patch all holes, cracks in your walls and repaint the home to a neutral bright color
  2. Fix all appliances and HVAC systems
  3. Repair plumbing and all leaks
  4. Replace or repair all damaged flooring
  5. Replace broken windows
  6. Repair the roof and see if can get the roofer to certify it for 5 years
  7. Update light fixtures
  8. Replace blinds or drapes that are dated and faded
  9. Fix all safety items
  10. Make sure you get the home PROFESSIONALLY cleaned.  Theres clean, then there is licking the toilet bowl, clean

 

 

1.) Get mortgage pre qualification or, even better, pre approval before you start shopping.This helps you know what you can afford and makes your offer much stronger in the eyes of a seller. In a competitive situation, you may even consider waiving the mortgage contingency clause, which is something you want to avoid unless you are sure you can get the loan.

2.) Find a good agent. Using a real estate agent costs buyers nothing because the seller pays the real estate commission. Ask friends, family and co-workers for referrals. Look for a full-time agent who works often in the neighborhoods where you’re looking. You may want to interview several agents to find a good fit. If you can only look for homes on weekends, for example, you don’t want an agent who takes weekends off.

3.) Do your research. Use the Internet and apps from major portals such as Zillow, Trulia to research neighborhoods and asking prices for the type of home you want. But you should keep in mind that you’re not always getting a complete picture, so consult with your agent about real time market and trends in neighborhoods.

4.) Visit neighborhoods you’re considering at different times of day. A neighborhood that’s quiet during the middle of the workday may be noisy and crowded at night and on weekends. Get out and walk the streets, talking to people who live in the neighborhood, visiting shops and restaurants and “trying out” your desired location. Drive to and from work during commuting hours to get an idea of what a typical day might be like.

5.) Expect to provide lots of documentation to get a mortgage. Since the recession, mortgage lenders have become much stricter about documentation, income verification and other paperwork. Well-qualified buyers can still get a mortgage, with rates for 30-year loans at 3.80 percent last week. Borrowing has become more difficult with all the added documentation, so being prepared is key.

6.) Separate your needs from your wants. In a competitive market, most buyers find they have to compromise on location, amenities or condition of home. It’s easier to make a choice when you know going in which features you must have and which you’d like to have but can live without. Be flexible. Be prepared to compromise.

7.) Be ready to move fast. A well-located house in good condition and priced right will sell quickly, sometimes the first day it goes on the market. You need to be ready to make a decision when you find a home you like. You have to be prepared to act fast because we’re seeing bidding wars. If they don’t know what they want, the property is going to be gone.

8.) Don’t expect to get a smoking deal. The days of getting a house at a discount are long gone. That doesn’t mean you can’t ever get a substantial discount on a house that needs work, is in a less popular location or otherwise is in less demand. But in a seller’s market, there is usually very little negotiating room on price, and many go over asking or well over.

9.) Understand that no house is perfect. Making your offer contingent on a home inspection is a good move, but all homes have small defects. Many sellers won’t fix anything, and there is no reason for them to if there is a backup offer waiting if you walk away. You can’t nitpick a house. It is a used house. Many buyers may also choose to waive an inspection, but still do one for their peace of mind. This is common with Condos since the inspection is limited and responsibilities are limited.

10.) Find a way to sweeten your offer. Most buyers can’t pay all cash, but there are ways beyond price to make your offer more attractive to a seller. Have your agent ask the seller’s agent if he would like a faster or slower closing. Consider whether you can waive mortgage or inspection contingencies (which does not mean forgoing an inspection), go without a seller-provided warranty or otherwise improve the deal from the seller’s perspective.

11.) Don’t buy more than you can afford. Lenders will often approve a buyer for a higher payment than he or she can make comfortably. When you’re calculating what you can afford to pay, remember that a mortgage payment is only part of the cost of homeownership. Buyers should make sure they’re taking into account all the secondary costs including insurance, taxes, lawn maintenance, repairs and even furniture.

12.) Don’t buy a house you don’t love. While most buyers may have to compromise on some of the features they wanted, they shouldn’t settle for a home they don’t like. If you don’t find the right home this year, maybe you should rent and try again later rather than make a purchase you’ll regret. Make sure that you have a really strong emotional attachment to what you want to buy. Make sure you love it before you buy it.

Credit: Teresa Mears writes about personal finance, real estate and retirement for U.S. News and other publications. She’s also written for MSN Money, The Miami Herald, The New York Times and The Boston Globe.

The biggest question many buyers ask themselves is: “Should I/we buy now, or wait until the market goes into a correction”?

It’s a common question I get as a Realtor in the North Denver Colorado area. Our Real Estate market has been like trying to feed 10,000 piranhas only 1 grasshopper. With as many as 30-40 buyers making offers on one single home, how do you even try to compete with that?!

Since 2012, Denver has seen an influx of buyers at a time when marijuana was legalized, low interest rates, a strong job economy and an amazing climate hard to pass up. With that, we’ve seen home prices increase 7-10% on average, year over year, with some markets seeing 15-20% in appreciation, on average. 2016 doesn’t look like it will slow much either. We’ve also seen record rent growth throughout Denver and the North Metro area, which is interesting, but we’ll touch on that another time.

So why would anyone want to partake in a market as competitive as Denver’s? Below are are 3 reasons why you may be able to consider buying, and 3 reasons it may not be the smartest choice.

1.) Interest rates continue to remain extremely low, For now… This actually is a double edged sword. With low interest rates, many more buyers have much more buying power, and some buyers that couldn’t buy, now can afford to join in the fun, essentially helping the market stay as crazy as it has been. But, assume your interest rate of 3.75% increases to 4% on a $350,000 home. That is an additional $600/year in interest, on just a quarter percent. That makes a huge difference for first time home buyers. I do expect the Federal Reserve to increase rates over time given the strength of our economy. Being able to achieve a low interest rate on a mortgage allows you to lock in a great monthly payment, and allowing you flexibility on other bills, or even paying it down quicker, along several other advantages such as tax and appreciation.

2.) If you could lock in a mortgage payment for less than your rent, why not? It’s a no brainer to purchase, if your mortgage is less than your current rent, right? Not all the time. Speaking simply, ABSOLUTELY. However, you need to take into account where you are buying, how long you plan to stay, and an exit strategy. If you plan to move in 2 years or less, you are taking more of a risk than if you were to hold onto it for 5-10 years. Could you rent out the home with a positive return without going into the red? There are many things to consider here, but you and your agent should be able to break this down to figure out if the #’s make sense.

3.) I don’t have 20% to put down on a home…. That’s ok. Many local Credit Unions and banks have programs for first time homebuyers and even conventional programs that allow you to put as little as 3.5% down. Your Realtor should have a great network of lenders who can and have performed and been able to get loans for their clients. Ask them first.

So why should you maybe wait to buy a home?

1.) Lots of Debt. Now, this may not be a huge factor, but with lenders, it’s something they consider greatly. The ability to repay your loan or make payments is a deal breaker. Typically if your debt to income ratio is less than 43%, then you are sitting ok. For example, if you have $3000 in monthly expenses such as car payments, loans, credit cards, etc. and your monthly income is $6000/month, your ratio would be 50% and would be challenging for lenders to consider you qualified. However, some smaller lenders are able to be flexible on certain situations. Many smaller credit unions and lenders have less restrictions and can help work a deal that works for you and them. You need to consider your situation carefully if this is you. It’s very important to make sure you don’t get in over your head and you may want to work on getting your debts paid down or consider spending less on a home. Your agent and lender can help with walking you through a plan to a purchase down the road along with offering debt counseling.

2.) Are you in your 20’s/30’s and Single? You might want to consider your lifestyle and age. Don’t buy a home in the burbs, just to own a home when you are 25 and single. You may want to consider renting in downtown or in a core area to enjoy your 20’s/30’s rather than having to drive 20 minutes to the burbs everyday and being alone Sure, it’s cheaper, but you will regret missing out on the excitement of night life.

3.) Worried about your Job Security? If you are currently in the oil business, you may want to hold off, given the past 3 months in the oil business. However, it differs for every company and industry. But if you are worried that you may be relocated or laid off in the next 2 years. I would wait and keep your flexibility open to options. Losing your job and not having a consistent income can really put you in a tough position when owning a home. You cannot just simply down size. However, in a market like Denver, you may be able to sell in 7 days, but you cannot count on that. If you are unsure about the job situation, or hate your job. Keep your situation fluid so you can make better decisions for you and not your creditors.

That’s it! Tune in every week for new posts and videos. This was my very first blog and hope, if you are still reading it, that you enjoyed it and found it interesting. Leave me comments, questions or feedback below!

Agent Scotty Otis
www.scottroswell.com