Don't Let a Home's List Price Scare You Away

Today I’d like to share an example of why list price doesn’t matter as much as it might seem.

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If you’re a buyer on the market right now, I’ve got some key information that could be helpful for you. 

Currently, there isn’t a lot of inventory. We’re in a strong seller’s market and we aren’t seeing many negotiations on price. In other words, if you fall in love with a house, don’t get caught up on the list price. 

I was recently helping a client look at properties when they fell in love with a home listed at $545,000. The client wanted to submit an offer of $525,000, so that’s what we did. The seller came down $10,000 from their list price to $535,000. My clients, who were going to put 20% down with an interest rate of about 4%, couldn’t decide what to do. 

To help them make their decision, I used a great tool I keep on my phone to show them the difference that $10,000 would make. While $10,000 is a lot of money in general, it isn’t enough to worry about when you’re trying to secure the perfect home. 

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Is $38 really worth losing out on the right home?

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For my clients in this particular situation, that $10,000 would only really have amounted to a $38 difference in their monthly payment. Think of it this way: is $38 really worth losing out on the right home? 

Once I showed this information to my clients, they were more than happy to move forward with purchasing the home of their dreams.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

5 Terms to Help You Navigate the Home Buying Process

If you’re a homebuyer, there are five terms you need to know that will help you understand the home buying process far better.

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Here are five terms that will help you navigate the home buying process by understanding what they mean: 

1. Appraisal: This is a professional valuation of a property done by an appraiser. If you’re obtaining a loan to purchase your home, they’ll be hired by your lender. If you’re purchasing the home with cash, you can also hire the appraiser yourself. The appraisal will determine the proper value of the home by pulling comparable properties.

2. Closing costs: This is a bulk term for all the costs you’ll need to close your loan and get to the closing table. The lender’s fee, tax costs, and insurance costs are examples of what’s included in the closing costs. There may be other costs involved, too. If you’re buying a property within a homeowners association, for example, there may be a fee to transfer your name into ownership. 

3. Down payment: This is how much money you’ll put down in order to purchase the home. The more you put down, the less of a risk you represent to the lending institution giving you your loan. Some people pay 5% to 10% down, while others go as high as 20% in order to avoid mortgage insurance. Certain FHA loans allow you to put down as little as 3%, and if you’re a veteran, you can qualify for a VA loan and put no money down. There are many programs out there that can help first-time homebuyers get into a home. 

4. Credit score: This is another way a lender can examine your credit history and determine how likely you are to repay the loan they give you. A credit score can range anywhere from 350 to 850. Only about 55% of loans used to purchase a home are for scores lower than 750. Don’t worry, though—if your score isn’t above 750, you can still get a great loan. 

5. Pre-approval letter: This is a letter you provide to the seller stating that you’ve already been approved by a lender. In order for you to be approved, a lender will look at your assets and income and, more importantly, they’ll start collecting data. The more information you can give to a lender before you start house hunting, the more successful you will be. 

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The more information you can give to a lender before you start house hunting, the more successful you will be.

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If you have any questions about these terms or you’re thinking of buying a home in our Denver market, don’t hesitate to reach out to me. I’d be happy to help you.

The Difference Between Appraisals and Inspections

Understanding the difference between appraisals and inspections is important to any 

real estate transaction.

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Recently someone sent in a great question: “What is the difference between an appraisal and an inspection?” 

It’s common to confuse these two things, but knowing the difference is actually very important to any real estate transaction. 

First, let’s discuss appraisals. The main purpose of an appraisal is to determine the value of a home. Even though I myself have a solid understanding of market value and have worked with several hundreds of homes, my opinion, or any agent’s opinion, simply doesn’t mean as much as the home value determined by an appraiser. 

The lender is the person to whom this appraisal will really matter. Except in the case of cash buyers, the lender is the one supplementing this large sum of money to the buyer for the home purchase.

 Also, since they will be using the home as collateral, it is important for them to have a solid grasp of what the value is. 

In today’s escalating market, appraisers will look at similar homes while accounting for things like upgrades. Appraisers are looking in areas to help them determine home value. This can cause discrepancies in a forward-moving market like the one we’re in today. 

Sometimes these discrepancies will manifest in the form of an appraisal gap. 

Moving on, there’s also the matter of the home inspection. Inspections benefit the homebuyer in a number of ways. An inspection will not only alert them to issues within the home, but will also give them a good idea of what home maintenance will be like in the future. 

Overall, each one of these processes are integral to getting to the closing table from either side of the transaction.

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These processes are integral to getting to the closing table.

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If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

Why Are Home Inspections So Important? Part 2

We're back to discuss the fourth and fifth questions we're commonly asked about home inspections.

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We're back today with the final two items on our list of the top five things you should know as a homebuyer going through the inspection process.  

You can see our discussion on the first three items here.

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You want to ask sellers to cover major health and safety items.

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The fourth point of consideration is what you should ask for from a seller following the inspection. It really depends on the kind of market you're in, and currently, Denver is in a strong seller's market. Some sellers are listing their house as-is or offering to take care of very little as a result of the inspection. You want to ask them to cover major health and safety items, like the major mechanicals, the electrical, the sewer lines, and the other big ticket items. 

Honey-do list items that you can take care of on your own can be saved for once you get into the home. 

The final question I want to answer is, "How can the seller respond to your inspection request?" The Colorado buyer contract states that there are three ways. First, they can say they won't fix anything on the list. The good part is that you can still back out of the contract and get your earnest money back or move forward if the inspection findings weren't that worrisome. 

The second way a seller can respond is by agreeing to fix everything exactly as you requested. Then, the third way is called an alternate resolution. This means they'll agree to make some repairs on your list or offer a credit for you to take care of some repairs after closing. 

If you have any questions about the inspection process or about buying and selling real estate, don't hesitate to give me a call or send me an email. I'm here to help!

Why Are Home Inspections so Important?

Today, I’ll to answer three of the most common questions that I get about one of the most important steps in any real estate transaction: the home inspection.

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Home inspections are an incredibly important part of the real estate transaction. I get a lot of questions about inspections from homebuyers, so today I’ll cover the first three. 

The most common question I get is, “Who pays for the home inspection?” As the homebuyer, the inspection is part of your due diligence, so that is going to be your cost. However, the home inspection pays for itself time and time again because it helps you know if anything is wrong with the house that you’re purchasing. 

A general home inspection runs anywhere from $300 to $500, depending on the age and square footage of the home. 

What kind of inspections should you do when you buy the home? There are a variety of inspections that you can have done on the home. It’s a good idea to start with the general inspection. If that inspector sees anything that he feels needs a specialist’s attention, he will suggest another inspection. 

For example, if the general inspector finds a water leak in the bathroom, he may recommend that you hire a mold specialist to do a mold inspection. If there is a serious issue with the roof, he may recommend that you hire a roofer for a more in-depth roof inspection. 

I do recommend that you do a sewer line scope, especially in neighborhoods with older, mature trees. You can also order a radon test to see what the radon levels are, or a termite inspection if you are concerned about that. Typically, though, we don’t see many termites in Colorado. 

One of the most important inspections you can do is the neighborhood inspection. Walk through the neighborhood at 10 p.m. or early Saturday morning. Talk to a few of the neighbors too see what the area is like. After all, you are only in the house one or two times after you make the offer and before you close, so you really want to get a feel for the area. If your neighbor’s dog barks incessantly, you wouldn’t know that without inspecting the neighborhood. 

All of these inspections are a great way to protect your earnest money because you always have the right to terminate the contract. 

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Home inspections help protect your earnest money.

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Finally, what is an inspector looking for? The inspector will note health and safety concerns, maintenance items to keep an eye on, and a couple honey-do items that you may want to correct upon moving in. 

When you first look at the house and fall in love with it, you might be swept away by the beautiful kitchen with granite countertops and new appliances. However, we don’t know what’s going on behind the walls. The inspector will examine the electrical system, water pressure, and the age of the furnace and the hot water heater. 

Hopefully, these answers have helped you understand a little more about home inspections. I will answer a few more home inspection questions next time. Meanwhile, if you would like to learn more about home inspections or real estate in general, just give me a call or send me an email. I would be happy to help you!

How Can You Ensure a Smooth Home Buying Process?

A smooth transaction isn’t impossible in a seller’s market. You just have to be prepared in order to accomplish it.

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One question that I keep getting asked is, “How do I have a smooth home purchase in this market?” It’s a crazy market out there for buyers, so I have four tips to share with you today that will help your transaction go smoothly. 

1. Buyer orientation. We like each of our buyers to complete this step first. We sit down with them for about half an hour over a cup of coffee and go over the home buying process from start to finish, including the expenses and what your goals are as a buyer.

2. Getting a great lender. A lender and I work hand in hand to get you to the closing table. We can refer you to a preferred lender or meet with your lender today. 

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You need a great lender in addition to a great agent.

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3. See the homes in person. Starting your home search online is a good idea, but you should also go see the properties that interest you in person. There is a lot that you can learn by being inside the home that you can’t by looking at photos online. There is a lot of inaccurate data out there, too. We set our buyers up with a search on our MLS portal, which is accurate and updated every 15 minutes.

4. Close the deal. Our goal is to help our buyers understand the home buying process, get them through it, and make sure they get to the closing table once they’ve found the right house.

If you have any questions for me or you’re a buyer looking for a smooth transaction, give me a call or send me an email. I look forward to hearing from you soon.