Author Archives: Garry Callis - Legacy Real Estate Group - Colorado
When responsible first-time home buyers need help buying a home, the family bank can sometimes lend a hand.
Younger home buyers face a mountain of obstacles, including rising home prices and interest rates, too few homes for sale and unpaid college debt. Student debt is a major source of trouble. When the National Association of Realtors surveyed recent home buyers who had problems saving up a down payment, 53% of those in the youngest group (37 and younger) blamed student loan debt for their difficulty.
Families appear to be pitching in to help, according to the results of that survey in the 2018 NAR Home Buyer and Seller Generational Trends Report. Among home buyers who made a down payment, 23% of those 37 and younger used a gift and 6% a loan from family or friends — the highest proportion for either type of assistance among all age groups.
Family assistance like this works best when the kids qualify for a mortgage on their own and parents make the purchase more affordable with, for example, a bigger down payment or a lower interest rate, says Jeremy Heckman, a certified financial planner with Accredited Investors Wealth Management in Edina, Minnesota.
First the ground rules
To create a businesslike distance for these transactions, Heckman suggests that parents:
- Consider disclosing the assistance to all immediate family
- Consider treating all siblings equally
- Use contracts
- Document gifts
Formal agreements offer important benefits, says San Francisco real estate attorney Andy Sirkin. They define obligations and minimize misunderstandings. And if parent lenders die or become incapacitated, all their heirs can view the transaction and its history.
Ways to help
Here are three ways parents can help make it more affordable for new home buyers to purchase a home:
1. Give money
A gift of money is often best, Heckman says. Parents can write a check for any amount they choose. That’s it — no contract or ongoing commitments. Or they can pay all or part of an expense such as mortgage closing costs. Providing down payment assistance can help new borrowers avoid paying for private mortgage insurance, which helps keep their monthly payment low.
How it works
Strict rules dictate how cash gifts are used in a home purchase, and they vary by mortgage type, lender and lender offer, says Mark Case, a senior vice president at SunTrust Mortgage.
Lenders like to see money gifts — easily traceable checks, bank transfers or wire transfers — in a borrower’s bank account three or four months before applying for a mortgage, Case says. Givers and recipients may need to sign letters confirming that the money isn’t a loan.
When it comes to taxes, anyone can give any other person a gift up to $15,000 in value (money or, say, stocks) in 2018 without filing the gift-tax return IRS Form 709. So a parent with two children can give each of them — and even the children’s partners — up to $15,000 this year without having to complete Form 709. A tax professional can confirm how the rules apply to individuals’ specific circumstances.
2. Finance the mortgage
Parents with cash to invest can become the mortgage lender, offering extra-easy terms, like no closing costs or no down payment. Heckman says they can charge a higher rate of interest on their money than it earns in a savings or money market account and still offer kids a lower-than-market mortgage rate.
“I said, ‘This could be a win-win for both of us,’” says Jay Weil, an attorney in Wayne, New Jersey. He and his wife, Judy, have financed two mortgages for their son Matt and Matt’s wife, Allison.
How it works
Jay and Judy fully funded the younger couple’s first home, a Columbia, Maryland, townhouse. They decided to use a service that facilitates family loans. They worked with National Family Mortgage, which charges one-time setup fees of $725 to $2,100, depending on the loan size, and provides all necessary forms and documents to meet state, local and IRS requirements, guides families through the settlement and filing process and connects borrowers with loan servicers.
Then in 2017, the Weils lent the kids money again, for a $579,900 house in Laurel, Maryland. Matt and Allison got two loans. One was a primary mortgage from SunTrust Mortgage for $259,900, at 3.875%. His parents provided a second mortgage for $260,000 at 1.98%. They used money earned from the sale of their first home to make a down payment.
Family lenders must charge at least the Applicable Federal Rate, the minimum interest rate required to keep the assistance from being considered a gift.
Although riskier for parents, co-borrowing is another option. Mortgages with co-borrowers were nearly a quarter of all new-purchase mortgages in the third quarter of 2017, according to ATTOM Data Solutions, a real estate data company.
Co-borrowing helps borrowers overcome a limited credit history or a too-high debt-to-income ratio, says Case, of SunTrust Mortgage.
How it works
Parents apply for the mortgage, too. They must meet the lender’s credit requirements and sign loan papers with their kids at closing.
Aside from the mortgage itself, a separate family contract can define expectations and details such as who gets how much equity when the home sells and what happens in case problems arise, says Sirkin, the real estate attorney.
For parents interested in being co-borrowers, there are some things to keep in mind:
- Not all loans allow co-borrowers, so it’s good to confirm the option when shopping for mortgages
- Some lenders may call this step co-signing, which may have different parameters, but the outcome is the same: Parents and children are equally responsible for the loan and any missed mortgage payments
- Parents’ credit could be affected, making it hard to finance another big purchase later, even if children make payments on time
With all the headwinds facing first-time home buyers, family help sometimes makes all the difference.
The article 3 Ways Parents Can Help Grown Kids Own a Home originally appeared on NerdWallet.
A Home Buyer’s Guide to Motivated Sellers
Home shoppers outnumber home sellers in many places. If you’re a home buyer, you need every competitive advantage you can get. That’s why it pays to know how to find motivated sellers and persuade them to choose you.
The definition of “motivated seller” has changed since the depths of the economic crisis about a decade ago, when many motivated sellers were trying to avoid foreclosure. There are fewer of these desperate sellers now, but you can still find motivated sellers if you know where to look.
What is a motivated seller?
“A motivated seller is someone that needs to move out quickly,” explains Sonia Figueroa. Figueroa, a real estate agent with Century 21 Affiliated in Chicago, lists common motivators:
- The home has been on the market for three months or more, and the sellers feel impatient
- The sellers are relocating for a job
- The sellers are divorcing. “They’re super motivated because they want to get rid of each other, get rid of their assets and be done,” Figueroa says.
- The owner died and the sellers are the heirs. “They just want to price it to sell it, to divvy up the money,” Figueroa says.
Identifying a motivated seller
Here are telltale signs that the seller is motivated: The home is priced to sell quickly, it has been fixed up and staged, and the listing photos were taken by a professional photographer, says Stacy Hennessey, a real estate agent with McEnearney Associates in Falls Church, Virginia.
Another sign is when the seller is willing to negotiate. That’s not the norm in a typical seller’s market, where “if you don’t come with a full-price offer or a near full-price offer with terms that the seller likes, they can say, ‘Thank you, but no. Next!’” says Terri Robinson, a real estate agent with Re/Max Select Properties in Ashburn, Virginia. A motivated seller will make a counteroffer, even to a lowball bid.
And sometimes a home’s listing contains the phrase “motivated seller,” or the seller’s agent says the seller is motivated.
Tips for buying from a motivated seller
Ask what the seller’s priorities are. “The question becomes what are their hot buttons? What are their needs?” Robinson says. Maybe the sellers need a place to live while renovation work on their new house is wrapped up. Or maybe the sellers want certainty that the buyer can qualify for a mortgage.
Offer to solve the seller’s problem. “From the very beginning, having your agent tell the listing agent that you will be flexible and you want to help them out” can give you the competitive edge, Hennessey says.
Get preapproved for a mortgage. With a mortgage preapproval, you can close faster and the seller is assured that the deal won’t fall apart because of problems getting financing.
Offer flexibility on the closing date. Your offer is more competitive if you can adjust your timing to the seller’s timing, Hennessey says. One seller might want to close as quickly as possible, and another might want to wait until the end of the school year.
Offer a larger-than-usual earnest money deposit. Offering more than your area’s customary deposit is a signal that you’re serious. “My sellers always ask me what the deposit is,” says Creig Northrop, president and CEO of Northrop Realty in Clarksville, Maryland. A 1% deposit is standard in Northrop’s market. More than that is “showing sincere interest. So if you can get in the 2% to 5% range of deposits, you’re in really good shape,” he says.
Pay your closing costs instead of asking the seller to pay. Depending on where you are, it might be customary for the seller to pay certain closing costs. Offer to pay them yourself.
Offer to rent the house to the seller for a limited time. Sometimes sellers want to close the sale of their home a few days or weeks before moving into their next home. You can offer to let the seller rent the home for a few days or weeks. Customarily, buyers charge a daily rate of the mortgage payment divided by the number of days in the month. Your offer will stand out if you don’t charge rent.
The article A Home Buyer’s Guide to Motivated Sellers originally appeared on NerdWallet.
No matter if you keep your home sealed tight, leave the windows open, have a steady stream of visitors stopping by, or prefer to be alone, dirt (and, worse, microbes!) will worm their way into your pad.
And bathrooms are the worst for collecting the yuckiest of grime and germs. Check out these upgrades that’ll give you a fighting chance against germs, dirt, and bacteria while doing a whole-lot-less cleaning. Game. On.
#1 Materials That Use Little or No Grout
Who says a bathroom has to have tile? Dirt and grime love to cling to the gritty grout between tiles. To banish it from your bathroom for good, try glass or waterproofed real-stone veneer. They come in large sheets — hardly any grout needed. Maybe some at the joints, but that’s better than the entire wall and floor.
If you want to go completely groutless, there’s an ancient Moroccan technique called tadelakt that uses lime-based plaster, which is waterproof, resists mold and mildew, and, best of all, is sealed with a soap solution to keep grime away. It’s worked for centuries, so it should work in your bath, too. It’s pricey, though, because it requires trained artisans to apply.
An affordable alternative, suggests Stephanie Horowitz, managing director of ZeroEnergy Design in Boston, is to opt for large tiles with narrower grout lines. “It’s a fresh, modern look that requires minimal upkeep,” she says.
#2 No-Touch Faucets
Sensor-operated faucets aren’t just for crowded airport and mall restrooms. They’re growing in popularity in homes, too. If germs are your No. 1 enemy, a sensor faucet is a good choice because without touch, it’s tough for germs to find a foothold.
Some models also light up when you approach the sink — a cool, futuristic bonus for when you’re stumbling around in the middle of the night.
But because sensor faucets require a battery or electrical connection, users have complained that they break down more. Funny thing, though. Many say they would buy it again because they love the touchless feature.
Just don’t expect them to save you water. The last official study by the Alliance for Water Efficiency (in 2009) found they actually used more water.
#3 No-Groove Toilets
If you’ve ever transformed into a contortionist while reaching to clean every last yucky crevice in your toilet, the one-piece model was made for you. Because traditional two-piece toilets have a separate bowl and tank, they have lots of tiny crevices that are hard to really get clean.
You may spend a bit more for a one-piece model, which is molded from a single piece of porcelain, but the amount of scrubbing time you save may make it worthwhile. Plus, you don’t have to get up close and personal with the nasty parts.
Today’s pressure-assisted toilets not only reduce cleaning time, but virtually eliminate backups, thanks to a forceful jet of water that scrubs the entire bowl and removes everything in its path. On this one, you’ll actually save water. Because of their eco-smart designs, these high-efficiency toilets can save a family of four up to 16,500 gallons of water annually.
#4 A (Good!) Exhaust Fan
This is probably the least-sexy upgrade, but did you know it’s the No. 1 feature buyers want in a bathroom? That’s probably because it’s so effective at fighting bad micro-organisms.
Not only does a good exhaust fan fight mold, mildew, and other nasty micro-organisms, it protects your walls, paint, and trim. If left unchecked, excess moisture can cause your wallboard, paint, and trim to deteriorate. So spending a few hundred dollars on a fan and pro install could save you thousands down the road.
That’s a low-cost, no-brainer upgrade. Even if you already have an exhaust fan, take a look at the newer ones. Today’s models are much more efficient than the old buzz saw you might currently own. They’re quieter, more powerful, and use less energy.
If you forget to turn it on before you step into the shower, some models even come with a humidity-sensing feature that automatically turns the fan on when humidity is detected, then shuts off when the air is clear.
LISA KAHN writes extensively on home improvement, interior design, luxury real estate, and travel for media outlets including About.com, “The New York Times,” “The Ledger,” and “New York Spaces.” She has also edited dozens of books on home design, landscaping, cooking, and travel. Follow Lisa on Twitter.
This original article was posted here. We found it so helpful we wanted to pass along to everyone again! First Things To Do After Buying A House.
What to Do ASAP as a New Homeowner (“Future You” Will Thank You)
It’s finally yours. Your very own home. You can paint the walls whatever you like. Heck, even knock out a wall! There’s no landlord to fight you.
But if you’re serious about developing good homeowner habits (so your home makes you richer, not poorer), you’ll follow these tips. Easier to do now than suffer some head-slapping regrets later.
Security & Safety
These are the very first things you should do after buying a house (for obvious reasons):
1. Change locks. Spares could be floating around anywhere.
2. Hide an extra key in a lockbox. Thieves look under flower pots.
3. Reset the key codes for garage doors, gates, etc. The former owners might’ve trusted half the neighborhood.
4. Test fire and carbon monoxide detectors. Who knows when the last time was. Definitely install them if there are none.
5. Check the temperature on your water heater, especially if you have young ones, so it won’t accidentally scald. Manufacturers tend to set them high. (but the best temperature setting for hot water is 120 degrees).
6. Make sure motion lights and other security lights have working bulbs.
7. Put a fire extinguisher in the kitchen and each additional floor.
Start your master maintenance plan (and good home-keeping habits) by setting reminders in your calendar to do these basic maintenance tasks:
8. Clean out the dryer hose and vent yearly. Clogged ones burn down houses. And you don’t know the last time the previous homeowner did it.
9. Change your HVAC filters at least once a season. You’ll save on heating and cooling — and your unit will last longer. (While you’re at it, go ahead and stock up on them, too.)
10. Schedule HVAC maintenance for spring and fall.
11. Clean your fridge coils at least once a year. It’ll run better and last longer. (Don’t see any coils? Lucky you! Newer fridges often have coils insulated, so there’s no need for annual cleaning.)
12. Drain your water heater once a year.
13. Clean your gutters at least twice a year.
14. And if all items on your inspection report were not addressed, make a plan to fix them — before they become bigger and more expensive repairs.
You really really don’t want to be figuring any of this out in a real emergency. Do it now. You’ll sleep better and be less likely to ruin your home.
15. Locate the main water shut-off valve. Because busted pipes happen to almost every homeowner at least once. And water damage is value-busting and pricey to fix.
16. Find the circuit box, and label all circuit breakers.
17. Find the gas shut-off valve, too, if you have gas.
18. Test the sump pump if you have one. Especially before the rainy season starts.
19. List emergency contacts. You already know 911. These are the other numbers you often need in an emergency. You should have them posted where they’re easy to see.
20. Assemble an emergency supply kit. Some key items are:
- Flashlights and batteries
- Non-perishable food and water
- Blankets and warm clothing
- A radio, TV, or cell phone with backup batteries
Home & Mortgage Documents
In case there’s a dispute with your mortgage lender or a neighbor over property lines, or if you’re a bit forgetful about due dates.
21. Store copies (the originals should be in a fireproof safe or safety deposit box) of important home documents so they’re readily available. Go paper, cloud, or better, yet, both.
- Lender contact information
- Property survey
- Inspection report
- Final closing documents
- Insurance documents
22. Set mortgage and other bills to auto-pay so you’re never late.
Here in Colorado we have spectacular mountain views available to us all along the front range. It is one of the most highly requested items by Buyers in their home search wants.
The difficulty comes in determining how much the added cost for that view actually is- and whether is it worth it. That’s where real estate appraisers and analysts who study home values can help, even though they recognize there’s no simple answer.
“Views are actually really difficult to quantify,” says Andy Krause, principal data scientist at Greenfield Advisors, a real estate research company. “It’s somewhat subjective, and some of that is in the eye of the beholder.”
Assigning a dollar value can also be difficult because not all views are equal or valuable, and a view that’s sought-after in one location may not be in another.
So how do you put a price on a variety of views? What are you willing to pay for an amazing view?
Could it really be summer?!
Tackle these five summer maintenance tasks during June’s longer days and better weather — and save yourself time and money this winter.
#1 Update Outdoor Lighting
In June, winter nights are probably the last thing on your mind. But early summer is the perfect time to plan for those “OMG it’s only 4:30, and it’s already dark ” moments by adding or updating landscape lighting.
The most energy-efficient, easy-to-install option is solar lighting, but it won’t perform as well on dark or snowy days. For light no matter the weather, install electric.
LED bulbs last up to five times longer and also use less energy than comparable bulbs.
#2 Clean Your House’s Siding
With a bit of preventative maintenance, your home’s siding will stay clean and trouble-free for up to 50 years. Fifty years! Clean it this month with a soft cloth or a long-handled, soft-bristled brush to guarantee that longevity.
Start at the bottom of the house and work up, rinsing completely before it dries. That’s how you avoid streaks.
#3 Focus on Your Foundation
There’s no better time for inspecting your foundation than warm, dry June. Eyeball it for crumbling mortar, cracks in the stucco, or persistently damp spots (especially under faucets). Then call a pro to fix any outstanding issues now, before it becomes an emergency later.
#4 Seal Your Driveway Asphalt
Your driveway takes a daily beating. Weather, sunlight, cars, bikes, and foot traffic – all of these deteriorate the asphalt. Help it last by sealing it. Tip: The temperature must be 50 degrees or higher for the sealer to stick, making June a good month for this easy, cost-effective job.
#5 Buy Tools
Thanks to Father’s Day, June is the month everyone can get a deal on tools, tool bags, and that multitool you’ve had your eye on. If it’s time to replace a bunch of tools, or you’re starting from scratch, look for package deals that offer several at once. These can pack a savings wallop, offering 30% off or more over buying the tools individually.
Great article from USA Today about the buying habits of the Mellennials age group …
Millennials put off buying their first home as they struggled with the aftereffects of the Great Recession. Now that they’re snapping up houses in greater numbers, many older Millennials are making up for lost time: They’re bypassing the traditional gateway to homeownership – the starter, or entry-level, home – and buying larger, more expensive houses where they’re likely to raise families and maybe even grow old.
“They rented for longer,” says Diane Swonk, chief economist at Grant Thornton. “Now they’re going to where they want to stay,” possibly for decades.
By renting or living with their parents for years, many Millennials in their mid-30s can now afford pricier houses because they’ve socked away more money and moved up to better jobs, Swonk says. And they need the extra space because they’re finally getting married and having kids after deferring those transforming events. Also nudging them into more lavish houses is a severe shortage of lower-priced starter homes.
How big is a starter home?
There’s no hard-and-fast definition of a starter, or entry-level, home but a one or two bedroom – and a small three-bedroom— typically would qualify, says Lawrence Yun, chief economist of the National Association of Realtors (NAR). Prices vary widely by market but starters on average cost $150,000 to $250,000 while trade-up and premium homes cost upwards of $300,000, Swonk estimates.
DMAR Real Estate Market Trends Report for MAY ’18 –
In April, Denver-area home buyers purchased homes on the market within an average of 20 days alongside the average single-family home prices reaching a record-high 543,058.
Average single-family home prices in metro-Denver- $543,058
Median single-family home prices in metro-Denver- $455,000
While overall inventory is seasonally up, it’s down compared to April of last year with the single-family segment being the primary contributor. The condo market is hitting its stride, as more homebuyers look for affordable options.
The year-to-date average sold price hit $517,395 for the single-family home market, up 11.2 percent from last year, with the median sold price at $439,828, up 9.96 percent. The condo market continues to outperform the single-family market with the year-to-date average sold price of $348,951, representing a 13.52 percent increase over 2017. The median price of condos sold also increased by 14.34 percent to $295,000.
Year to date, a record number of 586 homes priced over $1 million have sold, up 36.28 percent over last year, with a combined sales volume of nearly $892 million, up 37 percent over 2017. For comparison, at this point in 2014, only 200 homes priced over $1 million had sold.
Full Article Originally Printed https://www.dmarealtors.com/dmar-real-estate-market-trends-report-may-18