Category Archives: Market Conditions
Matthew Leprino, REALTOR® and spokesperson for the Colorado Association of Realtors, shares insight on purchasing a home in Denver with 9News. He discusses changes in the qualification process over the years, how much money to put down on a home, “do’s and don’t’s,” and advice for social media.
Video originally posted on 9News.com. Their website can be accessed by clicking here.
Originally posted on FORBES by Tara Mastroeni.
Selling your old home and buying a new one at the same time is a balancing act. That said, it can be done. We’ve taken the liberty of outlining all of your options below. Read them over to decide which ones will work best for you. If you follow this advice, you should be able to create a plan to help the whole process go smoothly.
If you buy before you sell
Buying a new home before you sell your old one is, honestly, the trickier of the two methods. While it’s not impossible, it does require a bit more financial finagling. Sometimes, though, you find your dream home early on in your search. If that happens to you, here are your options:
Use a home sale contingency
The easiest way to deal with this scenario is by including a home sale contingency in any offer that you make. This contingency allows you a set period of time to find a buyer for your old house before you move forward with settling on your new home. If you can’t find a buyer in time, you have the option to try to extend the contract or to back out of the deal.
If this option sounds too good to be true, unfortunately, for the most part, it is. Home sale contingencies aren’t used much these days. Understandably, sellers don’t like them because they offer little-to-no reassurance that the buyer will actually be able to purchase the home. You are, of course, free to include this clause in any offers you make, but be aware that it could negatively impact the strength of your offer.
Get a bridge loan
A bridge loan is another option for helping you deal with the financial strain of buying a new house before you sell your old one. Bridge loans are short-term loans that allow you to pay off the mortgage on your own home so you don’t have to carry that cost. Then, when your home sells, you’d use the proceeds from the sale to pay off the bridge loans.
That said, bridge loans are a gamble. These loans often come with strict terms and high interest rates. In order for a bridge loan to work, both settlements need to go off without a hitch. Even if there is a problem with the settlement of your old home, you’ll still be responsible for finding the funds to pay back the loan on time.
Keep two properties for a bit
Holding two properties at the same time will undoubtedly be a stretch financially. However, if you can afford to do so, it’s also the safest option. This option allows you to submit offers on new homes without having to worry about using a home sale contingency or taking out a new loan.
If you sell before you buy
Selling your old home before you buy a new one is a more financially secure option. This way, you’ll know exactly how much money you have to spend on a new property. However, this method is not without its inconveniences, as well. For instance, you may have to deal with the stress of moving twice within a short period of time. Here’s how to go about doing it:
Use the settlement date to your advantage
The easiest way to avoid the hassle of moving twice is to use the settlement date to your advantage. If possible, try to have the settlement date on your new home fall on the same day as the closing on your old one. That way, you can move directly from one home to the other without pausing in between.
Here, it’s important to remember that writing up an offer is a negotiation. If having matching settlement dates is important to you, you may want to be flexible with other areas of the contract as a gesture of good faith to the other parties involved.
Ask for a rent back contingency
A rent-back contingency is exactly what it sounds like. This provision allows you to rent your home back from the buyer-now-owner from the time of closing until you’re ready to move. Keep in mind, however, that in this scenario, you’re essentially asking your buyer for a favor. They don’t have to agree to rent the home back to you. After all, they may be organizing a buying-and-selling plan of their own. But it never hurts to ask.
Find a short-term rental
If all else fails, you can always find a short-term rental to hold you over until it’s time to move into your new home. The biggest issue, here, is the cost. Short-term rentals are often more expensive than their year-long counterparts. Additionally, you may have to invest in some storage options to hold your excess belongings until it’s time to move.
Often the best return on your investment is the joy you get from waking up in a home you love. But sometimes the best part is getting your money back when the love affair is over.
Here are our Top Three picks for the most enjoyment and highest return on your investment.
New Wood Floors
Estimated Cost for a Pro Job: $5,500
One of the best returns on a home investment is hardwood floors. They’re beautiful, durable, and timeless — and one of the smartest things you can do, too.
Many homeowners now want (and even expect) hardwood floors. And when done in keeping with the home’s layout and neighborhood, they can add 2.5% to the sale price.
How to get even more ROI: If you already have wood floors and they’re still in good shape, why not refinish them and save a little money? It costs around $3,000 and recovers 100% of its value at resale.
New Garage Door
Estimated Cost for a Pro Job: $2,300
While it’s not the dreamiest home investment, a new garage door is one of the quickest ways to make your home shine, especially if it’s front and center like many of today’s homes. It’s also one of the most affordable.
How to make your garage door pay off more: In addition to improving curb appeal, an insulated door on an attached garage can help lower energy bills, which will earn back money every month — and generate a little joy in your heart.
Estimated Cost: $50 to $100 for a 6- to 7-foot deciduous tree
ROI: 100% or more
Planting trees today is one of the smartest ways to reap financial rewards tomorrow. A well-positioned tree shades the house in summer and shields it from harsh winds in winter, shaving money off your utility bills — as much as $250 per year.
And according to the Forest Service, mature trees contribute as much as 10% to your home value.
A couple of these are super fun to use and may even enhance your home’s value.
Home trends come and go. But it’s functionality that wins in the end. Because smart functionality almost always adds some intrinsic value to your home.
That’s why these smart home products, especially the ones that make you safer, are some of our favorite home upgrades.
#1 Video Doorbell
WiFi-enabled video doorbells will let you see, hear, and speak to whoever is at your door via a smartphone, even when you’re not home.
It’s like Facetime but for your house. It alerts your phone and turns on the camera when someone rings the bell or comes near. You can tell the UPS guy to leave the package at the door or say, “Be there in a minute!” — whether you’re in the bathroom or thousands of miles away. So much for casing the joint while you’re out of town.
Video doorbells can even help catch a thief because you can see them on camera.
They’re not expensive — at most, around $200 — and you can install one yourself with some basic tools.
#2 Smart Door Locks
Keys are so 20th century. With a smart lock, you can lock or unlock your door with your smartphone or voice. You can text digital keys to friends, the dog sitter, or the delivery guy, giving them temporary access, which is waaaaaay safer than the old key-under-the-doormat routine.
Plus: Think you forgot to lock the house? You can whip out your smartphone and check. On the stoop with arms full of groceries? Just tell the lock to open.
#3 Home Generators
The number of power outages from bad weather has more than doubled in the last 15 years, so generators are becoming a thing.
But not those noisy, portable, diesel ones. You want a generator that’s built into your home. They look like an HVAC unit and run on propane or natural gas, so they don’t belch out smelly gases or require refueling every couple of hours. They’ll kick on automatically when the power goes off and can even be operated from a smartphone.
It might not be a home investment you’ll eagerly Instagram upon installation, but when you’re still scrolling and posting during a killer snowstorm, you’ll be feeling pretty fancy.
#4 Smart Mirror
Even the ol’ looking glass is getting smart. Bathroom mirrors with voice-activated digital assistants can tell you the weather, give you traffic updates, and play your favorite podcasts. You can even tell your mirror to order more moisturizer the moment you realize you’re getting low.
There are prototypes out there for mirrors that advise on your wardrobe, health, and skin care, too; they’re just not on the market yet.
Obviously, everything in your home is not about ROI, and a smart mirror is no exception. Will it up your home value? Nah. Is it fun? Yes. Does it make life in one of your home’s most hectic rooms easier? Oh yeah.
#5 Indoor Gardens
Houseplants have been having a moment for a while, but edible gardens are coming indoors, too.
More than a third of Millennials are growing herbs indoors, and a gardening industry report predicts the number of people growing plants inside is going to increase about 25% by 2021. It’s an especially good idea for homes that have little or no yard space.
We’re not talking pots of basil on the windowsill but permanent setups — like a built-in planter that also works as a room divider (mid-century, retro-cool factor included).
Or you can turn a whole wall into a hydroponic, vertical garden with PVC panels. Install a few smart grow lights, and you’re good to go.
#6 Smart Blinds
Throw some shade on high cooling and heating costs with WiFi-enabled blinds you can control with your smartphone or voice. They’ll even work with Alexa and Siri.
Program them to open or close at certain times of day, or when the room hits a specific temperature. Or if you’re reading and you want to open the blinds to let in more light, you don’t have to get out of your chair. “Alexa, open the blinds.” Done.
You can also pre-schedule your smart blinds to make your home more secure.
We need to make sure people can afford to live here, Denver Mayor Michael Hancock writes…
Denver, your city is working hard to ensure families have housing options they can afford.
We have made great progress in helping first-time homebuyers, connecting families with new affordable options, protecting renters from eviction, and easing the tax burden on seniors and those with disabilities.
Today, one-quarter of all affordable homes here were created with city support over the past seven years. And in 2018, we will invest more money in one year than ever before to deliver housing Denver families can afford — $40 million.
But we are just getting started. Denver is stepping up our game, because this issue remains a primary challenge to our residents and families toward achieving the level of equity they work hard for and deserve, but is out of reach because the market is not responding to our residents’ needs.
On Monday, City Council passed my administration’s proposal to double the Affordable Housing Fund created in 2015 to $300 million using marijuana taxes. With it, we’ll be able to secure the building, preservation or land needed for more than 6,000 affordable homes for families over the next five years.
And in partnership with the Denver Housing Authority, we’ll use part of this to generate a surge of $105 million in upfront funding through bonds to accelerate building and preserving much-needed affordable housing. This step will also increase the land available for future affordable housing creation to support Denver’s lowest-income residents and those experiencing homelessness.
We’re not stopping there. I’m going to keep working with City Council, the Housing Advisory Committee and community partners to add new tools to our housing toolbox — land trusts, land banking, accessory dwelling units, a resident preference policy, extending minimum affordability periods are all being explored. We are also pushing to get more affordable housing from developers.
We can be the spark that helps get homes out of the ground, but the city can’t be the only ones. Congress needs to see this for the national issue that it is and provide the funding that matches the need. Our State Legislature needs to see that this isn’t just Denver’s issue alone, it’s affecting cities across Colorado. It’s vital that the State’s funding commitment in this year’s budget continues in future budgets.
And our private sector needs to step up to address what we as city leaders, our residents, stakeholders and the market are demanding — homes that are affordable. We can’t continue to put our recent economic successes at risk because the very people who jump-started and drove that success — the people of Denver — are pushed out because of costs. The demand and the need is there, it’s past time that the supply match it.
To ensure that our neighborhoods are accessible, inclusive and affordable, and that our economy extends opportunity to everyone, building more equity and access in Denver’s housing market should be everyone’s top priority – I know it’s mine. We need to make sure people can afford to live here. We need to protect what we love about our neighborhoods. This is how Denver will continue to rise – together.
Michael Hancock is the mayor of Denver.
The yard of your dreams just might be more achievable than you thought.
You’ve been spending so much time on projects inside your home (like that new shower you have to drag yourself out of), that your front yard is starting to scream for a bit of attention.
Poor neglected, thing.
You know your yard has some super curb appeal potential, but where to begin?
Check out the Remodeling Impact Report: Outdoor Features from the National Association of REALTORS®. It’s got some interesting data on how landscaping affects home value, especially those with tons of curb appeal. They beat out most indoor projects when it comes to adding value to your home!
Below are four projects with so much curb-appeal juice, any money you invest in them is likely to pay you back much more.
#1 Add or Replace a Few Landscaping Basics
Every few years, you overhaul your closet, replacing your worn-out basics with a few new pieces to ramp up your wardrobe. Why not do the same with your yard? Give it a basic makeover so it has some good, classic, value-boosting “bones” to build upon.
Landscape design basics like:
- A winding flagstone walkway
- A couple of stone planters (6 feet by 2 feet)
- A few flowering shrubs
- A deciduous tree about 15 feet tall
- Quality mulch
Why you can’t go wrong: The median cost for this makeover is $5,000. But the recoup (how much more your house would sell for after doing this project) is $4,000! Pretty sweet, right?
#2 Take Care of Your Trees
Dead or dying trees definitely hurt resale value. And if you remove dead trees and take care of your healthy trees, you won’t be throwing money away.
REALTORS® who advised their clients to do some tree triage before putting their home on the market say their clients almost always get their money back.
The typical cost to pay a pro to remove a dead tree and take care of the healthy ones with fertilizing, pruning and trimming is $2,000. And if you sell, you can expect 100% return on your investment in most cases, according to the RIR report.
Why you can’t go wrong: Just three trees in the right location can save up to $250 a year in heating and cooling costs, says the source for energy-saving stats: the U.S. Department of Energy.
#3 Build a Deck If You Don’t Have One
If you’re spending sunny days admiring the great outdoors from indoors, it’s time for a change to get you outside… like finally building that deck you’ve been dreaming of.
Why you can’t go wrong: A new deck costs about $10,000 and recoups 80% at resale. Plus, how can you put a price on all those evening cookouts and Sunday brunches al fresco?
#4 Heap Loads of Love on Your Lawn
Yep, you read that right. Especially if you know you’re going to sell in the next year or so.
It’s the easiest project to do — and it has a whopping ROI of 267%!
Lawn maintenance is simple:
Why you can’t go wrong: It’s the cheapest project to do with an annual cost of only $375. Every year, you’ll reap the benefits of a lush, barefoot-friendly lawn.
Originally posted on HouseLogic.com
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.