Kristal Kraft ~Denver Real Estate~303-589-2022

100 Real Estate Tips in 100 Days (Day 89)

Real estate licensees continue, as they have always done, to agree to market a home for a price in excess of what the comparable market indicates is a reasonable sales price. Of course, many homeowners do the same thing when they attempt to sell their homes without professional assistance. Why does this happen, considering the time, expense, and emotional hassle that must be devoted to selling a house?

Some real estate licensees will list a home at what the seller wants to sell it for, regardless of the apparent market value. The fact is that home market listings, even over priced ones, can create traffic that may generate a sale, just not a sale of the overpriced listing. Pressure from management or family to do something, anything, can lead to sticking a for sale sign in front of hopeless opportunity.

For Sale by Owners (FSBO's) tend to price their home based on what they want, without knowing or caring about the market environment. In many of those situations, the disappointment is double, the take less than what they expected, and they usually list their home with a licensee and pay a sales commission.

Today's well informed buyer can determine a reasonable price for a home quickly, even in unfamiliar markets, based on the volume of information available to anyone just by asking. Sellers are well served by studying the market, or having a professional study the market, and price their home at a competitive price. That approach saves a lot of time and emotional damage, and gets the homeowner down the road quickly.

100 Real Estate Tips in 100 Days (Day 88)

Visitors to Denver consistently comment on the vitality of the city center. Years of planning and execution by various stakeholders have contributed to that continuing vitality. Moving forward in to the near future here are a few things on tap for Downtown Denver:

Civic Center Restoration – this wonderful public space in the heart of Denver’s cultural center has been showing its age for some time. The Civic Center Conservancy is working to complete designs and concepts to bring this area current to reflect the excitement of the rest of downtown.

16th Street Mall Improvements – the 27 year mall which serves as the spine of downtown, connecting ODO with Civic Center, is in need of serious repairs and updating. New electrical systems, ADA compliant fixtures and curbs, and the installation of new pavers will all combine to keep this showpiece pedestrian space viable for another 30 years.

Union Station – this wonderful old railroad center is now in the control of The Regional Transportation District, and will become the nexus of Denver’s light and heavy rail transportation system.

Arapahoe Square – this somewhat lackluster area immediately north of the core of downtown is due for a major injection of development. The Master Plan is soon to be put to paper, and this 20 square block area will begin to become home to people and businesses with access to Light Rail.

100 Real Estate & Relocation Tips in 100 Days (Day 87)

Based on an agreement between the Federal Housing Finance Agency, the regulator of Fannie Mae/Freddie Mac, (the largest purchasers of conventional mortgage loans in the United States) and the New York Attorney General's Office, we now have the HVCC. Here are the ten things that any party associated with a home loan appraisal cannot do to influenced or direct the results of a mortgage appraisal:

1. Withhold or threaten to withhold payment for an appraisal report (that seems fair and reasonable)
2. Withhold or threaten to withhold future business for, or terminating or demoting and appraiser (fair again, no one should be intimated to produce anything)
3. Offering express or implied future business or increased compensation (attempting to buy business is patently wrong, so we are OK with everything so far)
4. Conditioning the order of an appraisal report or the payment of compensation based on a preliminary value estimate from an appraiser. ( This is the "you break it, you buy it philosophy", still a reasonable position)
5. Requesting that an appraiser provide and estimated or desired valuation prior to the completion of an appraisal report, or requesting that an appraisal provide estimated values prior to the completion of an appraisal report. (obviously providing a desired value is wrong, and the second part leads to the potential of an improperly cozy relationship between an appraiser and a lender of Realtor)
6. Providing to the appraiser an anticipated or desired value for a subject property, except that a copy of the sales contract may be provided. ( Ok-this one is a DUH- the contract is an agreement between the buyer and seller of value, it is the desire of both parties to obtain an appraisal equal to that agreed value, or be provided with demonstrated proof that their value judgment was incorrect. As far as the buyer and seller are concerned, that is the reason for the appraisal).
7. Providing to an appraiser or appraisal Management Company, stock or other financial benefits beyond the stated and agreed compensation. (no problem here either, to offer stock or other benefits would be an inducement, which is already a RESPA violation)
8. Listing or delisting an appraiser without notice and the requirement to provide evidence of misconduct in the event of delisting. (this could be extortion, a criminal act)
9. Ordering a second, automated appraisal if you did not like the first one, unless there is clear evidence of flawed information. (In principal I agree with this also, except the presumption that an appraiser performs flawless work is silly on its face. The system is too broken today for abuses based on laziness and incompetence not to occur)
10. In other act that impairs the appraisers ability to perform an independent valuation, including violations of Truth in Lending, Regulation Z, or any number of other state and Federal laws and regulations. (this is the catch basket clause, here just to cover anything not specified earlier)

The sum total of most of the HVCC is to take the real estate/mortgage industry back to pre-1990 conditions. Appraisers acted independently then, and I suspect that most appraisers have been acting independently since then. But silly, stupid money, bad actors, and the attendant political grandstanding have delivered this rather onerous Code of Conduct to the feet of the industry and the checkbook of the consumer. Yes, the cost of compliance, so that investors can be assured that no rules have been broken, will add to the cost of every appraisal and every loan, and increase loan processing time. In the minds of a few politicians, it is better to increase the cost of a home mortgage loan to every consumer than to prosecute the bad actors.

Be that as it may, this is the way it is, so as a buyer, be prepared to extend your closing time a few days, and expect to pay $100 to $200 more dollars to close your mortgage loan.

100 Real Estate and Relocation Tips in 100 Days (Day 92)

Value is in the mind of the buyer. How to find the best value for you is a process, a search if you will, but not as much of a discovery as enlightenment.

Let’s look at value from the seller’s perspective. A few sellers set a price based on what they want, and not on what the market is indicating. Most sellers set their price based on market information, known as comparable sales, with that information usually being provided by a Realtor®. Because appraisers determine value based on certain well defined strictures, most Realtors® attempt to provide their selling clients with market data similar to what an appraiser will use at the time of sale. Simply stated, that means very similar houses, in close proximity to the subject house, and sold in the past 90 days. A seller can gain a small edge by offering a house in very good condition, staged for showing, with the best terms of purchase available. As a buyer, the value proposition starts with that well maintained house offered at the market price. Prices set arbitrarily by a seller because that is what they want do not represent a good value.

As a buyer, you must first become acquainted with prices as they generally apply to house of the same type, size, and area as the most likely house you wish to buy. That will provide a framework for pricing, a component of value. A your search narrows, your agent can provide you with recent sold information, which will help you further define a most likely offering price.

With the pricing component coming into focus, other value concerns must be considered. Timing is of considerable importance. If you cannot move into your dream house until 30 days beyond your most convenient date, then the cost of that delay must be considered. If the house has deferred maintenance, then the cost of any repairs must be factored into your decision. Locational convenience must be considered. 5 minutes further from work is ten minutes a day, or 48 hours in a year. Children walking to school are preferable to a 30 minute bus ride. How far to shopping, parks, and all of the other things in you and your family’s life that require a venue other than your home?

There is of course value in a stable neighborhood verses a declining neighborhood. Proximity to transportation systems, top rated school districts, police and fire protection, all of these things affect value. While the final price is important, use care in not making price the sole deciding factor. Such a decision would definitely not represent good value

100 Real Estate and Relocation Tips in 100 Days (Day 86)

Colorado is somewhat unique in that the standard contract to Buy and Sell Real Estate is date specific. Further, the contract, as with all forms used by real estate licenses in Colorado, are created and promulgated by the state real estate commission. Date specific means that all elements of the contract have a precise date of execution. In spite of great efforts to train and educate real estate licensees as to the importance of these dates with regard to a mutually beneficial conclusion to a contract, mistakes are made. As a consumer, it is important that you be aware of the dates and understand the logic concerning the flow of events, and be attentive to the dates involving important due diligence requirements. So here are the top ten contract date mistakes:

1. Loan Condition Dates - this mistake takes a variety of forms, with the most common and unpleasant being the difficulty of the buyer recovering earnest money if the loan is not fully approved prior to this date.
2. Appraisal Objection Deadline - With the new obligations imposed by the Home Values Code of Conduct (HVCC), just adding to the difficulties of properly completing and underwriting a timely appraisal, this deadline can wreck havoc on loan approval if not properly structured.
3. Title Objection Deadline - it is not enough to receive a commitment to issue a title insurance policy, the buyer must understand the implications of the commitment and any covenant restrictions.
4. Survey Objections - while buyers are well advised to obtain a survey, lenders many times require a survey after the dates have expired, leaving the buyer at risk if unexpected information if revealed.
5. CIC Documents Deadline - Common Interest Community Documents, or HOA documents, must be understood and found acceptable by the buyer before this expiration date. Many of these documents are lengthy and complex, and need time to understand.
6. Disclosure Deadlines - not enough time or too much time given is a common mistake.
7. Inspection Resolution Dates - often found to be written with insufficient time to complete an acceptable resolution.
8. Insurance Objection Deadline - too often this deadline is simply ignored by many consumers. There is never a guarantee of insurability.
9. Closing Date - it is amazing how many times this date is written on a Sunday.
10. Contract Acceptance Deadline - this date is simply being ignored by financial institutions selling foreclosed property.

Any and all of these dates can be and often are structured in an order that does not allow a logical flow to the contract, thereby placing the buyer at risk.