Getting to Value-in Denver

VALUE? Let’s look at your Denver neighborhood

One of the first things people ask is “What is my house worth?” The best answer is “it depends.” Sometimes the need to move quickly makes the price go down. Or tenants can make the property linger on the market and reduce the final sale price. So the next words out of my mouth are normally “Why are you moving?” “We found the perfect house!” can also adjust the price down, while we need to find a replacement first may do the same thing? Hence, “it depends” is the best answer. Lets sit down and talk about your neighborhood, in Denver or Highlands Ranch

Fair market value is the price that real estate would sell for on the open market without any unusual forces being involved. The definition is relatively simple but there certainly different methods of determining what it is.27939218-250.jpg

A homeowner could order an appraisal before they put their home on the market but would incur the expense of an appraisal and more likely than not, it won’t or can’t be used by the buyer or their lender. The advantage is that an appraisal is a professional approach by a disinterested party to establish value.

Licensed appraisers use three approaches to value: the market data, the replacement cost and the income approach. The appraiser can put more weight on one approach than another based on his/her assessment of what would be appropriate.

The replacement cost looks at what it would cost to rebuild the property today less the depreciation it has experienced by age and wear and tear plus the value of the lot.

The income approach uses a capitalization rate based on the net operating income of a property to determine value. It is more applicable to commercial properties than it is for homes used by homeowners and not rented.

The market data approach relies on recent sales of similar properties near the subject. The appraiser will make monetary adjustments for differences in the comparables that are used to create a more accurate comparison.

Real estate agents use a similar approach to determine fair market value by performing a Competitive Market Analysis, CMA. Like the market data approach of an appraisal, it looks at recent sales of similar properties, it also considers properties currently for sale and what homes were unsuccessful in their attempt to sell. This approach is sensitive to supply and demand and may be more reactive to rapidly rising or declining markets.

Both appraisals and CMAs have a distinct advantage because of the personal opinion as a professional compared to online website estimates using raw data and mathematical formulas. Regardless of which method is used, it is an estimate. Obviously, some estimates are more accurate based on the experience of the person making the estimate. A price is placed on the property by the seller but value is ultimately determined by the buyer when a final sale is achieved.

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Pay Off Your Mortgage?

Denver Real Estate and Mortgage Payoff/Reverse Mortgage

I have recently become more educated about the “reverse mortgage” and how it works in the Denver Real Estate market. You may not be free and clear yet, but if you have over 50% equity and are 62 or older it can enhance your cash flow dramatically. As your age goes up so does the amount you can borrow. For instance at 62 it is 50 %. At 72 it is 60%. Finally if you or your estate want to sell the property you can at any time. A reverse mortgage can also be used as a purchase loan!

However, becoming debt free is as much a part of the American Dream as owning a home but there certainly can be conflicting circumstances that make the decision to pay off your mortgage early unclear. Denver Real Estate

The advantages of paying off debt early is increased cash flow, less interest paid and a higher credit score. The disadvantages are lower cash flow available as discretionary funds for meals, entertainment and other things. If the ultimate goal is financial security, is it worth the intermediate sacrifice?

Whether you pay off your mortgage early is a personal decision that may be right for one person and not for another. Consider the following before you get started:

Reasons you should

  • Peace of mind knowing that you don’t have a mortgage
  • You’ll save interest regardless of how low your mortgage rate is
  • Lowering your housing costs before you retire

Reasons you shouldn’t

  • You can invest at a higher rate than your mortgage
  • You have other debt at a higher rate than your mortgage that needs to be paid off
  • You might need the money in the future and want to remain liquid
  • You might not qualify for a mortgage currently
  • You should pay off other debt with higher interest rates
  • Your employer has a matching retirement plan that would benefit you more
  • You have more urgent financial needs like emergency fund, life, health and disability insurance
  • You expect high inflation and the value of your mortgage debt will decrease

Use this Mortgage Accelerator to determine how quick you can pay off your mortgage.

If you are in the first years of a mortgage, you might also want to see a program called “Honey I Shrunk The Mortgage”. Send me a email asking for the power point presentation.

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Two Negotiations for Denver Real Estate

<H3>Inspections and Realtors in Denver</<H3>Over the past 31 years in Denver Real Estate I have found that my experience both in college in shop classes, and at inspections has served me well to create solutions rather than torpedoing the sale because of the way the report is written. I always encourage my buyers to be at the inspection because they need to hear and see what is going to be written up. They also need to discuss what are big issues and what are the smaller “I can fix that” kinds of things in the report. Too often the Realtor* (see below) is not present to hear even a synopsis of the results and simply sends the report to the listing broker. Years ago when I started this career I never would have guessed that one of my primary jobs would be figuring out how to get garage doors repaired? (**More below)

There are two negotiation periods in some home sales. The primary negotiation takes place when the contract is agreed upon that includes the price, closing and possession. Buyers and sellers alike feel relieved once this first round has resulted in an agreement but there may be more negotiations to come if there are contingencies for financing, inspections or other things.Denver Real Estate

The purpose of an inspection is for the buyer to receive an objective evaluation about the condition of the home and its components to identify existing defects and potential problems. The expense for inspections can be several hundred dollars and it’s reasonable for buyers to not want to spend the money before they find out if they can come to terms with the seller. From a different perspective, sellers want to know quickly if the buyer is going to reject the home due to the inspections.

Sometimes, buyers will expect sellers to make all of the repairs listed on the report and this is where the second round of negotiations begins. If the seller refuses, the negotiations can go back and forth until the other party accepts the offer on the table or the contract falls apart.

When purchasing a new home from a builder, it is expected for everything to be in working order; after all, it is new. However, it is reasonable to expect that existing homes, that are not new, have a different standard. While it’s understandable that buyers would want to be aware about major items that are not in “working order”, normal wear and tear of components based on its age should be expected.

In a highly competitive seller’s market, buyers might do whatever they can to get their contract accepted, realizing that there is another place to negotiate when they’re not competing with other buyers’ offers to purchase.

For this to be a WIN-WIN negotiation, both seller and buyer must feel good about the transaction. Neither party should feel that they have been taken advantage of.

* Realtors are taught in class not to attend the inspection because there is too much liability. I think it is my duty to not only attend but understand the issues and why the buyer wants them addressed, and then to scribe that request, not to copy the contents of the report. And the inspectors use “boilerplate” inspection reports crafted by attorneys to keep them safe. Who keeps the public safe?

** A buyer Client of mine asked to have the garage doors on a Highlands Ranch house serviced because they were acting hinky. The Seller said NO because they were sure it would be over $2000 and the doors would need to be replaced (they have been using a rip off garage door company). We negotiated the deal that we would accept a $500 credit from the seller and the bill, using my contact was under $250. You gotta know good people!

***PS The 3 sales are to the buyer, the inspector, and the appraiser. They all have to accept the price of the Denver real estate.

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How to Price Your Home in Denver. Agree or Disagree?

A recent survey by some really “smart people” showed that most folks in the nation (including Denver) prefer pricing their homes “just below” the round number…say for instance $499999 instead of $500000. What say you? Agree or Disagree?

I will tally any responses and give you my sense later in the week. However, you can e-mail me back or comment how you feel a home should be priced…above, below or at the round number? THANKS!

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Ready for Retirement Denver Realtor Asks

Denver Realtor “gets” Retirement Investing in Real Estate

Denver Realtor Pete Doty says there are a number of companies in Denver that can assist you in using your IRA to purchase real estate. And when you look at the potential return it is a pretty good deal. And it is a great way to fund a child’s college tuition. Over all the steps to get your IRA funds (Roth or regular) into a true self directed IRA with a qualified administrator is just a rollover or transfer. Then using a bank that will accept a non-recourse loan with 25-35% down is the next step. It is done all the time. Want to look at prospective rental property in Denver, or somewhere else in the country….let’s talk! But first read on…

It’s surprising to realize that most people spend more time planning their next vacation or cell phone purchase than they do on their own retirement. Let’s look at a hypothetical situation where you have $35,000 to invest for your retirement in 15 years. Have you compared where you might have the best opportunity?

The safest place to put it might be a certificate of deposit because it’s insured but unfortunately, rates would be less than 2%. The value would grow to $47,233.26 at the end of the 15 year holding period.Denver Realtor Where to invest - 250.jpg

Investing in a mutual fund has more risk but also a greater opportunity to earn a higher rate of return. An estimated 7% return would project an accumulated value of $99,713.14.

Using the $35,000 for a 20% down payment and closing costs on a $150,000 rental home could realize much higher proceeds. Using a familiar investment analysis spreadsheet, the $35,000 could grow to a future wealth position of $153,302. This analysis considers leverage, 3% appreciation, re-investing cash flows, 7% sales expenses and paying applicable taxes which the previous examples do not.

The rate of return on these three examples are 2% for the CD, 7% for the mutual fund and a comparable 14.19% return on the rental. As the rate of return increases on investments, additional risk is reasonable.

Most people are much more familiar with homes than they are with mutual funds, bonds and other similar investments. The same REALTOR® who helped you with your home can help you invest in a rental home.

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Avoid Wasting Time in Denver House Hunt

Denver Realtor Pete Doty may have been known to say…

“If you waste my time, don’t expect me to hang out with you very long.” This could have been said by a buyer or seller or a real estate agent. Time is valuable and no one wants to waste their time. And certainly, in a hot market like Denver’s, sometimes you cannot even wait until after lunch! When on a Denver House Hunt you have to be quick nimble and fast! And even then the buyer may not succeed. However, we did find a couple of strategies that got our offers accepted, and we are pleased to share them with our clients. And when we have out of town buyers, they need to bring their checkbook and be pre-APPROVED for a loan so when they see “it” it does not dis-appear before they get a chance to buy it. Denver sellers are just not in the mood to take a contingency either, so the current house needs to be under contract at least. Now builders who have a 6 month delivery may work with a buyer that has a house to sell, as long as there is a Realtor who knows the house they are leaving and has a good idea on the pricing…you cannot price 100k over value! So my advice is to read the rest of this and be ready to buy, when the time is right! Maybe toward the end of the year?Denver Realtor house hunt

Most people can’t put their lives on-hold while they’re trying to buy or sell a home. Whether they have a family, a couple or single, life continues and the time constraints of moving can become burdensome.

Pete Doty is committed to helping you save time while making the experience memorable. He knows the process and the potential problem areas and can help you move through them.

To preserve your time and your agent’s, please consider the following:

  • If your plans to buy or sell change, let your agent know.
  • Be on time for appointments or if it is necessary, cancel them with as much notice as possible.
  • Get pre-approved through a trusted mortgage professional.
  • Cooperate with your loan professional by providing all requested documentation.
  • Don’t wander into builder or REALTOR® open houses without your agent. If you find yourself in that situation, immediately notify them that you have an agent.
  • Only talk to the other party through your agent until after closing.

Your agent is working to help you meet your goals. Things work best when it’s like a partnership where each party mutually respects the other and their resources including their time.

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Picture This! Denver Real Estate Photos

Denver Real Estate Photography is Critical to Successfully Marketing Your Home

When one sees a property go off the market because the listing has expired (YES, there are those in Denver) there are a couple of things that stand out. More often than not the price is too high, there is a description and verbal tour the home that is more a list of features (no benefits), and the Denver real estate pictures are poor quality. The lighting is poor, the composition is from Gullver’s view, and there are just not enough of them. Color attracts the eye and we tend to linger on bright photos especially because we know the beautiful atmosphere we have here in Denver with white fluffy clouds on a blue sky!. Some of these “expired listings” that have failed to sell will be offered through discount brokers where photos might cost extra, so the home owner submits their own, and often not enough of them. They might even offer an actual walk out basement as an in ground basement yet the broker never visits the home. I have found over the years that if I invest in the high quality pictures that a professional can provide, we sell faster and for more than expected. Make sure to compare listing brokerage firms. And read on for more about photos…

Listing photos may be one of the most important marketing efforts that lead to a potential buyer.

Denver Real Estate

Nearly, all buyers use the Internet during the home search process. They usually start looking at homes online before they contact an agent. It’s far more efficient to screen properties by looking at the pictures that have been posted than to make appointments with each homeowner, drive all over town and waste a lot of time looking at homes that would never meet a buyer’s criteria.

  • There needs to be enough pictures of a property to adequately represent the home; most websites allow for at least 24 and more may be needed if it is a large home.
  • Take horizontal shots to accommodate the format of most listing websites.
  • The pictures should be well-lit so that it is easy to see all of the features of the room. Natural light is preferred over the limitations of flash.
  • They should be taken with a wide-angle lens so that you can see the majority of the room in one picture.
  • Large rooms can be taken from different angles to give the buyers a different perspective.
  • Rooms should be set if not staged prior to taking the pictures so they will give the buyer an idea of what the room might look like with their own things in it.
  • Arrange pictures in website to help buyers visualize the floorplan as if walking through it.
  • Think about using a tripod; professionals do to absolutely hold the camera still.
  • They should definitely not be “photoshopped” to modify factual elements like removing power lines.

Everyone occasionally takes a great picture but it doesn’t make them a photographer. Since the photography can be one of the most important marketing efforts, I offer to pay for these pictures of your house and use a professional photographer to show the home to its best advantage, when you list your home in metro Denver.

 

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How Will It Feel?

Denver and national interest rates

When one talks about a real estate market in sweeping terms, like “Denver has appreciated by 15% last year” that could be really misleading! True there are pockets of the market here that where prices were still so depressed from the 2009 time frame, and there was still enough inventory there that prices did explode, but not everywhere. Sometimes I can extrapolate with a percentage but most of the time, to find the true market value of your home, I have to do a market analysis, specific to your home. And sometimes you are right and others, not so much. The truth is selling a home at a price higher than the current market will support may take months for the market to get to your price range. So when pricing a home we all need to be careful to ensure your interests are best reflected in the marketing plan. Let’s talk before you decide to make a move in Denver or across the country. Keep Reading…

It has been said that change is the only constant. Most of the financial experts have been expecting interest rates to increase along with home prices. While homes, in most markets, have definitely seen increases over the past five years, the mortgage rates today are actually lower than they were a year ago. Denver interest

If the interest rates were to increase by 1% over the next year while homes appreciated at 6% during the same time frame, a $250,000 home would go up by $15,000 and the payment would be $211.53 more each month for as long as the owner had the mortgage. The increased payments alone would amount to $17,769 for the next seven years.

When facing a decision to postpone a purchase for a year, a legitimate question to ask oneself would be: “how will it feel to have to pay more to live in basically the same home a year from now?”

It is easy to understand that if the price of a $250,000 home goes up by 6%, it increases the price by $15,000. A slightly more difficult concept to realize is that if the interest rate were to go up by ½%, it is approximately equal to a 5% increase in price. A 1% increase in mortgage rates would approximately equal a 10% change in price. This means that if a home goes up in price by 6% and the interest rate goes up by 1%, it is equivalent to the price of the home going up by a little more than 16%.

Use the Cost of Waiting to Buy calculator to estimate what it might cost to wait to purchase based on your own estimates of what interest rates and prices will do in the next year.

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Denver: Getting Your Contract Accepted

<h3>31 years as a Denver Real Estate Broker provides the client with a huge database of EXPERIENCE</h3>When we approach a Seller with a contract through the Listing Agent in Denver we know it is likely that we could be in a multiple offer situation, depending on the price point of the home. My 31 years of experience has allowed me a level of knowledge that has recently gotten 2 contracts accepted in the most competitive price ranges we have here in Denver. Now I cannot guarantee everyone will have such success with their offers but I do know we will float to the top of the stack. Additionally, because about half of my business every year is on the other side, representing the Seller, I know how they respond to the “incentives” we offer and which are most effective. The information below is good, yet all real estate is local. And while it is all local, in Denver the game is pretty much the same across town. So make sure you check in with us before you try to make a move.

While all contracts must have certain required elements, mutual assent, consideration, capacity and legality, there are some things that increase its chance of being accepted.

Denver Realtor Negotiating a dealThe seller generally wants the highest possible price with the fewest inconveniences in the shortest period of time. In the same way, the buyer generally wants the lowest possible price with the fewest inconveniences in the shortest period of time.

The perspective of the principal can change depending on how these different parts of an agreement are structured.

  • Offer Price – While the price of the home seems to be the major point of contention in a home negotiation, the seller’s net proceeds and the buyer’s mortgage payment may actually be more critical.
  • Financing – 86% of buyers financed their recent home purchase as opposed to the 14% who paid cash. Some financing has higher fees than other types of financing and in some instances, sellers must pay the additional charges on behalf of the buyer.
  • Concessions
    • Seller-paid closing costs – paying all or part of a buyer’s closing cost requires less cash outlay for the purchaser and makes it easier or more appealing for them to buy the home.
    • Seller-paid buydown – prepaying interest to the lender on behalf of the buyer gives them lower payments for the first one, two or three years even though they must qualify at the note rate of the fixed-rate mortgage.
    • Personal property – seller may agree to include existing or new personal property like washer, dryer or refrigerator.
    • Improvements – seller may agree to make modifications to the existing condition of the home like floor covering, countertops, appliances, painting or other things.
  • Earnest Money – more money gives the seller a sense that the transaction is more likely to close while putting the least amount at risk is generally, more appealing to the buyer.
  • Timing – depending on which party is more flexible, sometimes an earlier or later closing or a position on occupancy can be an offsetting consideration that can balance the differing terms.
  • Contingencies or lack thereof – requirements that must be satisfied before the contract can be closed.

The training and experience of a skilled negotiator can benefit both buyers and sellers to save time, avoid difficulties and bring all parties to an agreement. Your real estate professional should be able to help you structure a good offer and negotiate a win-win situation. (Pete Doty, Denver Realtor, is a Certified Negotiation Expert, a designation from the National Association of Realtors).

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The Right Questions – Littleton Realtor

Littleton Realtor says the right questions are key to a successful move

While working in Denver as a professional full time Realtor over the last 31 years, I have been blessed by three distinct types of clients: Those who already know and trust me due to past experience or a referral, those that have connected due to some kind of advertising, and those that are just “Interviewing 3 Realtors” and have already decided on the one. I ask a lot of questions during the interview because I can only help someone move from Denver to Littleton if I know what is important to them…it could be schools, activities, church, or even architecture. Folks who are buying a home typically want to know “how much home can I buy?”, “how much money will I need?” “how long will it take?” “how much will you cost me?”. A Seller in Denver typically wants to know “How much will I take away?” (much better than what does it cost or what are your fees?) and how long do you think it will take?

Asking the right questions will lead to the answers that help you determine which agent to use for one of the largest investments that most people make…the purchase or sale of their home. Littleton Realtor

Rudyard Kipling wrote the verse “I keep six serving men, they taught me all I knew; their names were what and why and when and how and where and who.” Prefacing your questions with one of these words can help you get the information you need to make a good decision about the REALTOR® you use.

  • How long have you been selling homes and is this your full-time job?
  • What designations or other credentials do you have?
  • How many homes did you and your company sell last year?
  • What is your average market time compared to MLS and your top competitors?
  • What is your sales price to list price ratio?
  • When will you report to me on the progress of my transaction?
  • Who can you recommend for service providers like mortgage, inspections, repairs and maintenance?
  • Why do you want to work with me?
  • Where are the biggest opportunities to expose my home to the largest market?

Finding the right person to represent you is a little like the person who ordered a lobster dinner at a restaurant. When the waiter brought out the meal, the lobster only had one claw. The customer asked why it only had one claw and the waiter said: “I don’t know; I guess it was in a fight.” The customer looked at him and said: “then, bring me the lobster who won.”

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