It’s not far, if you know the way to that Denver Home

Buying a Home in Denver is easier than most think

 One of my greatest joys is to surprise & delight my clients by making the process easier, faster and less expensive than they thought it would be, and in Denver, that can be a real challenge! One of the ways I help is by creating a series of short videos about the home buying process in the Denver area. You can click here or cut and paste the link below

“It’s not far, if you know the way.” What this expression implies is that you could have a long way to go if you don’t know where you’re going or how to get there. Just like reading a map, there are some definite steps that will improve your success in buying a home in today’s market.Denver Home Buying Process

  • Know your credit score – the best mortgage rates are available to borrowers with the highest scores. Unless you know what your credit score is at all three major credit bureaus, you don’t really know what rate you’ll have to pay.
  • Clean up your credit – it is estimated that about 90% of credit reports have errors. Some are not serious but others could affect a borrower from getting the loan they want. It is your responsibility to know what is on your different reports and correct them if possible. You’re entitled to a free copy of your credit report each year from Experian, Trans Union and Equifax.
  • Get pre-approved – Taking the time to make a loan application with a qualified lender even before you start looking at homes will provide peace of mind, make sure that you are looking at the “right” homes and may help you negotiate the best price on the home you select.
  • Do your homework – when you find the home that meets your needs and desires, get the home inspected and research the tax assessments, school ratings, crime activity, possible zoning changes and comparable sales in the area.

Call for a recommendation of a trusted mortgage professional and an inspector.

As a Denver Realtor since 1985, and living in Highlands Ranch since 1989, I have collected the names and contact information for respected, honorable and trusted professionals in the trades and I am happy to share them with you. Call me at 303-880-5585 ext 3.

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Denver Home Sale by Surviving Spouse

<H3>Your Denver Home May Need to Be Sold For Tax Advantages</H3>

While far from a specialty in Denver Home sales, working with estates and spouses grieving the loss of a lifetime mate, or even the children or personal representatives can be a very different “not taught in real estate school” experience. Often it is a liquidation and “get us the best price you can for our mom’s house in Englewood” while other times it is more “let’s fix it up and get top dollar”. Knowing the difference and how to compare in different Denver communities is critical. And knowing  Mom’s house is her retirement fund makes a difference too. And while there are still fix up deductions, if there is no money to do them then the choice is made. Yet most critical is to have all the decision makers together to make their decisions.

Special consideration is made by IRS for the sale of a jointly-owned principal residence after the death of a spouse. Surviving spouse may qualify to exclude up to $500,000 of gain instead of the $250,000 exclusion for single people if certain requirements are met.Denver Homes

  • The sale needs to take place no more than two years after the date of death of the spouse.
  • Surviving spouse must not have remarried as of the sale date.
  • The home must have been used as a principal residence for two of the last five years prior to the death.
  • The home must have been owned for two of the last five years prior to the death.
  • Survivor can count any time when spouse owned the home as time they owned it and any time the home was the spouse’s residence as time when it was their residence.
  • Neither spouse may have excluded gain from the sale of another principal residence during the last two years prior to the death.

If you have been widowed in the last two years and have substantial gain in your principal residence, it would be worth investigating the possibilities. Time is a critical factor in qualification. Contact your tax professional for advice about your specific situation. Contact me to find out what your home is worth in today’s market. See IRS Publication 523 – surviving spouse.

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Denver & US Mortgage Rate History

It’s not “if” the rate goes up but “when” the rate goes up; it could make a big difference for some buyers. Freddie Mac predicts that mortgage rates will be at 4.5% a year from now.Denver

If buyers can afford a home with higher interest rates, it means higher payments. Higher payments might mean they won’t have the money to spend on other things like furniture or improvements to the home or an unrelated purchase like a new car.

When the rate moves 0.50% on a $250,000 mortgage, the payment goes up by $70.66 a month. If it moves 1.00%, the payment goes up by $143.74 per month, each and every month for the entire term of the mortgage which means paying over $50,000 more for the house.

The question facing every borrower in this situation is “How will you feel about having to pay more to live in the same house because you were not ready to commit?”

Then, there’s the borrower who is absolutely maxed out as to what they can qualify for or sometimes, it is a borrower who just refuses to pay a higher payment. When that’s the case, the buyer has to make a larger down payment. In the same example, a 0.50% increase in rate would require $14,873 more in down payment. That could make the purchase impossible or require the buyer to buy a lesser price home that will not have the same amenities.

Mortgage rates have been low for so long that some people think that is what they should be. There are some economists who believe that the economy will not be strong again until mortgage rates are in the 7% range.

To see how this type of scenario might affect you, go to the If the Rate Goes Up calculator.

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Coffee table

When our kids moved back from Scotland the 3 year old dictated that we change our decor. Our family room really became a family room and here is our new coffee table. Thomas has permeated our house, and of course I love trains too so this addition was welcomed and a surprise how much Calum knows.

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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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