What questions should you ask at the open house?

Buying Advice: What questions should you ask at the open house?

Know what to ask — and how the answers will help you find the right home to buy.

By Melinda Fulmer of MSN Real Estate

Open houses can be a wonderful way to find your next house. They can be just as helpful in gathering intelligence about a neighborhood, getting a feel for its housing stock or simply scoping out real-estate agents with whom you might like to work.

But what should you ask when you pay a visit? In this month’s “Buying Advice,” we consulted agents and other real-estate experts for their insights on how to navigate open houses.

We’ll also update you on the latest housing and mortgage stats, and see how most people are feeling about the housing market’s prospects. And real-estate author and blogger Ilyce Glink will answer one reader’s question about whether he can legally have two primary residences.

Open-house questions If you play your cards right, an open house can tell you a lot more about a property than its floor plan or the condition of its floors. The key is asking the right questions, agents say. (Or if you’re looking with your agent, making sure she does it for you.)

Here are some questions to ask the listing agent and how these questions might help you in your purchase of the home:

Have you had any offers on the property? That lets you know if you have competition for the property, says Kim Drusch, an agent with Century 21 Award in San Diego. You’d also want to know if the sellers had rejected any offers and why, agents say. It could help you better craft an offer that will meet with their approval.

Has this house been in escrow? If it has, and didn’t sell, you’d want to know why. Was it an appraisal issue? Did a home inspection turn up some major damage? If it has been in escrow, ask if any inspections were done on the house. If there were, ask for copies of these reports, so you know what you’re dealing with, and what kind of secondary inspections you might need should you decide to make an offer.

How long has the property been on the market? If it’s getting a little stale, it might be ripe for a lower offer, experts say. Likewise, find out if there’s been a price reduction and when it happened.

Why are the owners selling? The agent showing the house is likely to remain mum on this one. But, then again, she might also let it slip if they are moving soon, are under financial pressure or are building another house and might need more time in the house if she’s a little desperate to move the property. Any information you can glean can help you decide how much to offer, when to close, etc.

Are there any liens on this property? You don’t want any surprises, so make sure there aren’t any construction liens, tax liens or other claims on the property resulting from unpaid debt, such as unpaid homeowners association dues.

Is the home going to meet a lender’s appraisal expectations? Do you have comparable sales in the last 90 days? These days, with prices on the decline, and more and more properties getting taken back by banks, appraisal at the listing price isn’t always a sure thing. Take a look at the recent comps and have your agent check pending sales to make sure you won’t get stuck once you’ve starting spending money on inspections and other aspects of the process.

Are there any other costs of ownership? Here again Drusch says you want to make sure there’s nothing to surprise you after closing.  If it’s in a condominium complex or other planned community, ask about association dues and additional taxes or assessments, especially if it’s a newer community. And if there is a homeowners association, get its phone number and call it to make sure there aren’t any rules that conflict with your lifestyle, pets, etc. You don’t want to find out, after the fact, that your husband can’t park his work truck in the driveway of your new home, Drusch says.

Have your agent follow up with the listing agent via fax or email to get it all on paper.

“Make sure everything is in writing,” Drusch says. And, as always, make sure you have your own home inspection done, even if you have been assured there are no problems with termites, plumbing, etc.

Home-sales update Existing-home sales dipped 0.8% in April from the previous month and 12.9% from the previous year, when the homebuyer tax credit was in effect, according to data from the National Association of Realtors. The national median home price declined 5% from last April to $163,700.

Lawrence Yun, the NAR’s chief economist, says tight credit and low appraisals are putting the brakes on many home purchases.

“Although sales are clearly up from the cyclical lows of last summer, home sales are being held back 25% to 20% due to the very restrictive loan-underwriting standards,” Yun said.

Moreover, distressed homes, which trade at double-digit discounts to traditional listings,  are still weighing heavily on the market. Distressed homes made up 37% of sales in April, down from 40% in March, but well above the 33% posted at the same time last year.

Investors are the most excited about the still-floundering market. All-cash deals accounted for 31% of transactions in April, down from a record 35% in March.

Mortgage rates drop The one bright spot for buyers is that mortgage rates continue to drop, increasing affordability. Fixed-rate mortgages declined for the fifth straight week, as of May 19, Freddie Mac said in its Primary Mortgage Market Survey, with a 30-year fixed averaging 4.61% and the 15-year averaging 3.8%.

Economists versus consumers: The outlook Just don’t look for that investment to appreciate in value immediately. Economists don’t predict a return to home-price gains until early to mid 2012.

Fannie Mae, for one, expects the median home price to decline 6% in the second quarter of this year from the same time in 2010, with those losses slowly tapering off this year, until the market hits bottom in the first quarter of 2012.

Analysts at J.P. Morgan expect an additional 6% decline in prices from where the market stands today.

But perhaps most bearish are consumers themselves.

In a joint housing survey conducted by Trulia and RealtyTrac, released in mid-May, 54% of those polled said they don’t expect the housing market to recover until 2014 or beyond. Twenty-four percent expect a recovery in 2013.

It’s clear, says Fannie’s chief economist Doug Duncan, that despite low prices, low interest rates and improving job numbers, consumer attitudes have yet to rebound in a way that will really push the needle up on home sales.

“In spite of the positives surrounding the housing market, we see that consumers are still hesitant to take on a large financial obligation,” Duncan says.

Still, he says he expects home sales to rise some this year, as the economy gets on surer footing.

And for many, it might begin to make more sense to buy. According to Trulia’s most recent data, it is now more affordable to buy a home than rent a similar home in 78% of major U.S. cities.

Reader question Here’s a question from one of our readers, Doug, about whether he can claim residence in two states:

Q: I have read that a married couple can have two primary homes if one is living out of state due to job conditions. Is this true? I recently purchased a house in Nevada, where I have been working for the past three years, and we were renting a home in Arizona. We want to live in Arizona and are trying to buy a home there now, but were told that we could not have two primary residences.

Here’s some advice for Doug from Ilyce R. Glink, publisher of ThinkGlink.com and author of “Buy, Close, Move In!

A: The IRS has several ways to determine whether the home you’re living in is your primary residence. First, you must spend at least six months and one day living in your primary residence. So, if you’re in the house in Nevada during the week and in Arizona on the weekends, the Nevada house would be your primary residence.

According to IRS.gov, for taxpayers with multiple homes, the regulations list several factors relevant to determining which home is the principal residence. Among these are amount of time used; place of employment; where other family members live; the address used for tax returns, driver’s license, car and voter registration, bills and correspondence; and the location of the taxpayer’s banks, religious organizations or recreational clubs.

Unfortunately, the IRS isn’t crystal clear about whether married but separated spouses can have two primary residences. I asked Bill Nemeth, president of the Georgia Association of Enrolled Agents, to weigh in.

Nemeth said: “The short answer is that the IRS will allow a main home and a second home to be deducted on Schedule A, assuming the couple files ‘married filing jointly.’  The main home is the home where they live most often. If the question really involves the states of Nevada and Arizona, it can get very complicated very quickly, since they are both community-property states. If the taxpayers file ‘married filing separately,’ the discussion takes on a lot of ‘it depends.'”

It’s possible that the IRS would permit a married-filing-separately couple to claim two primary residences, but when it comes time to sell, you’d only be permitted to take up to $250,000 in profits tax-free on each property.

For more details on what constitutes a primary residence, go to IRS.gov and check out Publication 523, Selling Your Home. But to get an expert opinion, consult with an accountant, enrolled agent or tax attorney who can research the tax records.

Don’t hesitate to give me a call at 970-227-7355 or shoot me an email at [email protected] if you would like more information about the current market!

 

Make your home offer stand out with a handwritten love letter

Just as temperatures are starting to rise, so are multiple offers on prime properties in some recovering markets. To stand out from the pack, an increasing number of buyers are taking the old-fashioned approach and penning a love letter to sellers telling them what they adore about the house and why they are the best suitor to end up with it.

In this installment of Buying Advice, we’ll look at what buyers stand to gain by writing these letters and what the letters should contain to be most persuasive.

We’ll also check in with the latest housing numbers and answer a reader’s question about how to find first-time homebuyer assistance.

Courting the owner In this digital age, there’s something nice about getting a personal letter written (or even typed out) on paper, even if it comes from someone you are doing business with. That’s why an increasing number of sellers are writing letters to owners when competition for properties gets stiff — especially given that bids considered too high often won’t meet lenders’ appraisal rules.

Anna and Buzz Hays recently wrote a letter to shore up their bid on a midcentury home in a coveted Glendale, Calif., neighborhood. “I thought about it and said, ‘I might not have all cash to pay for the house, but I do have writing ability and I can use that,'” says Anna Hays, a teen-fiction writer.

She described what she liked about the home, including how well-maintained it was, the beautiful rock waterfall by the pool, the friendly neighbors and the “nature and calm” in the wooded neighborhood that surrounded it. She also included a few lines highlighting her and her husband’s résumés and assured the couple selling their home of 15 years that they would take steps to make its pool safe for their school-age twins.

The strategy worked. Hays and her husband beat out the other three offers and recently closed on the property. “They called me when the bid was accepted and said it was because of the letter,” she says.

Is this tactic a good way to set your bid apart from the pack, or is it a waste of time? We asked agents what they thought about buyer letters and what they would include if they wrote one. Most said a sincere letter was worth a shot for a standard sale, not a bank-owned property.

“I have seen them work miracles with sellers, and I have seen sellers put them aside and move on with another offer,” says Ofe Polack, an agent with Coldwell Banker in Manchester, N.H. “Like everything else in life, it takes two to tango.”

However, agents caution that buyers should never go rogue and submit a letter without their agent’s knowledge. “Buyers are never to have direct communication with sellers,” says San Diego agent Kim Drusch of Century 21 Award. She says she often submits photos and background stories of the family she is working with, if she thinks the seller would be swayed by the information.

“A traditional seller typically is devoted to the home they raised their family in,” Drusch says. “They, of course, are vested in who takes over ‘their’ house from this point forward.”

Buyers should convey several things in a letter, including:

  • Specific features or things that they like about the house and the community. “I’ve … had sellers read letters and the compliments made them so happy that they’ve chosen lower offers because of the letter. But not much lower,” says Joseph Moore, an agent with Bridge Realty in Minneapolis.
  • How long they’ve been looking.
  • A little bit about themselves, including names and ages of any kids. “If the buyers knows that the seller raised a family in the house, I would appeal to those emotions,” Polack says.
  • Anything that speaks to their purchasing power or creditworthiness.
  • A commitment to the house and a willingness to do “whatever it takes” to land it.
  • Anything else buyer and seller have in common.

Keep it short and sweet and don’t give so many compliments that the sellers think they’ve underpriced the home, agents say. And don’t expect your prose to bridge a $30,000 gap between your offer and the next bidder’s.

“If you’re sincere,” Hays says. “I don’t see how you can go wrong,”

(Buyers: Have you been turned down for a home loan? Has a home deal fallen through because of a problem with financing? Please email your stories to [email protected]. They will be considered for an upcoming column.)

Housing market update Existing-home sales edged down 2.6% to 4.48 million in March from 4.6 million in February. But that number was up 5.2% from March 2011.

Lawrence Yun, chief economist for the National Association of Realtors, insists — as many other economists now do — that a recovery is “happening” despite the March dip.

New-home sales came in better than expected and values are firming up.

The national median existing-home price of $163,800 in March was 2.5% higher than in March 2011.

The NAR’s Pending Home Sales Index, which measures contract signings rather than closings, rose 4.1% in March to 101.4 from 97.4 in February. It is 12.8% higher than it was in March 2011, an encouraging sign; economists say the housing market is finally shaking off the winter doldrums.

What’s your home worth?

This rosy outlook was affirmed by Zillow’s first-quarter Real Estate Market Report, which showed home values rising 0.5% from February to March. That was the largest monthly increase since May 2006, before the housing bubble burst. Zillow projects a 0.4% price decline nationally this year.

However, Zillow says 19 of the 30 markets it covers will reach a bottom in home values in 2012, or have already reached one.

The biggest increases in value in the next 12 months are expected in Phoenix; Tampa, Fla., and Miami-Fort Lauderdale. Atlanta and Chicago are projected to experience more significant price declines as their markets continue to languish.

“For people who have been waiting to time their home purchase close to the market bottom, it’s time to start shopping,” Zillow chief economist Stan Humphries says.

A reader asks: Funds for first-timers? Buying Advice received a question from Deana in New York, who wondered what was the best way to find programs that will help first-time homebuyers with their down payment.

Increasingly, real-estate experts say, it’s just a matter of typing “first-time homebuyer down-payment assistance” and your state and city into a search engine to find programs.

“There are so many people searching for those terms that they have themselves become a keyword,” says Ilyce Glink, publisher of ThinkGlink and author of “Buy, Close, Move In!

One of the most reliable ways for first-time homebuyers to find help is to turn to one of the housing nonprofits approved by the Department of Housing and Urban Development, as well as those funded by community-development block grants and municipalities and foundations, says Marietta Rodriguez, director of homeownership and lending at NeighborWorks America, a network of nonprofit community-development and housing counselors.

“They can help you figure out if you are mortgage-ready and what finance and support services are available,” she says. In some cases, pre-purchase counseling from one of these agencies may be required in order to get help with a down payment.

One thing to watch out for, Glink says, are scam websites that purport to have first-time homebuyer down-payment programs, but are in fact either lead-generation sites or scam operations looking to access your valuable personal information by posting phony aid applications online.

Rodriguez says many of these sites will even charge applicants for information that is available for free.

While you might have to fill out a form online, it’s best to make a call and confirm that the nonprofit housing agency that claims to be offering it really is.

And, Rodriguez says, given how confusing and dense the information on these programs is online — with pages and pages of links — it might be easier to talk to a knowledgeable person who can figure out quickly what you qualify for.

By Melinda Fulmer

Don’t hesitate to give me a call at 970-227-7355 or shoot me an email at [email protected] if you would like more information about the current market!

 

Can you get a home via squatter’s right?

Can you get a home via squatter’s rights?

You dream of taking ownership of a vacant home by living in it. Then legal reality sets in.

By Michael Estrin of Bankrate.com

Describing himself as a “savvy investor,” a man used an arcane property-law doctrine known as adverse possession to squat in a vacant Dallas-area home. (Bing: How does adverse possession work?)

Kenneth Robinson’s gambit cost him $16 in filing fees paid to the county clerk’s office, and he got eight rent-free months in a home valued at $340,000. The ploy gave him a hook to peddle an e-book explaining how other people could use adverse possession to squat in vacant homes and eventually claim legal title to those properties.

But lawyers familiar with adverse possession say Robinson got the law all wrong. In February, the mortgage holder foreclosed. Robinson moved out, rather than face eviction. Although Robinson failed, his actions bring up the question of whether it’s possible to take a house via adverse possession.

What is adverse possession? Colloquially known as “squatter’s rights,” adverse possession is an old law designed to resolve property disputes and encourage efficient land use.

Courts use adverse possession to resolve property disputes that could date back decades, says Brian C. Rider, adjunct law professor at the University of Texas Law School. Disputes often involve as little as 1 or 2 feet of land. Rather than getting bogged down on where a property line was decades ago, courts use adverse possession to set boundaries that reflect how residents use them today.

What adverse possession does not do, Rider says, is establish squatter’s rights.

“The idea, which seems to be in vogue among people who want to become squatters, is that they get some rights immediately,” Rider says. “That is not so. A squatter is a trespasser until he or she has been there long enough to get the benefits of the adverse possession statutes.”

Legally speaking Most states have adverse-possession statutes. While the particulars vary, the general idea remains the same, says Charles R. Gallagher III, a real-estate lawyer in St. Petersburg, Fla.

“Generally speaking, adverse possession requires possession that is actual, open, notorious, exclusive, hostile, under cover of claim or right, and continuous and uninterrupted for the statutory period,” Gallagher says.

In some states, the statutory period can be as long as 20 years, while in others, it may be as few as seven years. But satisfying the numerous possession elements can be tricky because it’s not just enough to be present on the property.

“The difficult elements for a squatter would be exclusive use through some lawful claim or right,” Gallagher says.

Squatters would achieve adverse possession only if they had a legal basis for being there and if the squatters’ presence had the hallmarks of ownership. Courts usually expect people with adverse-possession claims to pay property taxes, maintain the land and generally treat it the way an owner would.

Can adverse possession save a home from foreclosure? Robinson’s story is no doubt attractive to some homeowners facing foreclosure. But it’s far from a sound strategy to save the family home, says Lionel Bashore, a lawyer in Shelby Township, Mich.

“I don’t believe it will [put off foreclosure], if for no other reason than the length of time someone has to possess a home visibly, openly and notoriously,” says Bashore, who says that period is 15 years in Michigan. “There may be that one very rare exception where a bank-owned property fell through the cracks and someone somehow establishes the elements of adverse possession.”

In this context, “notoriously” means that the squatter’s use of the property is so visible that the rightful owner should know that

Lawyers familiar with adverse possession caution against following Robinson’s lead.

“I doubt that homeowners can meet the legal criteria to own their home outright under these legal standards,” says Gallagher, adding that the owner still would owe the mortgage.

When would a homeowner encounter adverse possession? Homeowners seldom encounter property disputes involving adverse possession. If they do, it’s usually a dispute over something such as a fence or a driveway. The law is more useful in rural areas where demarcation lines aren’t visible.

“However, to squat in someone’s home and satisfy the elements I think is more like an urban legend,” Bashore says. “You hear a lot about it, but no one has actually met anybody that has done it.”

Don’t hesitate to give me a call at 970-227-7355 or shoot me an email at [email protected] if you would like more information about the current market!

 

Inner-city suburbs?

Enterprising homeowners are changing the landscape of ailing neighborhoods in big cities through ‘blotting,’ a term coined to describe homeowners taking possession of adjacent abandoned property.

By Melinda Fulmer of MSN Real Estate

Shelina Gethers, left, and her granddaughter Kaili stand in Gethers’ New Orleans yard. Gethers added to her yard via a process called “blotting.” Photo courtesy of Gethers

When Buck Harris and his partner, Mike, bought a 145-year-old Italianate house to restore adjacent to Cleveland’s Ohio City neighborhood two decades ago, the neighborhood ambience included drug shootings and corner prostitutes.

“It was a war zone,” Harris says. “The neighborhood was in dramatic decline at the time. It was known as where you go to get heroin.”

Now, as Harris and other intrepid homeowners have gobbled up the vacant and foreclosed lots surrounding their houses over the years and worked to wipe out drug-related crime, the area has been transformed. Many of the nearly block-long lots, or “blots,” they have created look as if they were lifted from a verdant suburb, with mature trees and a wide expanse of lawn.

Harris’ neighborhood is just one example of how enterprising homeowners are changing the landscape in many depopulated cities, bringing the look of spacious suburbs to abandoned urban neighborhoods.

What’s your home worth?

For less than the cost of an airplane ticket, in some instances, owners can acquire lots next door to create their own oasis, complete with pools, courtyards or even orchards. Cities, meanwhile, are spared the upkeep of these properties.

“I think it’s a good strategy” for our 60,000 vacant lots, says Marja Winters, deputy director of Detroit’s Planning and Development Department. “In a lot of them, there’s no interest, so why not put them in the hands of citizens that are going to own it and care for it?”

This type of side-yard expansion, once expensive and time-consuming, has taken off in recent years as cities have foreclosed on abandoned properties, putting them in a land bank to be sold to interested parties. As the price and process have improved, the number of blots has swelled by the thousands in cities such as Detroit, Chicago, Cleveland and New Orleans, as well as other parts of the Rust Belt and Northeast.

In Detroit alone, the city approved 139 of these side-lot sales last fiscal year, and 123 in just the first part of this fiscal year. The New Orleans Redevelopment Authority has signed purchase agreements for more than 1,000 properties abandoned after Hurricane Katrina, according to published reports.

As the number of blots has grown, so have concerns about the effect they will have on future growth in these shrunken cities. Is it wise to create suburban spaces just outside of downtown? Or are these cities shortchanging future growth?

That depends, experts say, on how much demand there might be for some of these properties in the years ahead. “There are residential areas where there could be little to no demand for decades — places where I cannot foresee a future in 50 years,” says Margaret Dewar, a professor of urban and regional planning at the University of Michigan who has studied blotting.

Moreover, she says, in many of these areas, the small, narrow lots (think 30 by 100 feet) and homes without driveways or other modern amenities are not as appealing to future residents. “Having a driveway and a garage is a big improvement in one’s property,” Dewar says, and a feat that can be accomplished in most cases only by adding the lot next door. “It makes (these blocks) a better 2012 area, as opposed to 1912 (when many were developed).”

How blotting works The process of acquiring vacant lots around an owner’s property is different in every city and can take anywhere from 90 days to nine months, depending on the process and approvals necessary.

Owners, in most cases, must demonstrate ownership of their own property and prove that it is up to code and that they have the means to maintain it. They also must inform the city of their plans for the lot they wish to acquire. Many cities require these lots to be fenced in, and some will provide fencing material.

Slide show:             What fence is right for you?

Under the New Orleans Redevelopment Authority’s Lot Next Door program, purchasers may also qualify for a grant that provides up to $10,000 in landscaping materials and plants to improve the look of these spaces.

The cost of gaining title to these extra lots is only a couple of hundred bucks in some areas of Detroit and Cleveland. In New Orleans it can cost $4,000 or more, after a city rebate. If both neighbors want the lot, cities simply divide it and split the cost. Because most of these blots do not hold a separate structure and property values are low, the tax impact is minimal.

Slide show:             Want land? Take it — it’s free

“There’s not a lot of value in these properties,” says Tobias Armborst, a partner in the Brooklyn design firm Interboro Partners, which coined the term “blot” almost a decade ago in a research paper. “Their greatest value is in their use.”

While this type of land grab has been going on for decades, the past few years have seen many owners making big investments in the lots next door, as Harris did. That’s because it has gotten a lot easier for people to gain clear title to these abandoned properties through city land banks.

For decades, cities did not pursue tax foreclosures on vacant properties and could only give neighboring owners quitclaim deeds, which did not convey clear title but merely released the city’s interest in the property. Others were squatted on and fenced in with a neighbor’s yard — a kind of urban homesteading. The land banks have made it easier for residents to claim title quickly and to gain financing from banks for meaningful improvements, rather than simply fencing the lots in to keep vagrants out.

What does a blot look like? These blots run the gamut from two small lots to four or five, and can take up most of a city block.

For some, the extra space has provided a place to put in a wheelchair ramp or a raised garden bed, or allowed for the planting of trees for privacy. Others have prompted large additions such as a new wing or a move to change the orientation of the house to face away from the street and to a central garden.

Harris, a yoga instructor, and his partner installed a pool in their backyard, and added Zen-style landscaping, including a large wooden arch, statue of Buddha and groves of bamboo. Harris’ half-acre compound has been featured on the Ohio City garden tour four times in the past two decades.

“As a result of our salvaging this house, we have really changed the whole neighborhood,” says Harris, 63. “There’s a lot of new construction going on. It’s hard to believe it’s the same neighborhood.”

Shelina Gethers, 48, who lives in the historic Gentilly neighborhood in northern New Orleans, has created her own beautiful retreat after purchasing the abandoned corner lot next to her from the city for $4,000 in late 2009. She put a concrete fence around both lots and added a pool and a gazebo, while keeping the mature trees on the lot she acquired.

“It really is a little outside oasis,” she says. “When it’s hot, my granddaughter is in the pool every day.”

The process was easy, she says, despite its nine-month time frame. And because she had such an easy time of it, her neighbor across the street decided to purchase the lot next door to her, and has since added a gazebo and a half-dozen fruit trees, further improving the look of her street.

Don’t hesitate to give me a call at 970-227-7355 or shoot me an email at [email protected] if you would like more information about the current market!

 

6 tips for a painless closing

6 tips for a painless closing

Closing on a house can be joyful or horrific. Follow this advice for a smooth settlement.

By Polyana da Costa of Bankrate.com

You finally found the house of your dreams. You signed a contract and got approved for a mortgage. You’ve even hired the movers. Now comes the most important part: the closing.

In an ideal world, closing should be a mere formality, where homebuyer and seller sign on the dotted lines, exchange checks for the keys and shake hands. But this isn’t an ideal world, which means that if you and the professionals you hired don’t prepare, your closing could be a disaster. (Bing: How much are closing costs, on average?)

Here are six tips for ensuring your closing goes smoothly.

1. Ask questions Knowing what to expect and communicating with all parties involved in the deal are key to a successful closing, says Neil Garfinkel, a real-estate attorney at Abrams Garfinkel Margolis Bergson LLP in New York.

A week before closing, “talk to the people who are representing you, and tell them you’d like to spend a couple of minutes to discuss what to expect,” Garfinkel says.

Don’t be afraid to bother your loan officer or your real-estate agent, says Jeff Richardson, a real-estate agent at Alliance Bay Realty in Newark, Calif.

“Stay on them,” he says. “Ask them ‘Do you have everything you need?’ Don’t assume everyone knows what they are doing.”

2. Anticipate human error Richardson says he recently represented a buyer whose closing failed because of missing loan documents. The buyer was a co-signer on his brother’s mortgage, and the lender had requested 12 canceled checks showing that the brother, not the buyer, was paying the old mortgage. The buyer could come up with only eight checks, and the loan officer said that would be enough. That was weeks before closing.

“I kept saying that wasn’t going to work,” says Richardson, who also has worked as a mortgage broker. “The requirement is 12 checks. How can eight checks be sufficient?”

Three days before closing, the lender said it couldn’t issue the loan without the 12 checks, and the deal was canceled.

“Sometimes people don’t know as well,” Richardson says. “I asked his loan officer, ‘How can you give someone an approval letter when you don’t have all the documentation?’ And his answer was, ‘Well, now I learned it.'”

3. Review loan documents in advance One way to ensure all is going as planned is to tell the lender that you want to review the documents before closing, or ask your attorney to do so.

By law, you have the right to review the closing-settlement statement, or the HUD-1 form, at least 24 hours before closing. Compare that form to the good-faith estimate you received when you applied for the loan.

“You should have everything you are going to sign before you sign it,” Richardson says. “A lot of people don’t do that. When they get to closing, they are nervous, and they just want to sign and get the keys. That’s how people get in trouble.”

4. Take a check Another reason to review the loan documents in advance is so you know how much money you must bring to

Many buyers are so anxious and excited that they forget they need to stop at the bank to get the check.

Using a wire transfer is an option, but it may delay the closing, says Rafael Castellanos, a managing partner at Expert Title Insurance Agency in New York.

“Some people think a wire transfer is faster, but the closing won’t happen until they have actual confirmation that the wire hit,” Castellanos says. “Depending on the time the transfer was made, it could be a huge problem.”

The buyer must also bring photo identification and a copy of the homeowners-insurance policy, as well as the good-faith estimate, the HUD-1 statement or both, in case there are discrepancies.

5. Take the day off A smooth closing may take less than 30 minutes, but you won’t know for sure if your closing will go as planned until it’s done.

“There may be delays, especially if you are closing at the end of the month,” says Rob Nunziata, president of FBC Mortgage in Orlando, Fla. “Sometimes, people have to sit there for hours and say, ‘I’ve got to get back to work.'”

Trying to close during your lunch break is a bad idea, Castellanos says.

“Imagine you get these delays, and you are on your lunch hour,” Castellanos says. “Now you’re hungry, you’re frustrated and you’re late. That’s a pretty bad combination.”

6. Expect the unexpected — including typos You’re at the closing table. You’re told everything is good to go. All you need to do is sign.

You must double-check the numbers on the mortgage note you are signing, even if you have received the HUD-1 form before closing.

“One of the biggest holdups in closing is when the mortgage documents are incorrect,” Castellanos says. “Sometimes, you have to correct the interest rate, or the amount is wrong and you need to fix it.”

Because of a simple typo, your loan documents may need to be sent back to the lender to be redone.

To prepare for these unexpected delays, borrowers should try to schedule their closings for earlier in the day. And don’t wait until the last day on the contract to close.

“You shouldn’t get to that line, especially when you are buying a foreclosure or short sale,” Richardson says.

Don’t hesitate to give me a call at 970-227-7355 or shoot me an email at [email protected] if you would like more information about the current market!

Don’t lose your shirt in a bidding war

Don’t lose your shirt in a bidding war

Home prices are up, and inventory is down. That means competition is fierce — but you can manage it deftly.

By Amy Fontinelle of Investopedia

Despite the uncertainty surrounding the real-estate market’s recovery, popular price points in some cities are experiencing bidding wars. Multiple-offer situations have been reported in the San Francisco Bay Area; Los Angeles; Austin, Texas; South Florida and other areas. If you find yourself in competition when you’re ready to make an offer on a home, here’s how to avoid overpaying.

Take your cues from the comps Any time you buy a home, you want to offer a purchase amount that makes sense for the home’s location, condition, size and amenities. This rule stands firm even in the case of a bidding war.

How do you know what price makes sense? You look at “comps,” or comparable properties that have sold recently. A comp should be as similar as possible to the home you’re buying. If you’re buying in an area where many homes were built by the same developer at the same time, finding comps is usually a snap.

If no similar properties have sold recently or if the home you want to buy is unique, you’ll have to use your judgment to determine the value of differences in square footage, lot size, upgrades and other features. A good real-estate agent will provide you with all the data and analysis you need to compare properties and arrive at a reasonable purchase price for the home you want to buy. (Bing: Find a great agent)

Make sure you’re not overpaying for the neighborhood. If you overpay, you’re setting yourself up to lose money when you sell. Worse, you could get stuck in the home because you can’t sell it for enough money to pay off the mortgage.

Consider your post-closing expenses Is the home in turnkey condition, or are there repairs you’ll need to make right away? If so, how much will these repairs cost? Are they major, such as foundation cracks or water damage? Or are they minor, such as painting the walls? If the comps you examined were move-in ready, subtract the cost of your target property’s needed repairs to get a more accurate idea of what the home is worth in its current condition.

Even if the home doesn’t need any repairs, it may not come with everything you want or need. Will you have to buy appliances? Add a fence to the yard? If the sale doesn’t include all the essentials, you have to leave room for them in your budget.

Don’t lose sight of your own bottom line You decided what you could afford early on in your home-shopping process. Now is the time to stick to that amount. The sense of victory you might feel from winning a bidding war will be short-lived compared with the long-term struggle of making monthly mortgage payments you can barely scrape together. Other bidders might be able to afford more than you. So be it.

When you think about sticking to your bottom line, make sure it’s the bottom line that you established based on your own calculations of your likely income and expenses as a homeowner. Don’t base your bottom line on the maximum amount that the bank has agreed to lend you. Your own personal affordability calculations are probably more accurate than the bank’s, which are based on broad averages and an incomplete picture of your financial situation.

Refuse to play games A bidding war is a game. Each buyer is trying to guess how much the seller will accept for the house, how much other buyers are offering and how to position the offer to be the lucky one that’s accepted.

Your offer shouldn’t be based on a guessing game. If there are multiple offers, write one offer. Make it your highest and best offer considering what you can afford and what the home is worth, because you may get only one shot. The seller may come back and ask all the bidders to increase their offer, or he may not. If he does, don’t change your offer. You don’t know what other buyers have offered and you don’t know that they’ll increase their offers. You might already have submitted the winning bid.

Keep the appraisal in mind No matter what you bid on the home and no matter what the seller accepts, your lender will only let you pay as much for the home as it appraises for, and the seller won’t be able to command a price that’s higher than the home’s appraisal value.

The bank is wary of lending more than the home is worth because if it ever gets stuck owning the home, it wants to be able to sell it and recoup as much of its value as possible. The bank is evaluating the situation from a purely rational, financial perspective — and you should be, too.

It might be tempting to think that the appraisal can act as a check on overbidding; if you end up under contract for more than the home is worth, the appraisal could help you negotiate a lower price when you already have the home under contract. However, there is no guarantee that the appraisal will come in below your bid, so you shouldn’t attempt this strategy.

Don’t hesitate to give me a call at 970-227-7355 or shoot me an email at [email protected] if you would like more information about the current market!

 

Ranch houses: Trendy again

Ranch houses: Trendy again

More homebuyers are considering one-story homes.

By Amy Hoak of MarketWatch

More and more, people are starting to crave the practicality of one-story living.

That’s why more one-story homes are being built, new two-story homes often come with a master bedroom on the first floor, and even older ranch homes are getting a second look.

“People who want to have a one-story house are looking for [ranches] and buying, including boomers but also young families who don’t want to be running up and down the stairs,” said Alan Hess, author of the book “The Ranch House,” who said there is a growing resale market for the homes, even though their heyday was in the 1950s and 1960s.

“The old ranches provide an alternative for people,” he said.

It’s only recently that an increasing number of homebuyers have been more interested in doing all of their living on one floor. In 1973, one-story homes made up 67% of new-home construction. That dropped  to 43% in 2006, before reversing course and rising to 46% in 2011, said Stephen Melman, director of economic services for the National Association of Home Builders, citing Census Bureau information.

While it may be too early to call a trend, it’s only logical that there would be an increased demand for single-story homes among baby boomers and others, Melman said. About 90% of homeowners 45 and older say they want to age in place in their existing home, according to a study by the 50+ Housing Council of the NAHB and the MetLife Mature Market Institute. And by 2020, nearly 45% of households will include someone 55 or older.

“When you think about the number of people who say they want to age in place, their biggest obstacle is climbing the stairs,” Melman said.

As people are living longer, boomers who have seen their own parents age in place often realize the benefits of single-floor living before they actually need them.

But the one-story homes being built today are “not your grandfather’s ranch,” Melman said. Modern one-floor homes are open and bright, and won’t be advertised as ranch homes by the developer, either; they will be advertised using the amenities that the homes offer.

It’s also becoming common for two-story homes to be built with the master bedroom on the first floor, said Denise Dersin, editor in chief of Builder magazine, a publication for the construction industry. That creates a more flexible floor plan, a way to accommodate family members who can’t trudge up the stairs or perhaps to create a separate living environment for an adult child who moves back home after college. Upstairs bedrooms may accommodate grandchildren or other visitors, she said.

She sees that two-story design as more of a trend than new one-story designs, adding that the bump in one-story new homes may have more to do with the industry trying to create affordable models for buyers.

New construction aside, those who want that one-floor living in a resale home may be giving ranches another look, she added. That’s especially true of people who need to move but want to stay in the same neighborhood, since the number of new homes in established neighborhoods is limited.

Ranches also tend to be affordable, the opposite of the conspicuous McMansion, and may suit more families at a time when consumers are looking to buy only as much house as they need, Hess said.

To help older ranch homes get with the times, alterations to change the face of the homes can be quite successful, said Phyllis Harb, a real-estate agent with Prudential California Realty in La Canada, Calif.

There are other options for single-story living, too. Tudor-style homes can also be single-story, she pointed out. Prairie or bungalow homes, too, are often built so that most of the living is done on one floor, Melman said.

The availability of one-story homes also has to do with location. Where land is dear, often the only affordable option is to build up, Melman said.

Of course, for those considering a home’s ease of use during retirement, one downside of living in a ranch is that it is often spread out on a large lot — meaning owners won’t escape the maintenance of a big yard.

Still, avoiding those five or six trips up and down the stairs each day may be worth it. That’s true not only for those nearing retirement, Harb said. In general, she has more clients today who say they’d prefer a single-story home than those who would prefer a two-story home.

“Interest rates are low, and none of us know how long they’re going to remain low. It may likely be that there isn’t a ‘move-up home.’ This might be their ‘forever home,'” she said, causing buyers to select a place with features they can live with today as well as that will suit them tomorrow.

Don’t hesitate to give me a call at 970-227-7355 or shoot me an email at [email protected] if you would like more information about the current market!

 

Should you buy a fixer-upper?

 With housing inventory tight and many bank-owned homes on the market, some buyers are starting to consider homes that they previously would have dismissed as problems. (Bing: How tight is housing inventory right now?)

How much of a project should you take on? We asked real-estate agents and a home inspector what buyers should consider when evaluating a home that needs work.

In this month’s Buying Advice, we’ll also check in with the latest housing statistics and help define a real-estate phrase that’s commonly used but not universally understood.

Repair, renovate, rehab Buying a fixer-upper is hardly ever anyone’s first choice. But with the number of available listings at or near record lows in many markets, paying for repairs is something more buyers have to plan on, says Chasin Prather, with ERA Buy America Real Estate in La Palma, Calif.

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“Relying on the seller to make the repairs you want in this market is not a good strategy,” he says. “Assume you’ll have to take it in the existing condition.”

A recent home inspection at a 1952 tract home on which his first-time-buyer clients had made an offer turned up inferior galvanized plumbing, and other repairs were needed. Despite the large tab to make repairs, the seller offered to pay only one-quarter of the cost.

“The tight competition allowed the seller to say, ‘Take it or leave it. I have seven other offers,'” Prather says. His clients ultimately decided to buy it.

But Prather says there are times when it’s best to walk away. Here’s his list of problems you should walk away from:

  • Mold: If you see or suspect (sniff sniff) mold in the house, you should definitely get it inspected carefully. (Did we mention that you should never skip a home inspection, or any additional specialized inspections recommended by the inspector?) Mold on the inside could mean repairs to plumbing and extensive drywall replacement. Exterior mold could mean that the house has improper drainage, which requires expensive lot grading to remedy and, if uncorrected, could mean a flooded basement every time it rains.
  • Foundation issues; If an inspection turns up a problem with the foundation, you can bet that you’ll be draining your bank account to fix it. And if your lender becomes aware of the problem, it could jeopardize your financing, Prather says. Many lenders request a copy of the home inspection if it is cited on the purchase agreement.
  • A bad floor plan: Many buyers with large families talk themselves into a home with a less-than-ideal floor plan by rationalizing that it would be made better with an addition. While an addition can add space, it can’t always resolve issues such as a cramped kitchen or bad access to the laundry room, bedrooms or backyard. “Be sure the rest of the home works for you,” Prather says. 

Bill Jacques, president of the American Society of Home Inspectors, says first-timers should probably steer clear of a house that needs extensive repairs. He says most people overestimate how handy they are and underestimate the costs of repairs. “They end up taking on these large projects and not being able to finish them,” he says.

 

Problems that made his walk-away list include:

  • A bad roof: You are looking at thousands of dollars to replace it, on top of any other work.
  • A dead or dying heating and air-conditioning system: “If you have to replace the unit, you’re looking at a minimum of $5,000,” Jacques says. And if it’s a much older home, you might also have to commit to replacing some ductwork.
  • An ancient, problematic electrical system: Many old homes, he says, have faulty wiring and electrical panels that could pose a risk of electrical fire. For example, he says, in many cases, old circuit-breaker panels made by Federal Pacific Electric Co. failed to trip and protect homeowners. Updating wiring is expensive, he says. Know that going in.

If many repairs are needed, he says, you have to consider whether you’d be better off waiting and buying something a little more expensive. “You will be spending all of your money [and time] trying to fix everything up,” Jacques says.

If you are going to give a fixer serious consideration, make sure you do your homework, says Tony Geraci, broker/owner of Century 21 HomeStar in Cleveland.

Price out repairs with a licensed contractor before you buy and have the contractor help you map out a realistic timeline for repairs.

If repairs are major, ask yourself if you are able to find another place to live. If you must move in, can you live with the house the way it is?

Know that a home inspection might not turn up everything that needs work. Make sure you have an emergency fund to deal with these problems.

See if your city’s planning department offers any grants, tax abatements or other incentives for renovations in your neighborhood.

Lastly, prioritize your projects and don’t tackle them all at once, especially if you’re doing it yourself. You don’t want to start working on both bathroom and kitchen and wind up getting stuck or out of money halfway through, when your counters are all ripped out.

“Doing it on your own saves you money, but there’s no one to complain to if you do it wrong,” Geraci says.

Housing-market snapshot Existing-home sales increased 0.8% to 4.98 million in February from 4.94 million in January and were up 10.2% from 4.52 million in February 2012. It was the highest sales level since the tax credit of 2009.

The national median price for an existing home climbed 11.6% to $173,600 in February from the same time a year earlier and registered the largest monthly increase since the hot housing market of 2005. In the West, where choice is the most limited and multiple offers are common, the median price rose 22.7% from last February.

Rising prices are finally beginning to translate into more listings. Total housing inventory at the end of February rose 9.6 % to 1.94 million existing homes, a 4.7-month supply at the current sales pace. However, it’s still 19.2% below a year ago, when there was a 6.4-month supply.

What’s your home worth?

With such low inventory, the median time on the market dipped to 74 days in February, down from 97 days in February 2012. One out of three homes sold in less than a month, according to the National Association of Realtors.

Real-estate term of the month: Title search No matter where you live, your lender is going to require a title search if you’re buying real estate. Most first-time buyers have heard the term tossed around, but only a portion of them knows what it means and how it works.

We asked Alicia Champagne, a real-estate attorney in Wilmington, Mass., to shed a little light on this process. What is a title search? And how and why is it done?

In its simplest terms, she says, it’s a search of a property’s history to make sure that the seller has clear title to the property and that nobody else could stake a claim to it once you purchase it.

“Most of my homeowners say, ‘Alicia, hand me the piece of paper with clean title on it,'” she says. There is no such piece of paper, she says. Instead, title is just a synopsis of property records used to issue title insurance to a lender and confirm lot boundaries or easements.

While the process varies from place to place, it usually consists of a review of documents at the county recorder’s office and a search of the federal bankruptcy system. Each county recorder keeps a public record of real-estate transactions under the property’s legal description.

The person conducting the search is also looking for any tax liens, judgments, unpaid homeowners-association assessments or mechanics liens — filed for unpaid work on the property. If the property is part of an estate, he also determines whether probate is necessary. If there have been liens in the past, they must be discharged or removed to ensure that there’s no threat to title.

The person doing the title search is also making sure that the property hasn’t been conveyed to a trust or business. A separate search of federal bankruptcy records ensures that a seller can legally sell the home and that a trustee does not hold it.

Once the search is done, it is used to issue title insurance to the lender, protecting it against any other unforeseen threat to the deed, including fraud.

By: Melinda Fulmer

Don’t hesitate to give me a call at 970-227-7355 or shoot me an email at [email protected] if you would like more information about the current market!

 

 

Not for sale? Not necessarily a problem

Not for sale? Not necessarily a problem

May Buying Advice: Choked by a weak housing inventory, some agents are coaxing homeowners to the market with a different approach.

By Melinda Fulmer of MSN Real Estate

Frustrated with the lack of housing inventory, homebuyers in many markets are taking matters into their own hands by sending letters to homeowners and asking them to sell. In this month’s Buying Advice, we’ll consider this direct approach and its effectiveness. We’ll also check in with the latest housing numbers and dish out some tips for first-time buyers who are insuring a home. (Bing: Why is housing inventory so low right now?)

Wanted: Sellers After about nine months of unsuccessful home searching in the historic Olde Worthington neighborhood of Columbus, Ohio, real-estate agent Anne DeVoe’s clients were frustrated. No homes were coming up for the couple in the small, 10-block neighborhood.

So she suggested they make a wish list.

“I asked them to drive around and identify the houses they were interested in,” says DeVoe of Coldwell Banker King Thompson. She drafted letters to the owners of 35 homes, asking if they would consider selling. Two were interested. After looking at both houses, the couple put in an offer on one of them, a two-story Colonial. The deal is expected to close this month.

“I made the same suggestion last fall, and it was a success,” DeVoe says. “It’s great for someone who wants a particular street or neighborhood.”

Jeff Beggins of Tampa, Fla.-based Century 21 Beggins says he agrees that sellers are few and far between. He says many owners who were once underwater still mistakenly believe that property values are lower than they are. Others have seen the gains and are holding out for more appreciation, despite today’s low mortgage rates. Either way, there are far more buyers than homes to buy, he says.

To generate some listings, Beggins and his team have begun courting homeowners in coveted neighborhoods, mailing monthly newsletters with recent sale prices and current listings, as well as an offer of a free home-price analysis. In many areas, his agents are even going door to door to solicit homes to sell.

“Our message is simple: Our South Tampa market is hot. Interest rates are low. It’s a great time to move up, move down or just move around” to a new area, he says.

The appeal has had limited success, he says, but it’s worth it when an agent walks away with two or three new listings.

Suzanne Zinn Mueller, chief marketing officer for CB Bain in the Seattle area, says a letter or postcard from a local agent can be just the reassurance a would-be seller needs that there are enough buyers waiting in the wings to ensure a speedy home sale. “One of the biggest fears of sellers tends to be concern over the hassle of selling,” she says. “How long will it be on the market? How long do I have to keep my house looking perfect?”

These days, she says, this shouldn’t be a concern for most Seattleites. As of April 25, the absorption rate for homes in King County, Wash., was 105%. For every home sold, only 0.95 of a home came on the market — a far cry from the 30% to 40% absorption rate that is typical in that market.

Nationally, the inventory of for-sale homes is down 17% from last year’s levels, according to the National Association of Realtors.

Hence the flurry of agent letters hitting mailboxes around the country. Indeed, in DeVoe’s case, her letter reportedly wasn’t the only one the seller received. But her timing was spot on: Both of the owners who responded had recently contacted agents and were thinking of listing their homes this summer. Her letter was enough to speed up those plans.

Of course, agents say, the letters have more luck if they are targeted to specific types of homes, specific houses or blocks within neighborhoods. Mass mailings haven’t directly brought in listings for Kim Drusch of Century 21 Award in San Diego. But they do get her name out there as an agent, she says.

If you keep coming up empty in your search, agents say, maybe your agent should try hitting the streets for you. If he’s not willing: “Find a good, aggressive agent who is willing to go above and beyond for you,” Beggins says.

Housing-market snapshot Existing-home sales declined 0.6%, to 4.92 million in March from 4.95 million in February on limited inventory. But they were 10.3% higher than in March 2012, according to the NAR.

“Buyer traffic is 25% above a year ago, when we were already seeing notable gains in shopping activity,” says Lawrence Yun, the NAR’s chief economist. “In the same time frame, housing inventories have trended much lower, which is continuing to pressure home prices.”

The median existing-home price for all housing types was $184,300 in March, an 11.8% increase from March 2012 and the strongest price bump since November 2005, before the last housing bubble burst. In the West, where inventory is particularly scarce, the median price increased 26.1% from March 2012 to $258,100.

Homes are selling faster because of limited supply, says NAR President Gary Thomas of Evergreen Realty in Villa Park, Calif. “The typical home sold in March was on the market for one month less than it took to sell a year ago,” he says. The median time on market for all homes was 62 days in March.

Fewer foreclosures and short-sale properties are in the mix: Sales of distressed homes continued to fall, accounting for 21% of March sales, down from 25% in February and 29% in March of last year.

What’s your home worth?

Looking ahead, the NAR’s Pending Home Sales Index, based on contract signings rather than closed sales, increased 1.5% to 105.7 in March, from 104.1 in February. It is 7% higher than the same time a year ago. An index of 100 is considered a normal level of activity.

First-time buyers: How to insure that home Finding insurance for that first home purchase can be just as anxiety-provoking and confusing as the negotiation itself. How much insurance do you need? And what kind of coverage should you choose?

We asked Jana Bell, vice president at HomeInsurance.com, for tips on how to select the right coverage for your new home. More can be found here.

The biggest confusion, Bell says, is how much to insure the dwelling for. Owners must insure for “replacement cost,” or the cost to rebuild the home, not what it is worth it in the market or what they paid for it.

“Today, with foreclosures and short sales, you are sometimes paying less than what it would cost to rebuild it if it was a total loss,” Bell says. You can use a number of insurance calculators, including this one on HomeInsurance.com, to get a rough idea of what it would cost to rebuild your home should disaster strike.

Next, Bell says that when you’re looking for a standard home policy, you want to make sure that it offers the “replacement cost” for your home and its contents rather than “actual cash value,” which means a depreciated reimbursement based on age that probably wouldn’t cover the cost of buying a replacement for that new roof or sofa today. (Bing: Warranties not worth paying for)

Finally, most policies will include liability coverage for people who might injure themselves on your property, such as that delivery guy who trips on your loose step and breaks his ankle, or the kid who slips on the concrete by your pool.

While the standard policy usually includes$100,000 in coverage for these types of events, you can triple that amount for just $12 to $24 more annually, Bell says.

Most policies also include coverage of a home’s contents to as much as 70% of the building’s value. You must document these items with receipts and photos to justify your claim. Snap some shots of everything after you move in and email them to yourself and your mom, or put them in a cloud server, so they are there for you even if your computer is destroyed.

“It takes 10 minutes to snap photos,” Bell says. “If anything should happen, you could always refer to those photos. It makes the claims process much easier.”

Don’t hesitate to give me a call at 970-227-7355 or shoot me an email at [email protected] if you would like more information about the current market!

 

Your condo-buying cheat sheet

Home prices have surged in the past year, forcing many first-time buyers to consider a condominium or townhome because these options are often less expensive. But is one of these the right choice for you?

In this month’s Buying Advice, we’ll arm you with the right tools to assess these communities, which come with a different set of rules and issues than tract homes. We’ll also consider the latest housing numbers so you know what to expect in the market, and we’ll review a Web tool for finding help with your down payment. (Bing: How low are interest rates?)

Condo 101 Buying a home is undoubtedly complex. But with condos, there’s even more to consider, from community rules to fees and finances.

Here are some of the things you should scrutinize when buying into a condo complex:

Finances: One of the biggest things most would-be condo dwellers overlook is the monthly cost of homeowners association (HOA) dues, which cover the cost of regular maintenance and repairs, says Ben Kakimoto, a Seattle condo specialist with Keller Williams.

In his city, dues can range from 25 cents to 55 cents per square foot each month. There’s also the possibility of special assessments or temporary fees to cover repairs or improvements.

Getting a good deal is not just about who has the lowest monthly fees. Often, Kakimoto says, communities will fail to collect enough dues from residents for years, and then wind up levying huge bills for repairs such as new siding or new elevators that can cost residents thousands.

The amenities you get for those monthly dues can vary widely and can include such things as window washing, a doorman, health center, party room and pool.

“The thing you want to look at is what you are getting for your money” and how different buildings compare, says Bill Gassett of

You also need to know how a building or community deals with delinquent dues, says Frank Rathbun, a spokesman for the Community Associations Institute. How long does it wait before placing a lien on a unit?

You and your agent should sit down and comb through a community’s financial documents looking for upcoming assessments, as well as review its reserve study, which will tell you whether a property has enough money to cover needed upkeep and repairs in the years ahead.

“I also call the property manager, if there is one, and get information there, too,” says Kakimoto, who blogs about Seattle condos.

In addition to getting yourself qualified for a loan, you need to make sure your building passes muster. If it has too many HOA delinquencies or if litigation is pending, it might not make the grade with lenders, Kakimoto says. You can ask the building manager or seller’s agent if the building is eligible for Federal Housing Administration loans.

Rules and policies: Just as important as a community’s finances are its rules and regulations — or covenants, conditions and restrictions (CC&Rs.) If you don’t go over these with a fine-toothed comb, you might want to move out as quickly as you moved in.

For instance, you might find out that a particular building doesn’t allow dogs, or dogs of a certain size. So Fido would have to go. Or, you might discover that the wood-frame condo complex doesn’t allow hardwood floors — bad news for some allergy sufferers.

These rules can dictate everything from what you can put in your window to what you can hang on your front door or put on your balcony, Rathbun says, which means you might not be allowed that charcoal grill.

In many instances, you won’t be able to plant anything around your unit. Can you live without that tiny plot of tomatoes?

Another thing that people should ask about, Rathbun says, is parking. Is it reserved? How many spaces do you have? Where are your friends or visitors allowed to park?

Are there quiet hours? What is the policy on renting out units? Make sure you know the answers to these questions before you buy.

What’s your home worth?

Satisfaction with management: You also want to figure out whether residents are generally satisfied with the property’s management.

Unfortunately, Kakimoto says, there aren’t a lot of public resources for buyers trying to research communities and their associations. However, board-meeting minutes are a great way to find out what repairs are coming up, what issues neighbors are squabbling over and how money is being spent. If a lawsuit is pending, you’ll also likely find some discussion of it here, he says.

Have your agent pull these minutes, and make sure to talk to a couple of residents to see if they are happy.

Lifestyle: Lastly, Rathbun says you should make sure you are ready for the condo lifestyle, which includes shared walls and much more interaction with your neighbors.

“When you live in a condo, you have to be accommodating and flexible,” he says.

Housing-market update: Are higher mortgage rates starting to take a bite out of sales? Existing-home sales dipped 1.2% to 5.08 million in June from 5.14 million in May, but remain 15.2% higher than the 4.41 million unit pace of June 2012, according to data from the National Association of Realtors.

The national median existing-home price was $214,200 in June, up 13.5% from June 2012.

“Affordability conditions remain favorable in most of the country, and we’re still dealing with large pent-up demand,” says Lawrence Yun, the NAR’s chief economist. “However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro market.”

The average rate for a 30-year fixed-rate mortgage was 4.07% in June, up from 3.54% in May and 4.41% in June 2012, according to Freddie Mac.

But inventory has started to rise, swelling 1.9% in June to 2.19 million existing homes available for sale. That’s a 5.2-month supply at the current sales pace, up from a five-month supply in May. That’s good news for buyers. If this uptick in inventory continues, it will mean more homes to choose from and a slowdown in the aggressive price gains we’ve seen this year, analysts say.

Those buyers may also have less competition. Purchases made by individual investors are waning, down to 17% of purchases in June, from 18% in May and 29% in June of last year. A decline in investor purchases and higher interest rates may be responsible for the decline in pending home sales in June, which is based on contract signings.

The NAR’s Pending Home Sales Index dipped 0.4% to 110.9 in June from 111.3 in May. However, it is still 10.9% higher than in June 2012. An index of 100 is considered average.

New-home sales, however, posted their best performance in five years this quarter; sales rose 8.3% in June to 497,000, according to the Census Bureau.

Sales were 38.1% above last year’s 360,000, the largest year-over-year increase since January 1992. Those gains came despite a 7.4% increase in year-over-year median price, to $249,700.

Looking for down-payment assistance? There are many ways for first-time buyers to find money to help with their down payment. One smart way is to turn to nonprofit housing counselors approved by the Department of Housing and Urban Development who can find this money for you and make sure you’re mortgage-ready.

But there are also a number of free online tools that offer help. Here, it’s best to tread carefully, lest your information be shared or your identity stolen by scam artists.

At least one, Downpaymentresource.com, says it does not sell information about its visitors to third parties. You can print out the information on programs and leave no footprint, unless you decide to email the results to yourself, in which case you opt in to its newsletter.

“The information that buyers type in is only used for calculation purposes in determining eligibility for down-payment assistance,” says Tracey Shell, company spokeswoman. “It is not stored or otherwise used.”

The company makes its money through a version of Down Payment Resource that is integrated with the multiple-listing service in 14 markets. Clicking on the Down Payment Resource icon from a listing will take buyers to a short survey with information on the programs for which they qualify.

If you want to see the specific program details, you must share your email and phone number with the listing agent, and both of you will receive the details of the programs you qualify for as well as each other’s contact information. However, agents do not see the personal information you entered into the survey about income or family status, and DPR employees can’t see your survey answers.

Don’t hesitate to give me a call at 970-227-7355 or shoot me an email at [email protected] if you would like more information about the current market!

By: Melinda Fulmer