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Issue 177 - 3/21/05
DO I NEED A HOME INSPECTION BEFORE I BUY MY NEW HOME? You love the house. You’ve decided it’s perfect for you and your family. It’s beautiful inside and out. Obviously the owners have taken great care of the home. Should you still pay the money to have a professional home inspector inspect the home and prepare a report of their findings? Yes you should! There are many areas in a house that could be damaged or even dangerous yet unknown to the sellers. A home inspector will discover these problems before they become your problems. Once you close the sale on your new home any existing problems in the house become yours. Problems discovered before you close can be negotiated with the seller and corrected before closing. Contingencies within the contract to purchase will allow you to end the purchase if you discover a problem that is unacceptable to you and cannot or will not be corrected before closing. Professional inspection of your new home protects you from future costs to repair the house after closing. While home inspectors in Colorado are not required to be licensed, a competent home inspector will be ASHI (American Society of Home Inspectors) certified and will carry sufficient errors and omissions insurance. E&O insurance protects you in the event the inspector fails to identify an existing defect. Home inspectors should not be in the home repair business. If they do have a home repair/renovation business as well as a home inspection business they might be biased. You want an unbiased opinion of the home’s condition. A basic home inspection will cover over 400 visual and mechanical areas of your new home. Each one will be evaluated and the condition brought to your attention. This basic inspection does not include inspection for environmental hazards like lead, radon etc, or other specialized problems in the home. You have a right per contract to have other inspections performed as well as the basic inspection.. Don’t forget to have the well and septic tested if you buy in a rural area. Most basic home inspections range from $185 to $285 depending on the size of the home. Specialized inspections vary in costs. You can plan on an inspection taking 2 to 3 hours of your time. Most home inspectors like the buyers present during the inspection so they can point out problems and provide maintenance tips. A professional home inspection is the cheapest insurance you can have that the home you’re buying is functioning properly and is safe for your family.” Issue 178 - 3/28/05
PREPARING YOUR HOME TO SELL The decision has been made to sell your present home. Now begins all the details required to successfully market your home in the best possible light. One of the most important details is the staging of your home. Staging means arranging, repairing and adjusting the home to look its best. The first thing you should do is begin packing as much of your personal property as possible and removing it from the home. The best place to store your excess goods is in a rented storage unit. If you don’t want to have the expense of a storage unit you can remove the boxes to your garage. Either way will begin the decluttering process necessary to best show the features in your home. Remove most personal items from the house, such as family pictures, nick-knacks etc. Counter tops in the kitchen and bathrooms especially should be as free of items as possible. Never leave personal hygiene items out and visible. Keep them under the sink when not in use. Next declutter the tops of dressers, night stands, coffee tables and other horizontal surfaces in the home. A good rule of thumb is to have no more than 3 items on any one surface. Your furniture is positioned in your home to fit your particular lifestyle. The home might show better if the furniture is positioned differently during the showing period. It may not be as convenient for you on a daily basis, but the goal is to make your home feel as open and inviting as possible. Ask your realtor for suggestions regarding placement. You might also visit some new home models for staging ideas. Builder models are professionally staged to show the home at its best. Finally you need to address maintenance issues. Clean and crisp is the goal here. Paint what needs painting, clean the entire home, repair any caulking needed around windows, sinks and bath/shower areas. Pay particular attention to your yard and the approach and entrance to your home. This is where the buyer begins their judgment about the suitability of your home. If anything on the exterior looks worn or shows lack of maintenance the impression to the buyer is that the home has been neglected and will require their time and effort if they were to buy your home. First impressions are crucial. People choose the home they ultimately buy as they approach and enter the house. Many buyers base their decisions on the “feel” of the homes they see. The decision to buy your home instead of the 10 or 15 other homes they will see could very well hinge on the impact your home has on their emotions.” Issue 179 - 4/4/05
WHICH REALTOR DO YOU CHOOSE? There are two ways to sell your home; sell it yourself or hire a realtor to sell it for you. You’ve decided to use a realtor and are confident that the realtor you just hired will sell your home quickly and efficiently. After all she told you she would sell your home for $10,000 more than the other agents you spoke with before you listed! She agreed with everything you said and is willing to market your home your way. You can always lower the price later if necessary, right? Actually, it sounds like you contracted with an agent that is willing to ‘buy a listing’ by agreeing to inflate the listing price of your home. The home owner wants the most money they can realize from the sale of their home. So what if three other realtors said your home was worth $285,000. Your new agent is willing to list the home at $295,000. The promise of a higher sales price sways your decision and you choose to go with the inflated price agent. The reality is the market sets the value of your home and pricing your home above market value will only delay the sale of your home until you realize you need to lower the asking price. By then time has passed, you’ve paid another one or two mortgage payments and other realtors have seen your home on the market for much longer than the average days on market for the area. It appears there might be a problem with your home in their eyes because it hasn’t sold. Suddenly your stress level is up, your move date is approaching, you’re dropping the price weekly and you’re trying to figure out how you’re going to pay for two mortgages. Are you still happy with your choice? Probably not. Why would your realtor have overpriced your home? Lack of experience is usually the cause. Any experienced realtor will not even list your home if you insist on overpricing. It is a waste of time and money. Realtors are professionals and as such will tell you the true sales value of your home. They are interested in selling your home for as much money as the market will bear, but experienced realtors realize that an overpriced listing only harms the home owner. You hire a realtor expecting professional advice and service. Listen to them and you will find your home will sell, you’ll have less stress and you won’t need to make two mortgage payments! Issue 180 - 4/11/05
THE ROLE OF A LISTING AGENT When you bought your home, you probably used the services of a real estate agent. You found that agent through a referral from a friend or family member, or through some sort of advertising or marketing. The agent helped you in many ways and eventually you found the house of your dreams, made an offer, closed the deal, and moved in. For whatever reason, now it is time to sell your home and you need a real estate agent again. Many home sellers, especially those selling their first home, tend to think all agents are similar to the one that helped them buy their home. Although real estate agents can (and do) work with both buyers and sellers, most tend to concentrate more on one than the other. They specialize. When you bought your home, you probably worked with a “buyer agent” – an agent that works mostly with buyers. Because of the nature of real estate advertising and marketing, the public’s main image of the real estate profession is that of the buyer agent. As a result, many homeowners expect their listing agent to do the same things that a buyer agent does – find someone to buy their home. After all, they do the things you would expect if they were searching for buyers. A sign goes up in the front yard. Your home is listed in the local Multiple Listing Service (MLS). Ads are placed in the local newspaper and real estate magazines. Your house is proudly displayed on the Internet. But this is only “surface” marketing. More important activity occurs behind the scenes. After the “for sale” sign goes up and flyers are printed, your agent’s main job is to market your home to other agents, not to home buyers. Promoting your home to other agents exposes your home to the greatest range of buyers. Your listing agent will announce your home to the professional real estate community using a broad range of communications. Email, flyer distribution and word-of-mouth to other realtors are just a few of the methods. These behind the scenes activities will lead to a successful sale more quickly than the ads and signs ever will. Issue 181 - 4/18/05
ADVERTISING TRENDS IN REAL ESTATE Today most people begin their search for their new home on the internet. They research homes for sale and send inquiries to the realtors listed as points of contact on homes that catch their interest. Real estate advertising in today’s market must include a heavy internet presence to reach the majority of buyers actively seeking their new home. Effective real estate web sites will receive thousands of hits per week. Tracking the sources of these hits shows that people from all around the globe are using the internet to search for their new home and research the area. Multiple photos and virtual tours are extremely effective in attracting buyers’ attention and causing them to ask additional questions. With the large number of available homes in the Tri Lakes region (178 at this writing) extensive exposure of your home is a must if you want to remain competitive. With this many homes on the market it is estimated to take 170 days to sell a home. Make sure your home is seen by the most people possible and you should reduce the number of days substantially. This doesn’t mean print advertising is no longer effective. Print advertising reaches the public in a different way than the internet and has its place in promoting your home. However, an advertising campaign that doesn’t exploit the tremendous power of the internet is severely limited in the technically savvy market place. Experienced agents will make sure your home receives the widest internet exposure possible. It is not unusual for your realtor to feature your home on 50 or 60 different web sites. Ask your agent how they intend to promote your home on the internet. It is also productive and beneficial if your listing agent directs their marketing efforts toward other agents. Since this is “behind the scenes” marketing that you don’t actually see, it is often difficult for you to measure how hard the agent is working for you. Peer to peer marketing exposes your home to over 2000 realtors that have buyers that may be interested in your home. It’s a great way to expand your sales force by thousands. Finally, you will need to be proactive in the sale of your home by telling friends, family, coworkers and anyone else you know that your home is on the market. The more exposure your home receives the better. Issue 182 - 4/25/05
BENEFITS OF OWNING YOUR OWN HOME As a general rule, homes appreciate about five percent a year nationwide. Some years will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region. In the Tri-Lakes region the appreciation ranges from 5% to 10% per year. Five percent may not seem like that much at first. Stocks (at times) appreciate much more, and you could earn over six percent with the safest investment of all, treasury bonds. We all need a place to live, and we all pay a price for our homes. Whether we rent or own our homes there is a cost. The problem with renting is the money is lost. You pay your rent and the only benefit you receive is a roof over your head for another 30 days. When you own your home you still need to pay for mortgage, interest, taxes and maintenance, however this is not lost money as is rent. Presumably, if you bought a $200,000 house, you did not pay cash for the home. You got a mortgage, too. Suppose you put as much as twenty percent down – that would be an investment of $40,000. At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $40,000. Your annual “return on investment” would be a whopping twenty-five percent. Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase. Your rate of return when buying a home is higher than most any other investment you could make. When you couple the healthy appreciation we enjoy here with the low interest rates available it’s easy to see the great value realized when you buy your home instead of rent. Issue 183 - 5/2/05
WHAT PRICE SHOULD YOU OFFER TO PURCHASE YOUR NEW HOME? You’ve spent many hours looking at homes for sale and have found “The One.” The asking price seems fair and you decide to present an offer to the sellers. How do you determine the true market value of the home you’re considering? The best determinant of value is recent past sales of homes similar to the one you’re considering. Similar in style, material quality and location. One way is to research the public record. Homes that sell in the county have the deeded transfer recorded at the county clerk office. This record is available to all as a public record. You can see the price the home sold for and the date of the transaction. This information can give you an idea of the value of certain homes in the area. Make sure you’re not comparing apples to oranges when trying to determine the true value of a property you are considering purchasing. The square footage, location, number of rooms, garage size and type, view and quality of materials used in the construction all are factors impacting value. Public records are a good source of information as long as you are realistic in judging the quality and attributes of the home you wish to purchase. The biggest drawback to using the public record to determine current market value is the age of the information. Past sales data needs to be as currant as possible to accurately reflect true value. Public record information tends to become available to the public weeks or months after the sale has closed. For comparable information to be useful it needs to be as recent as possible. Within the past three months or less is ideal. Six months prior is the oldest transaction information you should consider. Realtors use another source of information called the Multiple Listing Service (MLS). This service is a professional database used by realtors to record information on every real estate transaction in the local area where a realtor was involved. Information is recorded in this database within 24 hours of completion of the transaction. This information has more details regarding each property and is much more current than the public record. The MLS database is private and requires membership in the local realtor association. In El Paso County the association is the Pikes Peak Association of Realtors. You must be a licensed real estate professional in order to become a member of the association and have full access to the MLS database. Recently the public has been granted limited access to the MLS database on web sites such as 1stColoradoHomeTours.com and Realtor.Com. However, public access is limited to active listings currently for sale. The public cannot access sold data on the private MLS system. Your buyer agent will work with you using the recent sold data in the MLS to determine the true market value of the home of your dreams. Happy house hunting! Issue 188 - 6/6/05
CREDIT SCORES Whenever you apply for a loan lenders check your “credit score.” What exactly is a credit score? Lenders use the term FICO score. FICO scores were developed in the 1950s by Fair, Isaac & Company. It is a system where your past payment performance is applied against mathematical probability tables. The results are used to determine whether or not you are a risk for repayment of your loan. Your credit report displays your repayment history for the past seven years. The more recent repayment history carries more weight than older behavior, buy even the older repayment behavior is factored into the score. The score is also greatly impacted if you have ever filed bankruptcy or been subject to a foreclosure or repossession action. FICO scores also look at the type of credit you hold. Many different credit accounts could mean you are over extended in your personal finances and therefore a risk. Owing a large amount of money doesn’t necessarily make you a credit risk as long as your records show a strong repayment history. Many people use credit leverage without incurring late payments or other repayment problems. Types of credit accounts are revolving (credit card) debt, mortgage debt, retail store debt, signature loan and line of credit debt. Credit scores are numbered from 100 to 800 or so with the higher number being more desirable. The better credit interest rates begin in the upper 600s and the best are given to people with scores of 720 or higher. A low credit score doesn’t mean you can’t obtain a home loan, but you can expect to pay a higher interest rate if you do have a low score. The most important thing you can do to assure your credit score remains high is to pay your loan payments on time. If you find you have a low FICO score you need to examine your personal habits and identify where you’re going off track financially, then correct your behavior. In many cases financial problems arise when people begin living beyond their means. Develop a realistic budget and stick with it. Stop creating new debt and focus on paying off the debt you already own. Good credit is not caused by the amount of your income. It is at its best and highest when you exhibit good financial habits and self control. Issue 189 - 6/13/05
GARAGE SALE SEASON! Spring makes us think about cleaning out, cleaning up and shaking off the staleness that seems to settle into our homes over the winter. One of the rituals of spring cleaning is the annual garage or yard sale. This is a fun, profitable way to dispose of all those unwanted items we all seem to accumulate in our lives. You can increase the success of your garage sale in a variety of ways. One of my favorites it to approach your neighbors and organize a block or street sale and advertise this fact in the local paper. This larger sale strategy appeals to the many people who love looking for a bargain. The more the merrier, plus it’s a great way to meet and reconnect with the people in your neighborhood. Before the ad goes in the paper you should do some pre-planning. Coordinate the date or dates that will work for the majority of the families that will participate. Are there any association or governmental restrictions regarding your planned sale? Every item should be tagged with the asking price beforehand. Make sure you have plenty of change on hand at the beginning of the day so you can easily handle larger denominations that people will undoubtedly hand you. Make neat, legible direction signs to guide buyers to your sale. Signs should not be smaller than 2 feet X 2 feet or else they will be difficult to read as people drive by. Plan to open your sale at 8:00AM because true bargain hunters are up and out early in the day. Now it’s time to organize your “store.” Do not put for sale items in the same areas as garage and household items not for sale. Place like items together. Appliances and cooking utensils, knick-knacks and general items, books, games & toys etc. This lets people interested in one type of item to see all like items together to make their choices. Have electricity available for people to try out any electrical appliance for sale. Opening day! Stay with the sale. Bring you lawn chairs out and enjoy the day. Talk with the people that stop by and keep your money on you or in a safe place. Let buyers know that all sales are final and there will be no refunds. Sit back and watch the merchandise fl y off the shelves and your till grow larger. After the sale be a good neighbor and ensure all signs and other debris from the sale are removed and cleaned up. The Disabled American Veterans and Salvation Army might be able to use any items not sold. Good luck and happy sales. Issue 190 - 6/20/05
FENG SHUI IN REAL ESTATE A few years back I had a buyer client who insisted she wouldn’t even consider buying a home unless it was “Feng Shui.” I had to admit to her I knew nothing of this art form. That was the beginning of a speedy lesson for me in Feng Shui theory. Much of Feng Shui theory is practiced using various items and personal goods placed in selected locations within the home or on the grounds. This was not a concern with this client as we searched for her home. She said she could make Feng Shui organization and materials placements after she purchased the home. She did have specific demands, however, regarding various requirements for the house to meet her needs. These requirements could not be changed or created after the purchase. First, the home must face either east or west, never north or south. Preferably the house should face east if possible. The home must never have a road leading directly toward the house. The kitchen must not be visible when you enter the home through the front door. When standing at the stove she wanted to face either east or south. I asked her the reasons for these requirements. She told me that the direction east signified optimism and satisfaction and she wanted to begin her days optimistic and satisfied. The direction west signified love and family prosperity, and she wanted her days to end on that note. Roads leading directly toward the house were considered arrows of death and should be avoided at all costs. The facing direction while at the stove was significant because facing south signified fire, and facing east signified wood which the ancients used as fuel to cook. Allowing a view of the kitchen when entering the home meant the occupant was preoccupied with food and could lead to becoming overweight which she wanted to avoid. After this explanation these basic tenants of Feng Shui seemed rather simple and straight forward. We eventually found her home that she enjoys to this day. I’ve been back to visit her a couple times over the years to stay in touch and have to admit that she has created a home that is warm, inviting and truly does make you feel good when you are there. Issue 191 - 6/27/05
MOLD AND YOUR HOME We’ve all seen mold. Usually we see it on food in our refrigerators that has passed its edible stage, or in the corners of the shower or under the sinks where moisture can be found. We handle this discovery by simply cleaning the area or throwing the moldy food away. Problem solved. There are other types of mold though that have made a ripple throughout the real estate industry in the past few years. These molds have been found in houses in some areas of the country and have proved to be harmful to people’s health. The concern is high enough that the state of Colorado requires a notice be given to all potential buyers of a property that mold could possibly be present. The buyers then must elect to either have a risk assessment performed or waive their right to do so. This protects all parties and puts the risks right up front ensuring fair and informed transactions. Buyers have the right to have the home they are buying inspected in any way that makes them feel comfortable with their purchase. Buyers should not cause any damage to the home by the inspection techniques. If you are a buyer and are concerned that mold might exist in your new home, by all means have it inspected! There are a variety of companies that specialize in mold detection and removal. Fortunately the dry climate of the Front Range is not the ideal climate for mold to be a serious problem. That is not to say that mold doesn’t exist. It certainly is possible to find mold here. Mold is usually a result of moisture problems within the home such as leaky plumbing or poor ventilation. Be suspicious of stains on ceilings, moisture in crawl spaces and basements, visible mold growing in cabinets and bath areas, and a musty damp smell in certain areas of the home. Before you hire a mold inspection company check their background with the Better Business Bureau. Ask your realtor if they have any reputable companies they will recommend. Finally interview 2 or 3 inspection companies to determine the best price for the service you require. You want your home to be a healthy environment for your family. Issue 193 - 7/11/05
THE QUESTION OF EMINENT DOMAIN I’m usually quite accepting of decisions made by the great leaders of our great country, even if I don’t completely agree with them. A recent decision by the Supreme Court, however, has brought me to a heel digging stop in my acceptance. The issue is eminent domain and the extent of government’s power to impose this process on the private citizens. As a realtor I’m required to disclose to buyers a variety of potentially negative possibilities as they consider a purchase. Possibilities such as the possible existence of lead based paint or possible mold etc. I can see a new requirement to warn buyers that their home might be stolen by the government at a substantially lower compensation than they paid should the government feel they can profit more from using the land your home sits on for a purpose other than a home. Eminent domain states the government shall not take your property without “just compensation,” but the government decides what constitutes “just compensation.” It is a one sided negotiation at best. In the U.S. eminent domain has existed since the beginning of our country. I believe its intent is taking of private property for the greater good of the public. For me “greater good” means schools, roads and other public use. Creating a larger tax return by allowing private business to build business structures which command more taxes than a residence is not greater good in my opinion. Losing my home against my will cannot ever be compensated for with higher taxes for my community. Eminent domain has its proper uses and truly can enhance the greater good. The new ruling, however, opens the way for private developers to profit at the expense of private citizens. I’m sure some developers are looking at communities differently now the ruling has been made. All they need to do is convince the government powers of the benefit of higher tax returns from their private plan versus the home owner’s right to quiet enjoyment of their home. Take a look at your own home, its location and the encroaching development in the area. Are you at risk? It is time to take pen in hand and write our representatives before we begin seeing eminent domain abused here. Stopping abuse of this governmental power is more desirable than fighting it after we’ve been notified our entire neighborhood has been selected for a new hotel complex. Issue 194 - 7/18/05
EVERYTHING YOU NEVER WANTED TO KNOW ABOUT SEPTIC SYSTEMS Many homes in the Tri-Lakes area are built on property requiring a septic system for sanitation. Septic systems are reliable and dependable but they do require occasional maintenance to ensure they perform at their best. Septic systems include a tank for catching and processing waste products, and a leach field to disburse the processed effluent into the ground. It is a personal waste treatment plant in your back yard. A properly working septic system will provide years of trouble free service to the home. Maintenance usually requires having a septic company pump the solids from the tank every 3 to 5 years. Systems installed after 1990 have two compartments and the pumping should be done in each compartment. When buying a home with a septic system there are questions that should be answered before you sign on the line. You and your realtor need to pull the permits which allowed the installation of the system on the property. Check to see how many bedrooms the existing system is permitted to service. Septic systems are rated by household bedroom capacity. The reason it is important to research this is in case the owner has added any bedrooms since the home was built. We occasionally find that homes built with unfinished basements have septic systems rated for 3 or 4 bedroom homes. The owner then finishes the basement with one or two more bedrooms and the septic is no longer adequate by code to service the home. It is also wise to require the seller to have the septic pumped and inspected by a licensed septic contractor to ensure you’re not buying problems in the future. After you move into your new home you should enjoy trouble free service from your system. There are some things you should avoid when you have a septic system versus a municipal sewer. Septic tanks can be flooded and loose some efficiency if too much water is allowed into the system at one time. It is best to stagger laundry into fewer loads per day. Waiting until you have a full day’s laundry and washing load after load all day could overwhelm some systems. Review your water use habits and avoid any activity that would discharge a large amount of water into the system in a short period of time. Your system will work well and handle your family’s needs without problem, but it does require care and maintenance. Issue 195 - 7/25/05
WELL, WELL, WELL! Turn the faucet and there it is; cool, wonderful water. Many homes in the Tri-Lakes area receive their water from their own private well located on the property. It seems simple; drill a hole until you strike water then pump it into the house. Actually, it is anything but simple. Water law is one of the most complex issues a realtor can encounter when working with a client to buy or sell a home supplied by a well. It is important to first know which type of well you own. The right to use water is determined by the “shares” of water “rights” owned. As an owner of a property with a well you do not have “water rights.” Our legislature created four classes of “exempt wells,” which allows well owners to enjoy using the water in their wells without the danger that water rights owners will require the wells to be shut down during times of low water. Can you imagine being forced to shut your well for weeks or months? That would be a tragedy. The two types of exempt wells most frequently encountered are “household use only” and “domestic use” wells. Each well has specific requirements regulating how the water can be used. Household use only wells can only supply water to the interior of the home for personal use. It cannot be used for any type of irrigation such as a garden, lawn or flowers. Wells having a permit for domestic use are allowed to produce no more than 15 gallons per minute and can be used by up to three family dwellings. Domestic wells allow watering pets and other domestic animals including poultry. You can also water up to an acre of lawns, gardens and flower beds. When purchasing a home that has a well your realtor will pull the permit for your review. Don’t take the owners word regarding legal usage. You also should not determine the well will meet your needs by what you see the owners or the neighbors doing with their water. Sometimes people aren’t aware of the type of well they have and are improperly using their wells. If a permit does not exist you should consider the well to be nonexistent as well. There is no guarantee the Water Commission will grant a well permit just because a well exists on the property. It is also wise to have the well tested. There are many tests available. The two most common tests are a gallon-per-minute (gpm) test to determine the well is capable of producing enough water for your use. Three gpm is usually considered adequate; however I would personally prefer 10 gpm if possible. The second test should be for water borne parasites and contaminants. Both tests can be provided by a licensed well driller. You can even have a purity test done yourself if you want to take a water sample to the county health department. They have a testing lab and will examine your water for a small fee. Make sure you run the water for 30 minutes before you take the sample. You can pick up testing kits at the health department. |
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