Cosmetic Issues = Buyer Savings

In a high demand real estate market like Denver, Sellers have the advantage. When Buyer demand outpaces available inventory, the Seller is king, and they have the upper hand at the negotiating table. Don’t abandon all hope, Buyers! In any market, there are things you can do to educate yourself so as to gain an edge in the process.

One area Buyers should pay particular attention to is the cosmetic condition of properties they view. In a Buyers’ Market, Sellers have to work harder to appeal to Buyers, including staging and taking care of deferred maintenance. Sellers can get away with minor deferred maintenance or cosmetic issues when the market is in their favor. BUT – these issues can still give the Buyer a little wiggle room at the negotiating table.

The following is a list of items you can use to your advantage when trying to negotiate concessions or a lower price as a Buyer in a Sellers’ Market (or any market):

  • Overly colorful paint, or paint in poor condition. If the basement is hot pink or the exterior paint is flaking off, it is worth asking for a minor break in the price, or a “paint allowance,” to help cover the cost of updating the home. You might not get what you ask for, and you may have to offer full price with a “paint allowance” stipulation, but the answer to a question you don’t ask is always NO.
  • Damaged carpet or other flooring. I once helped clients buy a house that sounds terrible – but was really a hidden gem: listed under FMV (fair market value), but the house needed all new paint, there were no window treatments of any kind, the main level smelled like dog and the finished basement smelled like cat. UGH – right? They bought this home in a desirable suburb for about $20,000 less than it was worth, and by painting and replacing flooring themselves and purchasing quality blinds on sale, they were able to make this house shine and gain instant equity. Don’t pass up an opportunity like this because the house is a little rough around the edges.
  • Fence in disrepair. Wood fencing is a common source of deferred maintenance. I don’t know many homeowners who enjoy staining or painting the fence every year or two. Use this to your advantage. If the Seller has left the fence alone for a few years, or it has obvious damage, ask for a break in price, or ask whether the Seller will meet you in the middle on repair or replacement costs. If you’ve made a fair offer and the Seller is motivated to close the deal in a timely manner, you may be able to pick up a few bucks on an item like this.
  • Road construction or other pesky projects – current or future. Even in a Sellers’ Market, major road construction, noisy building sites, even nearby home construction can be a pain. Noise. Pollution. Ugly views. Extra traffic. None of these things are pleasant to put up with. As a Buyer, do your homework! If there is a new road going in half a block away, the Seller should disclose this information if they have it – but they don’t always do that. Learn everything you can about a city or neighborhood, and if there are projects underway or planned for the near future, use this information to your advantage. A motivated Seller with a smart Realtor on their side knows major construction projects near the home will not improve the market value in the short run, and they will likely want to sell the house before the dust begins to rise. Use this information to negotiate a better price, or possibly concessions on the home.

Buying a house is a big deal, and there are a lot of moving pieces. When you work with an experienced Realtor, you’ll reap the benefits of someone who’s got your back – and knows every in and out that could save you money and give you an edge. In a market like Denver, Buyers need all the help they can get to score a great deal. If you’ll be in the market soon, I’d love to help you find the right home and maximize your potential at the negotiating table.

Jack Meyers

The Meyers Group
jackestate@aol.com
303.263.3050
Twitter: @jackestate

 

 

Millennials Wonder…

Millennials Wonder…Will I Ever be Able to Afford a House? 

millennials-save-america

The FED’s recent rate hike, tight housing market and other factors leave many Millennials wondering – will I ever be able to afford a home of my own?

This rising generation is waiting longer than ever to marry and have children, and having fewer children once they do start a family. More of them are continuing their education past high school, which means they’re saddled with hefty student loan debt right about the time they’re settling into careers and considering a home purchase. Rental rates – in the Greater Denver area and across the country – have skyrocketed as the housing market has gotten tighter, so renters are able to put less money into emergency funds, retirement accounts and a piggy bank designated for the future down payment on a home.

Other than sharing the sturm und drang of this situation on social media, what can this group do to rise above the challenges preventing them from entering the housing market? Read on for tips on how the Millennial in your basement (or renting the apartment next door or bunking on campus) can pick herself up, dust herself off and prepare for home ownership.

Clean up that Credit. The thing about youth is, it lacks experience. If you went out and got yourself a couple of credit cards, a car, a personal loan and maybe bounced a few checks for good measure as a poor broke college student, quit doing that and start digging yourself out of the hole. There’s no shame in admitting you don’t know how to clean up your credit. Ask a trusted friend, colleague or mentor for advice or referrals to a service that can help, then take action. And if you have no credit, research what you need to do to build a positive credit history from scratch – before you start house hunting.

Scrounge up a Down Payment. Traditional financing will require a 20% down payment to avoid the additional expense of PMI (private mortgage insurance.) One good way to plan your extra savings is to use an online mortgage calculator to figure out what you can afford, tally other likely costs of home ownership like HOA + utlities, and start “paying your mortgage” now. If your rent + utilities is $1500 per month and the mortgage you can afford + other housing expenses = $2000, begin putting $500 per month away as soon as possible. This will help you save up toward the down payment, and when you do purchase a home, you’ll already be used to the monthly expense.

Educate Yourself about Home Ownership. Home ownership is not “renting with different paperwork.” The expenses, challenges and responsibilities of home ownership vary greatly from those of a rental property, and you should know the ins and outs of home mortgages, homeowners insurance, how an HOA works, how owning a home will affect the rest of your financial life, and have a plan in place for what to do if you lost your job, became ill or needed to move suddenly. Life happens – whether you own a home or not. Before you make the largest financial investment of your life, know your stuff.

Consider Your Lifestyle. Buying a home in your 20s is different than buying a home in your 30s, 40s or beyond. Are you single now? What will you gain or lose if you meet someone and decide to sell the home in three years. Are you entrenched in a career with a particular company, or are you on the lookout for the next great thing? A mortgage company will want to see steady job history, so don’t change jobs close to when you’ll apply. In addition, consider whether the size, price and location (location, location) of your home search will be a fit for the next five years. If you aren’t a millionaire investor, you might not be financially prepared to sell and move in a year or two. Purchase a home when you are reasonably certain you’ll be happy for a few years time.

Be Realistic. Owning a home is still the American dream for many people, regardless of age, level of education, religion, cultural heritage – owning a home of one’s own is a big deal. Dream big – but plan realistically. You may have grown up in a five bedroom McMansion with a spacious yard and professional landscaping, but your first house might not fit that ideal. Know which five or so items are non-negotiable on your list, and don’t begin the search for your home until you are pre-qualified for a home loan and have selected a Realtor to work with. If you fall in love with an out-of-reach home, the home you end up with will feel like settling. If you wait to begin your search until you know what you qualify for and have done some soul-and-pocketbook searching to know what you want, you’ll fall for the right home – a house you can afford that meets your needs for the next 3-5+ years.

Jack Meyers

The Meyers Group
jackestate@aol.com
303.263.3050
Twitter: @jackestate

 

What First Time Buyers Want

WHAT FIRST TIME BUYERS WANT

According to organizations like NAR (the National Association of Realtors) and Zillow, first time buyers are far from dead. In fact, an online survey by Zillow attributed 47% of home sale over the past year to first time buyers. This figure helps explain the lack of inventory in the housing market; first time buyers don’t have a property to sell, so while they are flocking to buy, there aren’t enough home available for the total number of buyers, keeping home prices strong for sellers, but leaving some buyers searching longer than they expected, and making multiple offers before clinching a deal.

So who are all these first timers, you ask? If you are a seller, chances are first time buyers are viewing your listing, and it’s worth knowing who they are and what motivates them to buy. If you are in the market to buy a home, learning more about the “typical” first time buyer may give you an edge over the competition.

  • Median age is 33
  • Large percentage of first time buyer’s are couples in their thirties
  • More likely to be college educated                                                                                              (62% of buyers overall have at least a 4 year college degree)
  • 17% of millennial homebuyers are Hispanic
  • Just 66% of millennial homebuyers are white; future generations of homeowners will likely continue to increase in diversity
  • At a median purchase price of $217k and median square footage of 1800, millennials are bypassing smaller starter homes and purchasing next level homes once reserved for “buy up” shoppers looking to expand on space and amenities
  • According to Zillow’s information, just 1/4 of millennial homeowners are city dwellers; a whopping 47% choose to live in the suburbs, proving that suburban living, despite rumors to the contrary, is just as popular with up and coming millennials as prior generations

Whether you are a swinging single, married with 2.5 kids, thinking about retirement or hoping to upsize, downsize or rightsize your digs, it pays to be informed and to have an experienced professional by your side to help you navigate the real estate marketplace. Give me a buzz to let me know how I can help.

Jack Meyers

The Meyers Group
jackestate@aol.com 
303.263.3050
Twitter: @jackestate

 

 

If You Had a Do-Over…

If you’re like a lot of people, you learn by doing. When it comes to buying a home for the first time, a lot of learning takes place in the form of mistakes. Purchasing a home is a major investment, and first time buyers are more educated than ever thanks to the internet and other technology. Still, you don’t know what you don’t know, and first time buyers don’t always know the right questions to ask, sometimes causing home buying newbies to miss out on useful information. Here are a few tips from first time buyers who will do things differently next time.

First Time Buyers

Talk to a mortgage broker long before you are ready to buy. 

If you make great money, have cash in the bank and an excellent credit score, you are probably well on your way to buying that first home. If you aren’t sure of your credit score, whether you have enough credit, or whether your household income is sufficient to help you qualify for the type of home you’d really like to live in, talk to a mortgage pro now, before you need them. If buying a home is out of your grasp for any reason, a qualified, experienced mortgage professional can guide your next steps and help you gear up to qualify for a home loan; this beats finding out by surprise that you can’t buy a home 3 months down the road, even though your lease will be up and you’d really like to buy at that time.

Talking to a mortgage broker will help clarify items like:

  • How much money should you have in the bank?
  • Are your student loans in good standing?
  • Is your debt to income ratio acceptable? If not, how can you fix it?
  • Is your income adequate?
  • Do you have enough/too many lines of credit open?

If you’re on the fence, buy sooner – not later. 

In many cases, renting your home is akin to throwing money away; you are basically paying your landlord’s mortgage, and not getting anything more than shelter out of the deal. If you can buy, do it. Invest wisely, but don’t wait to buy if you know you’ll be in a particular area for 3-5 years or more. Many first time buyers wish they’d pulled the trigger sooner.

Get prequalified for a loan before you shop. 

Even if you are starting your home search online, as many buyers do, you’ll want to be prequalified before you begin searching in earnest for your first home. It is heartbreaking to find the perfect $350,000 home only to learn you qualify for a maximum loan of $275k. A realistic home search is the right home search for you, and you’ll enjoy the process more (and waste less time) when you know you are looking at homes in your price range. The key term is PREQUALIFIED, not preapproved. A preapproval letter is informal and doesn’t offer the official status of prequalification, which means you are qualified by a bank or other lending institution to borrow up to a certain amount.

Work with an experienced Realtor. 

An experienced Realtor will provide helpful tips on the search process, aides in negotiating the deal, and handles all the details of your transaction. Especially in a fast-moving marketplace, it is vital to have a professional representing your interests in the transaction. Even if you are planning a purchase a year or two from now, it doesn’t hurt to interview Realtors in your area to find the right professional to assist in your home search. Most Realtors can keep an eye out for homes that match your specifications and email you property matches on a regular basis so you can keep an eye on the marketplace as you prepare for your future purchase.

Conduct a home inspection – and ask a lot of questions. 

The home inspection is a chance to test drive your future home. Bring a notebook and a pen and don’t be afraid to ask the inspector questions or clarify anything he/she says during your inspection. Before the inspection, confirm whether the inspector will get up on the roof or go into the attic. Hire an experienced inspector, not a newbie and not the cheapest guy you can find. Home inspection is imperative for first time or 10th time buyers. Even if the seller is unlikely to make repairs, I wouldn’t recommend any buyer purchase a home (even new construction) without a detailed home inspection. Make notes about items you need to learn more about and improvements or repairs the inspector recommends, then follow through. You should receive a detailed report afterward; ask the inspector to include notes about recommendations he/she has made about systems within the home, landscaping concerns (such as improper soil grade away from the home for drainage), condition of electrical or plumbing, etc.

Purchasing a home is the most significant investment most people will make in a lifetime, and buying your first home is sure to be a meaningful transaction. Prepare thoughtfully for success and your diligence will pay off.

Jack Meyers

The Meyers Group
jackestate@aol.com 
303.263.3050
Twitter: @jackestate