Under Contract Process Expenses

What to expect during the under contract process. You are ready to buy a home. You have saved your dollars and you have your down payment. But you want to know what will the costs be over and above the down payment. That is a great question. You need to be ready for all under contract process expenses.

Earnest Money

A picture of cash and keys demonstrating Under Contract Process Expenses

The first money that will be required is the earnest money is oven required within a few days of the contract being accepted. It is not uncommon for the earnest money to be required to be provided within three business days of contract acceptance. The earnest money amount is what is requested by the seller and is apart of the contract. Sometimes when wanting to ensure your contract is accepted you may add to the earnest money amount. Doubling the requested amount or even tripling the amount requested by the seller. The earnest money is provided in the form of a personal check that is cashed and be credited to you at closing or you can provide the title company with a wire for the funds. 

Under Contract Process Expenses: Inspection

The next cost that you will have once you have a property under contract is the cost of the inspection.  Most inspectors charge based on the location of the property and the square footage of the home. The larger the home the more expensive the inspection. The cost can run anywhere between $400 to $750.  Inspectors usually expect payment before they begin or at time of the inspection.

Appraisal

Another cost that you can expect to pay as a part of the process is the cost of the appraisal. How this cost is handled depends on the lender that you are working with. Some lenders want the money at time of the contract acceptance others will make the appraisal apart of closing costs. Make sure know what you the expectation is. If you are required to have the money upfront that can be as much as $500 to $800 that you will need to pay at time of contract acceptance.  

Buying a home has expenses as a part of the process. This post gives you some idea of what to expect in terms of under contract process expenses. Contact us so that we can be your guide through the process of purchasing a new home.

Red Flags When Buying A Home

Buying a home is an exciting, stressful, and can be a fun process.  What are some important things that all buyers should pay attention to and look out for while shopping for your home?  Here is a list of ten red flags to look for when buying a home. 

Too Much Scent

While looking at home you may walk into a home that smells like air freshener.  Every where you walk in the home you see another plug in or sent producing product.  This is a red flag and the owner of the home could be covering offensive odors.

Red Flags When Buying A Home: Poor Tile Work

A photo of a tile backsplash demonstrating red flags when buying a home

Sometimes home owners take on projects that they know nothing about and they struggle to complete these projects.  Tiling can be a project that looks so easy on the home improvement shows.  Bad tiling can cost a lot to un do and re do.  Check grout lines, and tile alignment. Cracked grout can be a sign of major issues. It won’t be long before these tiles start coming loose. It may also be a sign of water damage underneath the tile. Misaligned tiles are indicative of a home owner completed job and should give you pause. Best case scenario the tile will always be crooked. Worst case, a much shorter life span for your tile.

Foundation and Maintenance Issues

These problems can show up through uneven floors, cracks in walls, sticking windows and doors and gaps that can be found around doors and windows. Poor maintenance in the home can indicate that the seller has ignored other issues.  Poor maintenance can also shorten the life of furnace and a/c units. 

Red Flags When Buying A Home: Beware of Water Nearby

A photo of a tile backsplash demonstrating red flags when buying a home

Water front property is beautiful but can mean more expense to you as the buyer and additional problems.  Water front property can indicate that there is a higher chance of flooding. The property may also require flood insurance. 

Beware of Water Inside

Water can also cause problems inside. Mold is a four-letter word in real estate.  A small bit of mold can cost thousands of dollars to address.  Make sure that bathrooms are inspected for mold.  Check under sinks in kitchen and bath for small gray or black spots. Look for water damage. Musty odor can indicate that you should check further to ensure that the home that you would like to buy does not have water damage. Check ceilings for water damage and even make sure that your inspector checks the attic too.

Cosmetic updates can be the reason that you fell in love with the home.  Beware and make sure that those great updates are not hiding something that could be a deal breaker if you knew about it. Bad ventilation can allow moisture to stick around and create mold.  Make sure that bathrooms have working vent fans. 

Red Flags When Buying A Home: Wonky Windows

Another important thing to watch for is wonky windows.  What is a wonky window?  That is a window that does not open smoothly.  A wonky window can signal foundation issues.  Moreover, windows are pricy to fix and repair.  

Buying a home is exciting.  It is important to know what you are buying.  Watch out for these red flags when buying a home. Get the home inspected to ensure that you are not taking on more than you can handle. Some of the issues listed above are not quick or inexpensive fixes.  You should enjoy home ownership and not feel burdened with a problem that costs thousands to correct. Your inspector should be able to find issues like those listed above.  Then you can make an educated decision to buy.  Let us be your guide through the process. Contact us today.

What Do Real Estate Agents Actually Do?

Popular culture has probably painted a picture for you of real estate agents. This might be anything from a cut throat negotiator to something along the lines of a used car salesman. In honesty the truth depends on which agent you talk to. However, professional real estate agents probably all fall somewhere along the lines of what is discussed below. So what do real estate agents actually do?

Hint: It’s a lot more than showing property, and coming to closing

It depends on who they are representing (buyer or seller). This is because there are vastly different roles that a real estate agent must fulfill. Let’s take a look at each of these roles.

What Do Real Estate Agents Actually Do When Representing a Buyer?

A buyer’s agent certainly shows a lot of property. However, they must also be a neighborhood and community expert. Buyer’s agents spend a lot of time researching. They do this in order to remain knowledgeable about pricing and the overall condition of the market. Research also allows them to find you homes that match your criteria. Being an expert on neighborhoods and the current market is vital. This is important in order to aid their clients in selecting a home and location that best meet the buyer’s needs. They will be able to tell you about specific builders’ construction practices. Along with this they can show you which homes to select and which to avoid.

The buyer’s agent must also be a negotiation expert in order to get their client’s offer accepted. This is actually only the beginning as buyer’s agents must also guide the transaction through the under contract process. During this phase the home needs an inspection and appraisal. Depending on the outcome of these inspections additional negotiation may be required. You want to make sure you have a skilled negotiator in your corner. This will allow the home buying process to work out in your favor.

Good Real Estate Agent’s Don’t Just List It And Leave It

What Do Real Estate Agents Do (Open House Sign)

As a seller’s agent the responsibilities change. It is vital to have the listing shown in the best light. This means home staging and professional grade photographs. It also means clearing up issues prior to the property going on the market. Some of these might include minor repairs or ensuring that permits are in order. It really is a case by case basis as no two properties are the same. Once the home is on the market a seller’s agent must be knowledgeable about their listings. They will field many emails and phone calls with questions about the property.

Having spent a great deal of time with your home getting it ready for sale will allow them to know your home inside and out. Absentee agents who never see your home are missing this crucial experience. A seller’s agent will need to negotiate both the initial offer and condition of the property at time of inspection and appraisal. During the under contract process they may also have to address questions of title, insurance or other issues. A knowledgeable and experienced agent can easily solve these issues. This is in sharp contrast to an inexperienced agent who may panic. There are very few new problems in real estate. A seasoned agent has probably seen most of them and can easily advocate for your best interest.

We are highly experienced representing both buyers and sellers in Fort Collins and Northern Colorado. Contact us today and let us guide you through the real estate process. Doing so will allow your interests to be best represented.

For Sale By Owner: Things to Look Out For

There are a few things to look out for with a for sale by owner property. You might think twice before buying a home that is advertised as for sale by owner.

You have been looking to buy a home and getting frustrated. 

For Sale By Owner

There is not much selection of available homes and when you have written an offer, you are competing with others and have lost out.  You wonder if you should look at homes that are not listed for sale by a realtor, but instead by the owner.  What difference does it really make you ask?  It actually matters a lot. When it comes to buying a home and dealing with all of the paperwork, digging into the home’s history and inspections.  Mistakes can cost home buyers thousands of dollars

For Sale By Owner: Things to Look Out For: Are you sure that the home is really for sale? 

Scams can be found anywhere these days. The real estate industry is no different. Do you know what a proper sales contract looks like?  Moreover, what about what things a contract should include?  Do you know all of the necessary forms required for a sale in Colorado?  Additionally, sellers do not have a Code of Ethics. Realtors do.  That seller might try to take advantage of you.  Who is looking out for your best interest? 

For Sale By Owner: Things to Look Out For, Are you a skilled negotiator? 

There is much to negotiate as a part of a real estate contract.  It is not just about the price.  Additionally, there are the dates that must be agreed up on, the possession and what repairs will be made too.

Are you willing to always have to deal with the homeowner? 

You will have to call them to schedule the inspection, appraisal.  If you would like to go over and get measurements for new carpet you will have to make another call to the owner. Moreover, if you want to take mom and dad to see it when they are visiting…that is another phone call.

You are about to make the largest investment you quite possibly have ever made. 

You want to make sure that the seller is telling you everything you need to know to make a good decision.  Additionally, are you sure that you are getting full disclosure from the seller?  Knowledge is power.  Is this a risk you are willing to take.  Additionally, they might hide key information about the condition or repairs to the property.

For Sale By Owner Things to Look Out For include Money Issues

The main reason the seller usually chooses to sell their home themselves is to save money by not paying agent’s commission. What happens if the seller is having money issues and will not pay for repairs after you spend the money for the inspection?  Is lack of money to pay for things the reason they are trying to save money.  You may not know the answer to that question until it is too late.  The seller may also take the cheap way out when doing the repairs that you have requested. What do you do in that situation?

A real estate transaction is a complicated process. 

When looking at a for sale by owner there are a lot of things to look out for. There are many details that you will have to handle. Mistakes can be costly. A real estate agent can save you frustration, time and money. This is a time that it is wise to leave the details and paperwork to the professional. As the buyer, remember that the services of the real estate agent are not a cost you pay.  Sellers usually pay for both real estate agents. Contact us with questions about how to buy or sell a home.

Real Estate Negotiation Tips

There are many ways to come out on top in real estate negotiations both as a buyer and a seller. Today we want to highlight some of the methods you and your agent can have at their disposal.

Real Estate Negotiation Tips For Sellers: Your keys to success

As a seller you hold a lot of the cards in negotiation. You have something that the buyer wants and have piqued their interest in your property enough that they have presented you with an offer. However, negotiation is still key to ending up with the most favorable offer. It is important to share with your agent what terms you are looking for. Is price your number one concern? Or are you more concerned about not paying for potential repairs? Timing is also a crucial factor. Do you need a specific closing date in order to purchase your next property? As your agent I will field phone calls prior to offers being written. Armed with this information the negotiation begins. These days there are a lot of competing offer situations. Informing these agents what terms would be most favorable to you allows them to create a great offer. My goal is always to present you with the greatest number of amazing offers. I then help you weed through all the idiosyncrasies to sign the best one.

Real Estate Negotiation Tips For Buyers

With the seller’s market of the last few years it can seem like sellers certainly have a bit of an upper hand. While this is true in some aspects at the end of the day a seller wants to dispose of their property and receive fair compensation. They may also have time constraints. Then we negotiate condition at time of inspection. The terms we first negotiate will always include timing. Sometimes, sellers are flexible but this is not always the case. The seller may need the cash from this sale to close on their next house in two weeks. Or they might need a rent back for several weeks after closing in order to secure their next move. The saying time is money is especially true in real estate. An offer that meets the timing the seller needs can easily beat out an offer thousands of dollars over yours. You can also waive your right to inspection. This ensures the seller that there will not be extra expenses that they need to worry about. Agreeing to cover any gap between the appraised value and your offer price is another strategy. This means you will bring the difference in cash to closing. When combined, all of these negotiation strategies provide a seller peace of mind in accepting your offer.

We Are Your Negotiation Experts

Need some help negotiating your next real estate transaction? Contact us and we would be happy to help you reach your real estate goals with the least amount of stress possible.

Waiting for the Real Estate Market to Cool Off?

Are you waiting for the real estate market to cool off? We have discussed in the past it is unlikely that there will be a market crash like the 2008/09 housing crisis. There is still a chance that at some point the market will shift. This could be from a sellers market to a buyers market or even a balanced market.

Sitting, Waiting, Wishing

You might be wondering if you should wait for the real estate market to cool off before purchasing. This is a fair question and one that we get fairly often. Unfortunately, even if the market cools over the course of the next few years, it still may mean housing costs are just as high. Let us illustrate this point with some math if you will bear with us.

Do The Math

So are there any benefits to waiting for the real estate market to cool off? Let’s say that you can purchase a home today for $400,000 with a 3% interest rate, this would make your monthly payment roughly $1,686 per month. This is when you factor in a rough estimate for property taxes and insurance. Now let’s say that the market takes a nose dive. With your crystal ball you wait and buy that same house in a year or two. Now that house sells for $350,000 but with interest rates climbing your rate is now 4.75%. This would make your monthly payment $1,826 (allowing for the same estimate for taxes and insurance). You are still paying $140 more per month on the same property. Even though the value of the property has gone down.

In this scenario it is also important to note how unlikely that situation is to occur. In Fort Collins during the housing crisis, home prices dropped less that 1%. On a $400,000 home this would equate to it being worth $396,000. In the above example the home decreasing in value at that rate equates to a price drop of 12.5%.

Waiting Doesn’t Work

The simple thought experiment above demonstrates that waiting for a hypothetical market shift does not result in any real cost savings for you. If home valuation trends continue you will have lost out on thousands of dollars of appreciation waiting for a day that may never come. So, if you have been on the fence about beginning your home search contact us and we can help you get started today.

Can You Compete With Cash Buyers

Cash is King! We have all heard this saying but how close to the truth is it?  Do sellers ALWAYS accept cash offers?  Can you compete with Cash Buyers?  Let’s dig into this and find out just how cash is viewed in our market.

What Amount of Home Buyers Pay Cash?

Looking at home sales for the year (2021) in Fort Collins there have been a total of 555 cash sales that were accepted by sellers.  That amounts to 19.2 percent of the market being cash offers. This is an increase over previous years.  Nationally in the spring of 2021, 25 % of home sales were made with cash. That is a notable increase over 15 % in 2019 and 20 % in 2020.  Based on this information from the Council of Residential Specialists, it appears that buyers that have the ability to pay cash for a property are. This has the potential for getting their offers accepted over those buyers that must get financing.  Clearly, there are more cash offers being seen by sellers. 

Advantages of Cash

What are the advantages to a seller to accept a cash offer over an offer that requires financing?  One of the major advantages of an all-cash transaction is speed.  Buyers with cash in hand don’t need to wait for financing that could require about 30 days to close. Cash buyers can also wave some contingencies such as appraisal or the sale of a previous home.  Sellers who want a quick closing may find this very appealing.  Other sellers may feel rushed by this and not find it quite as attractive.  Not having the requirement of an appraisal, may certainly be appealing. Especially if the offer that the seller has received is significantly over asking. 

So Can You Compete With Cash Buyers?

Just because a seller has received a cash offer does not mean that it is the “best” offer.  In working with cash buyers, I often need to remind them not to get cocky.  Remember that proof of funds will need to be provided.  If your funds are tied up in your home and you will need to sell that in order to purchase your offer may not be as attractive as someone who is getting financing.  As a cash buyer you need to understand just how competitive the market is.  Just because you are paying cash does not mean that you will be able to purchase the property for a lower price.  If you plan to pay cash for your purchase it is important to know how liquid the funds are that you will be using to purchase. How long will it take to have that cash in hand? 

Planning to Compete

Sellers do NOT always accept cash offers.  You can write an offer that can be seen as just as attractive to the seller as a cash offer.  It will be important that you are working with a strong, well known, local lender.  You must also recognize the importance of being pre-APPROVED!   There are ways that your lender can have you appear like a cash offer even when you are getting a loan.  There are tricks out there.  Be careful not to misrepresent yourself.  Remember that a good solid offer, well written that is offering an attractive amount, getting a loan from a local lender can get accepted over a cash offer. 

Make sure that your agent finds out what is important to the seller and be sure to include that in your offer.  It may take a tiny bit of luck too, but you can get your offer accepted. Contact Us today so we can work together to create a plan of attack. This will allow you to be in the most competitive position possible regardless of your financing.

What is Title Insurance

 Title insurance is issued to protect you the owner or the buyer of a property against ownership claims.  Title insurance is a one time premium that protects against past events.  That protection includes claims to the rights of the property.  These can include false claims, forgeries, forgotten heirs to a property or claims to anyone. 

The title order process is as follows:

  1. The property goes under contract and contract is provided to the title company.
  2. The title company will research the title work spending form 5 to 7 business days
  3. Title commitment is issued along with a list of requirements. 
  4. The requirements are satisfied so that clear title can be provided
  5. Closing of the property
  6. Final Title policy is issued about 30 days after closing.

When title search is pulled

As a part of the under contract period, research is done to see what encumbrances there are on the property and what claims there are. When this research is done the title company can find a problem that needs to be resolved prior to closing approximately 36% of the time.  These problems can be anything from a name that has to be verified, to a mechanics lien that is on the property that has to be verified. The under contract process provides the title company with time to do the research so that they are able to provide a marketable title, that can be transferred to the new owner (buyer). 

What is Title Insurance

The title commitment is issued and provides information regarding the property.  It is the report that is provided to the parties after the research has been completed.  The commitment provides information regarding liens against the property and the person in title on the property.  The requirements, that are a part of the title commitment, will tell what needs to be satisfied so that a clear title can be provided at closing. 

The list of requirement are listed Schedule B of the title work.  This will include the list of liens that must be paid off and what liens must be added.  For example the new mortgage for the buyer.  The list of requirements might also require that the seller provide an improvement location certificate (ILC) for the property. Another important section of title work is schedule B part II.  This section of title work includes any easements that are on the property in addition to convenance, conditions and restrictions (CC and R’S) if the property is within an HOA.  This is important to read to make sure that the CC and R’s can be abided by.

The next things that occurs is the property is closed.  The title company participates in the closing on the property making sure that all documents are signed properly at closing, liens are paid off and all documents are properly recorded.

Approximately 30 days after closing the final title policy is issued and mailed out to the buyer.  The transaction is complete.  The title policy lasts for as long as the person owns the property. If you have any questions, contact us. We would be happy to point you in the right direction.

Home Buyer Frequently Asked Questions

How do agents get paid?

This is one of the most common home buyer frequently asked questions. The seller in a transaction will pay the agent who markets the home and a fee to the realtor that assists the buyer with the purchase of the home. Realtors that work with buyers are typically paid a success fee when the home closes. They buyer typically does NOT pay for the realtor’s services. I am free to you!

Home Buyer Frequently Asked Questions, Why should I use a buyer’s agent?

A buyer’s agent looks out for the best interest of the buyer. Wouldn’t you like a trained, knowledgeable
professional looking out for your best interest when making the biggest financial decision of your life?

Why Should I use an agent when buying new construction?

Have Lestel show you the new construction in the area that is in your price range. She can tell you about
the builder, their reputation and share with you about the neighborhood. She can also negotiate the offer for you. Lestel understands the complexities of the fine print in the builder’s contract and can help you make good decisions regarding options. A new construction representative is there to sell you more features and more house. Lestel can help you set limits and be your guide through the process. Lestel can step in, on your behalf if there is a problem. She is there for you!

Home Buyer Frequently Asked Questions, What are the costs of buying a home?

When you purchase a home you will need to pay for your inspection and appraisal up front as a part of the under contract period. When you close on your home you will need to pay your closing cost and your down payment. How much your closing costs and down payment will be depends on the type of loan that you get. You will need to talk to your mortgage lender to get more information.

What will my monthly payments be?

Your monthly payment will depend on several things. It will depend on how much you are borrowing, what
your interest rate is on your loan, what your real estate taxes are on the home and how much you are paying
in homeowners insurance. If you are paying private mortgage insurance that will also effect your monthly
payment. While you can estimate these figures with a mortgage calculator, your lender will be able to let you know what to expect before you close on your new home.

Home Buyer Frequently Asked Questions, What do I do when I find a home I want to see?

When you find a home that you would like to see, whether on the internet or driving around, call Lestel. If
you contact the agent that has the sign in the yard or the one that is mentioned on the website, you will be contacting the agent working for the seller and who is looking out for the sellers best interest. If you look at a home with another agent Lestel cannot represent you or negotiate the offer for you.

What are the benefits of working with Lestel?

Lestel Meade has been a full time Realtor since 1998. Real estate is her career. Put her Experience, Enthusiasm, Education and Energy to work for you! Contact her today.

New Construction Around Fort Collins

Northern Colorado is an ever growing and changing area. With that comes a lot of development and a lot of new construction around Fort Collins. So you may find yourself thinking about purchasing a new construction home rather than something existing. If this is the path you want to take there are a few things you should know before pulling the trigger on a new construction home in and around Fort Collins, CO. 

First of all it is important to bring an agent. The reason is in the name. An agent is an advocate on your behalf. The builders rep is there for the builder. A lot of people think that by going unrepresented they will save the money. Money that would have otherwise gone to cover their agents commission. This is a common misconception. In reality the builder will charge you the same amount for the same house as the person who walks in after you with their agent. Your agent is there for you to look out for your best interests. As well as negotiate for you and have the hard conversations for you.

In order to make sure you get to work with an agent you need to select one prior to going out to the model home the first time. This is not to say that you can’t still be represented if you have already done this as we have negotiated for clients after this point, but it makes it very difficult. Instead select your agent and have them accompany you to any new construction developments you are interested in. Obviously one of the best realtors in Fort Collins and Northern Colorado is Lestel Meade. So this decision should be the easiest one you make.

Have Lestel show you the new construction in the area that is in your price range. She can tell you about the builder, their reputation and share with you about the neighborhood. She can also negotiate the offer for you. Lestel understands the complexities of the fine print in the builder’s contract and can help you make good decisions regarding options. A new construction representative is there to sell you more features and more house. Lestel can help you set limits and be your guide through the process. Lestel can step in, on your behalf if there is a problem. She is there for you! Contact her today.