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The home-buying process is a high-stakes thrill ride full of exhilarating ups and scary downs, but unquestionably one of the most deflating moments is when the appraisal comes in significantly lower than the accepted offer. This is, to use technical real estate lingo, “a bummer.”

Either you feel as though you got the raw end of a deal by paying more than the property’s worth or, if you don’t have extra cash to hand over, the deal can crumble into dust. (Your lender’s not going to fork over money for a higher loan amount if the appraisal came in lower than expected, so you’ll have to make up that difference yourself.)

“In a rising market, low valuations are pretty common because appraisals are based upon sales that closed when prices were lower,” says Diane Saatchi, a senior broker with Saunders & Associates in Bridgehampton, NY. “The reverse is so in a declining market.”

In other words: Appraisals can’t keep up with how quickly homes are selling in a hot market, so you’re bound to see lower-than-expected values placed on homes.So, what do you do if this happens to you? You have four options:

1. Appeal the appraisal

Sometimes called a “rebuttal of value,” the appraisal appeal takes some work. In fact, it’s a total team effort.

“The homeowner, loan officer, and often the real estate agent work together to find better comparable market data to justify a higher valuation,” says Casey Fleming, a mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage.” 

That means everyone puts on their best Sherlock Holmes garb and gets to work looking for anything that helps the claim for higher valuation. Perhaps the appraiser overlooked some comps (homes similar in style, location, and square footage sold within the past few years).

“It’s not uncommon to discover, for instance, that the appraiser used a comparable sale that looks like it’s in great condition, when in fact the home was trashed when purchased and has already been rehabilitated,” Fleming says.

The loan officer writes an appeal using the new comparables and then sends it to the appraiser. There might be some negotiating back and forth until all parties come to a compromise with a new valuation.

Spoiler: It’s a hard battle to fight.

“My record on this one is 0 for 9 so far,” Fleming says. “But I know many appraisers personally who have adjusted their values.” So keep the hope alive!

2. Order a second appraisal

“Most often, if the appraised value is not as high as the agreed (contract) price, the seller’s agent will ask to see the comps and get a second or third appraisal,” Saatchi says.

But it will likely cost you–you’re not only paying for the first appraisal (in your closing costs), but you’ll pony up for any additional appraisals as well. They can range between a few hundred dollars and $1,000 depending on the area. Occasionally, real estate agents or sellers will foot the bill if they really want to keep the sale.

3. Negotiate with the seller

If you’re lucky, you and the seller will both budge a little.

“You might go back to the sellers and ask them to reduce the price or split the difference,” says Peter Grabel, managing director of Luxury Mortgage in Stamford, CT. “The seller is under no obligation to do so, but they may prefer to do this rather than take a chance of losing you as a buyer, and starting over again. It is likely that another buyer will have the same issue, so the seller might be better off renegotiating with you unless they have other offers.”

Sellers might be more willing to cooperate, especially if the Federal Housing Administration is involved. Lenders often require the use of their own FHA-approved appraiser, and these appraisals are “locked in” for six months.

“The seller could be forced to take a poor appraisal or wait it out for a buyer with a different loan,” explains Joshua Jarvis of Jarvis Team Real Estate in Duluth, GA.

Jeff Knox, broker and owner of Dallas-area real estate firm Knox & Associates, says this is the most common outcome in his area.

“Of all possible outcomes, this is what happens most frequently,” he says. “While the seller will usually be upset about the low appraisal value, most reasonable sellers eventually come to terms with the fact that any other appraisal values by potential future buyers will most likely come in at about the same value.”

4. Walk away

No one wants to let a property slip through their fingers, especially if it feels like their dream home. But beware of ignoring a low appraisal—you could end up losing thousands whenever you decide to sell.

If you have an appraisal contingency in your contract, you can walk away, get your deposit back, and hope for better luck the next time around.

This article was written by Maureen Dempsey for Realtor.com. She is a writer who covers fashion, beauty, lifestyle, and home decor. She’s recently learned that decorating her new home is just as satisfying as filling her closet.

 

Congratulations! You have just closed on your new home and are pulling the moving truck into the driveway, and the last thing on your mind is the yearly maintenance needed to keep your home in great shape. We have found a list complied on Zillow.com by See Jane Drill of DIY maintenance that should be done the first 3 months and then organized seasonally. Enjoy!

First three months

You’ll be busy enough moving in and getting settled, so we don’t recommend taking on a lot of work during the first few months. There are, however, a few things you might consider doing right away:

  • Change all the locks, and make spare keys.
  • Implement energy-saving measures right away to save you money on heating and cooling costs:
    • Hang a clothesline in the laundry room and/or outside to cut down on dryer costs.
    • Lower the hot water heater temperature to 120 degrees F. This is generally the hottest water temperature that anyone would need, and lowering the temperature prevents scalding accidents.
    • Install a programmable thermostat, and learn how to use it.
  • If you make your home comfortable for kids and pets first, you’ll be comfortable, too! Babyproof and petproof as needed.

Seasonal maintenance

We organized the tasks by season, but some items are interchangeable. This is simply a recommendation, so make it work for you!

Summer

  • Install ceiling fans to cut cooling costs, or reverse the direction of existing fans. Run your fans counterclockwise in the warm months, and clockwise in the cool months.
  • Inspect the roof for missing, loose, or damaged shingles. You don’t always have to climb up there to do this. In some cases, you can do this from the ground with binoculars.
  • Clean the roof and gutters of leaves and moss.
  • Fix large cracks in the concrete or asphalt driveways. Do this during warm weather, when you can expect a few dry days for proper curing time.
  • Inspect air conditioners, and replace the filter if necessary.
  • Have the fireplace inspected and the chimney swept. You’ll likely pay less for these services by doing it in the offseason.
  • Clean and repair or replace window and patio door screens.

Fall

  • Seal cracks in windows and doors with caulk or weather stripping.
  • Drain exterior plumbing, and cover outdoor faucets.
  • Clean carpets. You can do this anytime, but it’s nice to get it done right before the holidays!
  • Install a new furnace filter.
  • Replace batteries in smoke alarms and carbon monoxide detectors. A good way to remember this task is to do it when you set the clocks back for daylight saving time.
  • Clean the dust from heating vents, and make sure vents are obstruction-free.
  • Inspect and replace — or add — outdoor lighting around the front of your home and walkways. This helps keep people safe when it gets darker earlier.

Winter

  • Clear drains of hair clogs using a Zip-It drain cleaning tool or a drum auger.
  • Clean the oven. While you’re at it, make sure all your kitchen appliances are in good working order prior to the holiday season.
  • Check the insulation in your attic or crawl space, and add more if needed. A good general guideline: have at least 12 inches of insulation in the attic, and up to 16 inches if you live in a region with very cold winters.
  • Create a family fire escape plan, and do a few fire drills to make sure everyone knows what to do in an emergency.
  • Keep snow and ice removal supplies on hand, such as a shovel, snowblower, and salt or sand.
  • Compile an emergency kit for your household with extra water, food, medicines, flashlights, and other necessities.

Spring

  • Clean and refinish (where applicable) decks, porches, and patios to prepare for outdoor living.
  • Bring out the outdoor furniture, and clean grills so they’re ready for backyard barbecues.
  • Spring-clean all windows — inside and out.
  • Plant a tree. This is a fun family activity to do in your new home. Plant the tree strategically for shade in a particularly warm and sunny area of your home.
  • Once you’ve had the last fire of the season, close the fireplace damper to keep dirt and pests out.
  • Assess and inspect garden tools and lawnmowers to make sure they’re ready for a new season of working hard in your yard.
  • Because this is your first season in a new home, take some time to observe your yard before making any major changes. See where the sun shines at different times of the day. Watch which perennials come up at which times. Take notes about what you like about the current landscaping, and what you want to change or add to the landscape.

Most importantly, enjoy your new home! Taking care of these few maintenance jobs will help you love your home for many years to come.

Wire fraud is becoming more and more prevalent in the world. According to the FBI, fraud is a $30-$50 billion dollar problem with 90% of wire fraud being prevented (the numbers are still staggering):

$951 million attempted

$870 million prevented

$81 million lost

They are trying hard at stopping the majority of the fraud cases but the bad guys always seem to be a step ahead. Here is what you can do to help prevent you from being a victim of fraud.

I was looking at Realtor.com the other day and came across this post about how comps are tricking people into thinking their home is worth more or less than what the home is really worth. I thought I would share this article written by Cathie Ericsson. She is a journalist who writes about real estate, finance, and health. She lives in Portland.

“Unlike most things we buy in life, homes don’t come with a sticker price. Sure, the real estate listing may say the price of the home is $320,000, but that’s just a starting point. Buyers can—and should—offer more or less money for the house based on something called real estate comps, short for “comparables.”

Real estate comps are properties that have similar characteristics to the house you’re trying to determine the value of. They’re critical tools used by real estate agents when you’re ready to buy or sell.

Because it’s easier to compare apples to apples, the best comps are houses that are as similar as possible to the one being valued.

But sometimes the comps are incorrect, which makes it hard for you to arrive at an appropriate value for your home. Using comps to determine a home’s valuation is not entirely a science, but there are some signs your real estate comps are not accurate.

Sign No. 1: The comps are far away

When we say location is key in real estate, that doesn’t just pertain to the location of your home. Your comps’ location is important because they take into account the desirability of the school system and neighborhood, among other factors, explains Jon Boyd, broker and manager of The Home Buyer’s Agent in Ann Arbor, MI.

If there aren’t sufficient nearby comps (as can happen if you’re in a rural area), your agent might need to widen the search area. Ideally you’ll look at homes within roughly a half-mile so you are truly comparing houses that are being valued equally.

Sign No. 2: The comps are stale

Markets move fast, and using a comp from a year ago will give you an incorrect idea of home values in your area. Boyd recommends sticking with homes that have sold within the past six months; the more recent, the better.

Sign No. 3: The comps are really appraisals

Does your comp use a strict formula of square footage, bedrooms, etc. to arrive at a market value? If so, that sounds more like an appraisal, which is an entirely different way of determining the value of the home. Be careful not to confuse the data provided by these two documents, warns Molly Stehman, real estate broker with Premiere Property Group in Lake Oswego, OR.

“Comps are totally subjective and a lot of opinion goes into the numbers,” she says. Appraisers must follow rules that standardize the process of determining a home’s value. So when coming up with comps, in addition to objective measures like square footage and number of rooms, Stehman will add factors like whether the home has been updated or remodeled, whether the floors are hardwood or laminate, the walkability score, the age of the roof and furnace, and even what she calls the “charm factor.”

That’s why the picturesque remodel you’re looking at might be priced higher than the plain-Jane house down the street, even if the facts on the appraisal sheet are basically identical.

Sign No. 4: The comps include homes that are still on the market

To be useful, a comp has to tell you what the home sold for, not what the asking price is. The best indicator of a house’s value is what people have paid for it, not what they might be willing to pay (the seller hopes). Be sure your comps contain only homes that are off the market.

Ultimately, the seller or buyer decides how much they want to ask or what they’re willing to offer for a house, Stehman points out. But by making sure your comps aren’t off-base to start with, you can step up to the negotiating table feeling as informed as possible.

Have you ever thought, oh I could have done this when I sold, I should have done this, I wished we would have done this?  The good thing sellers that have had regrets have shared with hopes that future home sellers don’t do the same thing. Jennifer O’Neill with Realtor.com has helped us compile a list of 5 regrets.

Regret No. 1: Not fully preparing the place

Serious about selling your home? Spiff it up, stat! Recent seller Kim Maggio admits that she didn’t focus on making cosmetic changes before putting her Haverhill, MA, house on the market and wishes that she had. “I didn’t spend enough time prepping our house for sale—purging, staging, or doing small repair projects,” she says. “And I regret not planning ahead or getting real about what had to be done, because it ended up dragging out the home-selling process—in terms of finding a buyer and negotiating repairs—costing me precious time and money.”

At Andersen Realty, we take the time to help you prepare your home. We have a stager come over before the photographer to help you make the pictures look amazing. She helps with everything, not just moving furniture around to make the room look larger. She helps with what you need to pack away, change, move, and declutter.

Regret No. 2: Making the property too perfect

On the other hand don’t go overboard, either. When Jen Mason and her husband sold their Denver condo in order to buy their neighbor’s bigger apartment across the courtyard, she put extra energy into leaving the property in pristine condition. “But why did we care about patching every nail hole, making the place look flawless, and leaving behind our beloved custom window coverings?” she gripes. “Our buyer was an older single woman who really just wanted to live in our neighborhood. All of our efforts had all been a waste.”

Regret No. 3: Staying in contact after the sale

Always do your best to keep things “just business,” Mason advises sellers. She didn’t, and is still kicking herself for it. “Since we only moved across the street, we availed ourselves to the buyer for questions,” the Denver homeowner explains. “And she called us for at least a year on a regular basis whenever she couldn’t figure out how something worked: the house alarm, air filter, fire alarm, window screens, and on and on. It was as though my husband became her personal handyman!” Despite their best efforts to remain friendly in the tight-knit community, she admits, “we eventually tired of her calls and stalled on our response time until she finally stopped reaching out.”

Regret No. 4: Trying to sell without an agent

“We tried to sell our home without using an agent and soon realized that in our market, and it didn’t quite work out,” says Boston-area homeowner Rebecca Addison. The approach “wasn’t really accepted by the buyer’s Realtors®, who often questioned our price point, which made things difficult.”So she ditched the for-sale-by-owner approach and wound up enlisting a Realtor after all. “I wish we had just done it right away, because instead it set us back at least a month if not more,” she says. “And in that time people moved on and the market changed. I think we might have missed out on a better sale.”

Regret No. 5: Caving to a buyer’s whims

Addison also learned the hard way that it doesn’t pay to bend over backward, sideways, and into intriguing pretzel shapes for a demanding buyer.“Our buyer was really difficult and wanted us to give on so many items,” she says. “We also agreed to give the buyer money toward updating the roof so we were very frustrated on the day of closing when he wanted even more.”Addison stood firm, and after a few hitches the sale continued thanks to an agreement between the Realtors to appease the buyer by reducing their commission.“I found myself resentful that the buyer got away with that and got the house,” she says. “Especially when I can see for myself that he hasn’t completed any roof work in the past five years.”

Regret No. 6: Skipping the staging

“I really regret not paying the money to stage my apartment right off the bat,” confesses Chicago homeowner Rachel Bertsche. Hoping to save on expenses since she’d already bought and moved into a different home with her family, Bertsche skipped that step until it was too late.

If you are ready to sell and are looking to not make any regrets, give us a call today.

Staging a home is always a topic that comes up when meeting with clients and I would like to address why we like to have our clients meet with a stager.

When we are getting ready to list a property we always love for our clients to meet with a professional stager. They come into your home and provide feedback on what you should do to prepare your house for the sale. There are many things you can do that are free by moving around furniture, decluttering, clearing countertops, packing personal pictures, and much more. You might say, “Why do I need a stager when the market is so hot?” Our answer is simple, “There is always competition and if your house looks just a little better than the competition you might get over asking price due to a bidding war.” The other benefit of home staging is it can add up to 20% of the home value. That means you will make more money on your home by spending a little money.

Long story short; home staging is worth every penny, even in a hot market like Denver. We believe so much in home staging that we will pay for the initial consult with the professional home stager to prepare your home for sale.

Give us a call today at 720-314-6863 if you are ready to buy or sell your home!

We are seeing a boost in home sales earlier this year than last. According to The Daily Real Estate News posted  on April 18, 2016, here are the factors that are causing a boost in sales.

Warmer weather across the country is drawing more people to look at open houses and available homes this month, says Jonathan Smoke, realtor.com®’s chief economist.
Here are four current housing market factors that will likely translate into greater sales this April:

1. Low mortgage rates: Mortgage rates have moved lower this month and are hovering near the lowest averages in the past three years. Lower mortgage rates help boost home buyers’ purchasing power as well as buyers’ ability to qualify for a mortgage.

2. More urgency: Many buyers were frustrated last year with their inability to buy. This spring, they’re heading to the housing market more determined. Mortgage applications for home purchases are up 20 percent compared to last year.

3. More searching: Realtor.com® reports a record number of people searching and looking at its website for homes. Nevertheless, there are 2 percent fewer homes for sale that they’ll find when compared to last year.

4. Faster sales: The time that listings spend on the market has dropped dramatically. Nationwide, the median days on the market dropped 14 days in the first two weeks of April compared to the first two weeks of March.

Some of the places seeing the fastest sales are in Colorado, including Aurora, Arvada, Littleton, and areas of Denver, where the median age of a listing is less than 7 days. Gladstone, Ore., and areas of Seattle are also seeing the median age of listings at less than 7 days.

Other areas seeing median listing ages of less than two weeks are: Cambridge, Mass.; Pacifica, Berkeley, Los Altos, and Sunnyvale, Calif.; Centreville, Burke, and Henrico, Va.; Berkley, Mich.; Colorado Springs, Colo.; Boise, Idaho; Clifton, N.J.; Salt Lake City and Sandy, Utah; Fort Worth, Texas; Louisville, Ky.; and Buffalo, N.Y.

Source: “Mid-April Forecast: Warm Weather Will Bring Out Home Buyers,” realtor.com® (April 15, 2016)

Everyone is asking the question, “Is Denver on a housing bubble?”

According to an article in the Denver Post posted on 4/15/2016:

“Denver is in a good spot. It is a strong market,” said Lawrence Yun, chief economist with the National Association of Realtors, during a visit to Denver on Wednesday.

The median price of a home sold in metro Denver reached $353,600 at the end of 2015, up from $310,200 in 2014 and $280,600 at the end of 2013, according to the NAR.

Over a two-year period, median home prices in Denver-Aurora are up 26 percent. That’s the eighth-fastest pace among more than 176 cities tracked by the NAR, the fastest of any major metro area, and nearly double the U.S. average two-year gain as measured by the association.

Historically, home prices over the long term rise at the pace of inflation plus 1 or 2 percentage points, and Denver’s off-the-chart acceleration has raised fears of a bubble.

But Yun notes that some key ingredients needed to create a bubble are missing.

Easy credit was a driver in the excesses last decade, creating artificial demand that resulted in an excess supply of homes.

Credit remains so tight now that many potential buyers can’t qualify for a mortgage, either because their credit scores are too low or they lack an adequate down payment.

Another driver of the last bubble was excess construction, and multiple signals show that not enough homes are being built. The chief signal is the lack of homes available for sale.

Metro Denver’s inventory of homes available for sale could quadruple and still would be around the historical average. There were only 3,963 active listings at the end of February, down dramatically from the 30-year average for that month of nearly 15,000, according to the Denver Metro Association of Realtors.

It would take a sevenfold increase to bring listings to the levels seen in the last bubble, when builders were willing to go gangbusters.

And yet, builders are pulling single-family permits only at a pace to match historical averages, despite a strong influx of people relocating to the region.

A shortage of construction labor, lack of close-in and affordable land to build on, and conservative construction financing are holding builders back, Yun said.

Another reason the for-sale supply remains tight is that many foreclosed properties after the housing crisis were snapped up at discounts and converted to rentals.

One way to boost the inventory of homes for sale would be for those rentals to come back onto the market. But with interest rates so low, investors are hard-pressed to find alternatives that can earn a comparable yield.

And as long as prices keep rising, investors don’t have an incentive to let go, Yun said. If prices start to level off or go the other way, then more of those homes might end up as listings.

Sounds like to us, Denver is not on the edge of a housing bubble. Now, is the time to buy before prices start rising for the summer months. We are seeing houses sell for over asking over and over again with record number of showings. If you are on the edge about selling, now is a great time to list because inventory is at an all time low and we can get you top dollar for your home. Give us a call today for all of your Real Estate needs.