The Risks and Rewards of Purchasing a Bank-Owned Home

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The process of purchasing a home directly from a lender can be long and arduous, but could very well be worth it in the end. If you have your sights on a particular home or are looking to find a deal on your first, working directly with the lender may be your only option. Purchasing a bank-owned home is not for the faint of heart, here are some tips for negotiating the REO process:

1. Be prepared: The condition of bank-owned properties are often poor and hard to show. Past owners may have departed on bad terms, leaving the home in poor condition with foul smells, missing appliances, wires taken from breakers, gas fireplaces gone, even bathrooms without toilets and sinks.

2. Understand the costs: Maintenance or repairs may be necessary, since these homes have been vacant for an unknown period of time–sometimes months or years. Keep in mind, when they were occupied the owners could have been under a financial hardship, preventing them from doing regular seasonal care or repairs when needed. Remember as well that the bank is trying to sell the house immediately, so you will receive a financial break in the price rather than a willingness to negotiate on the maintenance and repair issues.

3. Accept the unknown: In traditional real estate transactions, homeowners fill out Form 17 regarding important information about the history of the house. A bank owned home is either exempt or marked with “I don’t know” throughout the document. Not having the accuracy of this 5-page disclosure form could leave you with a lot of unanswered questions on the history of the home.

4. Know what is non-negotiable: The pricing on the house may not get much lower. Some of these properties can be “a dream come true” if you get them at an amazing price, or they could be your worst nightmare. Do your due diligence researching any property, and conduct all necessary inspections to safeguard yourself. Some major repairs may be negotiable, but will likely not reduce the home price.

5. Make a clean offer: The higher the price you can offer, the better. Include your earnest money, keep contingencies to a minimum, and suggest a reasonable closing date. The simpler your offer is, the higher chance you have of the bank accepting your offer or countering in a reasonable time period.

6. Be patient: Consult with a professional who handles bank owned home purchases to help you negotiate the pathway to homeownership. The process of purchasing a bank-owned, foreclosed or short-sale home is typically longer than a typical real estate sale.

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Why You Should Stay Put and Improve the Home You Have

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In “Staying Put,” architect and writer Duo Dickinson has assembled a terrific and practical guide to help us make real improvements to our homes. Dickinson, an advocate of well-designed and affordable homes for all, has specialized in residential design for more than three decades.

This is not your typical architect’s book about design. There’s no obscure language nor design-for-design’s-sake ideas. It is a practical, down-to-earth guide that walks anyone through the rational process of how to remodel your house to get the home you want, from how to think about your house and overcoming hurdles to a list of “Duo’s Do’s and Don’ts” for the homeowner. Along the way, there’s plenty of nice before-and-after photos to help explain the points. Do read the book. You’ll be glad you did.

The Taunton Press Inc, original photo on Houzz

The cover says it all. The ubiquitous photo of a gorgeous, award-winning home that’s beyond most of us is replaced with images of a saw, cup of morning joe and a to-do list.

Are you staying put yourself? Read on for 8 of Dickinson’s suggestions.

 

Mick Hales, original photo on Houzz

Consider the compass points. The tips and illustrated examples are wonderfully straightforward. For example, we see a house that gets overheated, the siding degrades and the front door bakes in the sun because it all faces south.

Dickinson’s common-sense advice: Rework the front of the house with a new wide porch that shades the front door and some smaller, yet well-sized windows to create a lot more curb appeal while reducing maintenance and energy consumption. It’s a triple win: more beauty and comfort with less cost.

Avoid gutters. Statements such as “gutters and leaders are devout to be avoided” may sound like heresy to many but certainly are the truth. Proving his point, Dickinson illustrates how a properly-built roof overhang can shed all the water it must without the complications, such as ice dams, caused by gutters.

Embrace small moves. Dickinson provides a wealth of simple solutions illustrated with before-and-after photos. He shows how to use small moves for big dividends, such as taking out a wall between a kitchen and a hallway to make room for more kitchen storage.

Mick Hales, original photo on Houzz

Enhance curb appeal. The book offers solutions to common problems with a particular style, such as how to improve and enhance an entrance into a split-level home.

Open up to the outside. Dickinson provides some excellent examples of how we can use modern windows and doors to strengthen the connection between inside and outside. Our homes, says Dickinson, no longer need be “later-day caves.”

Find your home. Learning more about the style of the house you have will help you avoid obstacles in remodeling and recognize the best opportunities for improving your particular home.

Mick Hales, original photo on Houzz

Open up the inside. Snippets of advice sprinkled throughout the book are like refreshing raindrops that clear the cobwebs away. One such snippet: “If you walk through a room to get to a room, something is wrong.” You know — it’s when that new great room gets added to a modest house, and the result is some kind of dyslexic creature that’s really two houses rather than one.

So rather than even building an addition, Dickinson suggests you make the most of what you already have. In this example, widening the opening between rooms strengthens this room’s connection with the rest of the home, increasing its utility and spaciousness.

The Taunton Press Inc, original photo on Houzz

Work with what you’ve got (before): Keeping the kitchen size the same while vaulting the ceiling dramatically increases the overall spaciousness of the room, as you’ll see in the next photo.

 

Mick Hales, original photo on Houzz

Work with what you’ve got (after): Walls, doors, appliances and even the skylight and kitchen sink were all left where they were. This all avoided costly plumbing, electrical and mechanical work and rework.

The Taunton Press Inc, original photo on Houzz

Working with what you’ve got (plans): Dickinson has included before-and-after floor plans for many of the examples. These plans help provide that much more context, allowing the reader to better understand what they may be able to do with the home they already have.

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The Value of Homeowners Insurance Can’t Be Overstated

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In addition to providing shelter and comfort, our home is often our single greatest asset. It’s important that we protect that precious investment. Most homeowners realize the importance of homeowners insurance in safeguarding the value of a home. However, what they may not know is that about two-thirds of all homeowners are under-insured. According to a national survey, the average homeowner has enough insurance to rebuild only about 80% of his or her house.

What a standard homeowners policy covers

A standard homeowner’s insurance policy typically covers your home, your belongings, injury or property damage to others, and living expenses if you are unable to live in your home temporarily because of an insured disaster.

The policy likely pays to repair or rebuild your home if it is damaged or destroyed by disasters, such as fire or lighting. Your belongings, such as furniture and clothing, are also insured against these types of disasters, as well as theft. Some risks, such as flooding or acts of war, are routinely excluded from homeowner policies.

Other coverage in a standard homeowner’s policy typically includes the legal costs for injury or property damage that you or family members, including your pets, cause to other people. For example, if someone is injured on your property and decides to sue, the insurance would cover the cost of defending you in court and any damages you may have to pay. Policies also provide medical coverage in the event someone other than your family is injured in your home.

If your home is seriously damaged and needs to be rebuilt, a standard policy will usually cover hotel bills, restaurant meals and other living expenses incurred while you are temporarily relocated.

How much insurance do you need?

Homeowners should review their policy each year to make sure they have sufficient coverage for their home. The three questions to ask yourself are:

  • Do I have enough insurance to protect my assets?
  • Do I have enough insurance to rebuild my home?
  • Do I have enough insurance to replace all my possessions?

Here’s some more information that will help you determine how much insurance is enough to meet your needs and ensure that your home will be sufficiently protected.

Protect your assets

Make sure you have enough liability insurance to protect your assets in case of a lawsuit due to injury or property damage. Most homeowner’s insurance policies provide a minimum of $100,000 worth of liability coverage. With the increasingly higher costs of litigation and monetary compensation, many homeowners now purchase $300,000 or more in liability protection. If that sounds like a lot, consider that the average dog bite claim is about $20,000. Talk with your insurance agent about the best coverage for your situation.

Rebuild your home

You need enough insurance to finance the cost of rebuilding your home at current construction costs, which vary by area. Don’t confuse the amount of coverage you need with the market value of your home. You’re not insuring the land your home is built on, which makes up a significant portion of the overall value of your property. In pricey markets such as San Francisco, land costs account for over 75 percent of a home’s value.

The average policy is designed to cover the cost of rebuilding your home using today’s standard building materials and techniques. If you have an unusual, historical or custom-built home, you may want to contact a specialty insurer to ensure that you have sufficient coverage to replicate any special architectural elements. Those with older homes should consider additions to the policy that pays the cost of rebuilding their home to meet new building codes.

Finally, if you’ve done any recent remodeling, make sure your insurance reflects the increased value of your home.

Remember that a standard policy does not pay for damage caused by a flood or earthquake. Special coverage is needed to protect against these incidents. Your insurance company can let you know if your area is flood or earthquake-prone. The cost of coverage depends on your home’s location and corresponding risk.

Replacing your valuables

If something happens to your home, chances are the things inside will be damaged or destroyed as well. Your coverage depends on the type of policy you have. A cost value policy pays the cost to replace your belongings minus depreciation. A replacement cost policy reimburses you for the cost to replace the item.

There are limits on the losses that can be claimed for expensive items, such as artwork, jewelry, and collectibles. You can get additional coverage for these types of items by purchasing supplemental premiums.

To determine if you have enough insurance, you need to have a good handle on the value of your personal items. Create a detailed home inventory file that keeps track of the items in your home and the cost to replace them.

Create a home inventory file

It takes time to inventory your possessions, but it’s time well spent. The little bit of extra preparation can also keep your mind at ease.  The best method for creating a home inventory list is to go through each room of your home and individually record the items of significant value.  Simple inventory lists are available online.  You can also sweep through each room with a video or digital camera and document each of your belongings. Your home inventory file should include the following items:

  • Item description and quantity
  • Manufacturer or brand name
  • Serial number or model number
  • Where the item was purchased
  • Receipt or other proof of purchase photocopies of any appraisals, along with the name and address of the appraiser
  • Date of purchase (or age)
  • Current value
  • Replacement cost

Pay special attention to highly valuable items such as electronics, artwork, jewelry, and collectibles.

Storing your home inventory list

Make sure your inventory list and images will be safe in case your home is damaged or destroyed. Store them in a safe deposit box, at the home of a friend or relative, or on an online Web storage site. Some insurance companies provide online storage for digital files. (Storing them on your home computer does you no good if your computer is stolen or damaged). Once you have an inventory file set up, be sure to update it as you make new purchases.

We invest a lot in our homes, so it’s important we take the necessary measures to safeguard it against financial and emotional loss in the wake of a disaster.

The post The Value of Homeowners Insurance Can’t Be Overstated appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

5 Deal Breakers that can blindside home buyers

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Purchasing a home can be a complex endeavor for even the most well-prepared home buyer.  You’ve diligently saved for your down payment, followed the market, researched agents and now you are ready to make an offer on your dream home.  Don’t let these 5 “Deal Breakers” come between you and your new home.

    1. Big Purchases on Credit. It is tempting to buy the furniture for your new home or a new car for the garage before the sale closes. Take care if you are making these purchases on credit. Large purchases on credit can have a major impact on your credit profile which effects your mortgage application. It’s a better plan to wait until after closing or pay cash for these transactions or you may be putting that furniture in a different living room than you originally picked them out for.
    1. Overpaying. Before your bank will approve your mortgage they will appraise the home you are purchasing.  If they feel you are overpaying they are likely to decline your mortgage application. If you find yourself in this situation consult with your agent on renegotiating your offer to be more in line with the bank’s appraised value.
    1. Purchasing too close to Foreclosure. If you are making an offer on a house which is facing foreclosure be sure to have a closing date set before the foreclosure date. Have your agent work with the lender to structure closing before the house goes back to the bank and into foreclosure.
    1. IRS liens. You’ve heard the old saying “Death and Taxes”.  Back taxes and liens can derail your attempts to get financing for a mortgage so be sure to have your books in order before filing your loan application.
    1. Comprehensive Loss Underwriting Exchange (CLUE). CLUE is a database of insurance claims for both people and property.  Your home insurance rates are determined by the information about you and the property you plan to purchase which is contained in this report. Past claims for water damage, falling trees and even dog bites from present and past owners can multiply your insurance rates. Consult your agent about the CLUE report for your future home as soon as possible once your home purchase offer is accepted.

When purchasing a home there will be challenges which you can plan for and the unexpected hurdles.  By educating yourself as a consumer and choosing a well trained real estate agent you can avoid many of the pitfalls of 21st century home ownership.

What about you? Tell us if you have had any “deal breaker” experiences.

The post 5 Deal Breakers that can blindside home buyers appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

5 Deal Breakers that can blindside home buyers

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Purchasing a home can be a complex endeavor for even the most well-prepared home buyer.  You’ve diligently saved for your down payment, followed the market, researched agents and now you are ready to make an offer on your dream home.  Don’t let these 5 “Deal Breakers” come between you and your new home.

    1. Big Purchases on Credit. It is tempting to buy the furniture for your new home or a new car for the garage before the sale closes. Take care if you are making these purchases on credit. Large purchases on credit can have a major impact on your credit profile which effects your mortgage application. It’s a better plan to wait until after closing or pay cash for these transactions or you may be putting that furniture in a different living room than you originally picked them out for.
    1. Overpaying. Before your bank will approve your mortgage they will appraise the home you are purchasing.  If they feel you are overpaying they are likely to decline your mortgage application. If you find yourself in this situation consult with your agent on renegotiating your offer to be more in line with the bank’s appraised value.
    1. Purchasing too close to Foreclosure. If you are making an offer on a house which is facing foreclosure be sure to have a closing date set before the foreclosure date. Have your agent work with the lender to structure closing before the house goes back to the bank and into foreclosure.
    1. IRS liens. You’ve heard the old saying “Death and Taxes”.  Back taxes and liens can derail your attempts to get financing for a mortgage so be sure to have your books in order before filing your loan application.
    1. Comprehensive Loss Underwriting Exchange (CLUE). CLUE is a database of insurance claims for both people and property.  Your home insurance rates are determined by the information about you and the property you plan to purchase which is contained in this report. Past claims for water damage, falling trees and even dog bites from present and past owners can multiply your insurance rates. Consult your agent about the CLUE report for your future home as soon as possible once your home purchase offer is accepted.

When purchasing a home there will be challenges which you can plan for and the unexpected hurdles.  By educating yourself as a consumer and choosing a well trained real estate agent you can avoid many of the pitfalls of 21st century home ownership.

What about you? Tell us if you have had any “deal breaker” experiences.

The post 5 Deal Breakers that can blindside home buyers appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

Real Estate Buyer Tip: How to Find a Deal

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If you are ready to buy a home in a seller’s market, don’t despair. Windermere Real Estate agent, Michael Doyle, shares how you can find a good deal on a great home, even in the hottest housing market.

The post Real Estate Buyer Tip: How to Find a Deal appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

Myths and Truths About Millennial Home Buyers

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In recent years there has been a lot written about millennials and their impact on the housing market. Because of this, there are also a lot of misconceptions about what this generation wants from a home. To start, it’s important to know that there are more than 71 millennials, which are defined as those aged 22-37. They also represent 34 percent of all home buyers which makes them tremendously important to the real estate market. We were curious if what we’ve read about millennial home buying habits is true and here’s what we found.

Simple, Functional, Minimal Maintenance

Millennials do not appear to be drawn to fixer uppers in the same way as prior generations. They want something that is “move-in” ready with minimal maintenance. They also value simplicity and function over extravagance which means they’re drawn to spaces that serve dual purposes and furniture that doubles as storage. The old adage “less is more” takes on new meaning for millennial buyers.

Location

Similar to older generations, millennials place a great deal of importance on location. The convenience to their job, friends, family, entertainment, and shopping is a must. But the rumor out there that they only want to live in city dwellings is a myth. Millennials are getting older and starting to have families, so like prior generations, many of them are moving away from the hustle and bustle of the city and into nearby neighborhoods with good schools and family-friendly amenities.

Digitally Engaged

Millennials have grown up surrounded by technology, so smart home technology is a high priority for these buyers. And they’re willing to pay more for it: a survey conducted by Wakefield Research states that millennials are willing to pay a 20 percent premium for smart home technology, such as voice assisted devices, smart phone-controlled security systems, electronic door locks, and doorbell cameras.

Experience over Luxuries

One of the main things we’ve learned about millennials is that they are not prone to conformity. They’re a practical bunch who places a very high priority on experiences and quality of life. Studies show that millennials would rather have discretionary income to pay for things like healthy food, gym memberships, and international travel than blowing their budget on an expensive home. In other words, they’re happy with a modest space so they have money left to spend on their quality of life.

In the end, millennial buyers aren’t that different from prior generations. They’re clearly a pragmatic group that sees their home more as a functional space than a symbol of their success. Technology definitely plays a far greater role for them than their baby boomer parents, but ultimately they still want a home in a nice neighborhood with good schools and access to friends, family, and nearby amenities.

The post Myths and Truths About Millennial Home Buyers appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

How to Get Started on Your Home Search

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Whatever your reasons for buying, finding the right home in the perfect neighborhood, and at a cost that is within your budget, is no small task. But if you do your research and approach the process with confidence, you are much more likely to emerge at the end of the day with a house you’ll be proud to call home.

The post How to Get Started on Your Home Search appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

Find a New Home in Four Steps

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Whether you’re a first-time homebuyer or a current owner looking for a bigger home, the ideas below will help you better navigate that all-important first step: Finding a property that you like (and can afford).

The search for a new home always starts out with a lot of excitement. But if you haven’t prepared, frustration can soon set in, especially in a competitive real estate market. The biggest mistake is jumping into a search unfocused, just hoping to “see what’s available.” Instead, we recommend you first take some time to work through the four steps below.

Step 1: Talk to your agent

Even if you’re just thinking about buying or selling a house, start by consulting your real estate agent. An agent can give you an up-to-the-minute summary of the current real estate market, as well as mortgage industry trends. They can also put you in touch with all the best resources and educate you about next steps, plus much more. If you are interested in finding an experienced agent in your in your area, we can connect you here.

Step 2: Decide how much home you can afford

It may sound like a drag to start your home search with a boring financial review, but when all is said and done, you’ll be glad you did. With so few homes on the market now in many areas, and so many people competing to buy what is available, it’s far more efficient to focus your search on only the properties you can afford. A meeting or two with a reputable mortgage agent should tell you everything you need to know.

Step 3: Envision your future

Typically, it takes at least five years for a home purchase to start paying off financially, which means, the better your new home suits you, the longer you’ll most likely remain living there.

Will you be having children in the next five or six years? Where do you see your career heading? Are you interested in working from home, or making extra money by renting a portion of your home to others? Do you anticipate a relative coming to live with you? Share this information with your real estate agent, who can then help you evaluate school districts, work commutes, rental opportunities, and more as you search for homes together.

Step 4: Document your ideal home

When it comes to this step, be realistic. It’s easy to get carried away dreaming about all the home features you want. Try listing everything on a piece of paper, then choose the five “must-haves,” and the five “really-wants.”

For more tips, as well as advice geared specifically to your situation, connect with an experienced Windermere Real Estate agent by clicking here.

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5 Deal Breakers that can blindside home buyers

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dicePurchasing a home can be a complex endeavor for even the most well prepared home buyer.  You’ve diligently saved for your down payment, followed the market, researched agents and now you are ready to make an offer on your dream home.  Don’t let these 5 “Deal Breakers” come between you and your new home.

  1. Big Purchases on Credit. It is tempting to buy the furniture for your new home or a new car for the garage before the sale closes. Take care if you are making these purchases on credit. Large purchases on credit can have a major impact on your credit profile which effects your mortgage application. It’s a better plan to wait until after closing or pay cash for these transactions or you may be putting that furniture in a different living room than you originally picked them out for.
  2. Overpaying. Before your bank will approve your mortgage they will appraise the home you are purchasing.  If they feel you are overpaying they are likely to decline your mortgage application. If you find yourself in this situation consult with your agent on renegotiating your offer to be more in line with the bank’s appraised value.
  3. Purchasing too close to Foreclosure. If you are making an offer on a house which is facing foreclosure be sure to have a closing date set before the foreclosure date. Have your agent work with the lender to structure closing before the house goes back to the bank and into foreclosure.
  4. IRS liens. You’ve heard the old saying “Death and Taxes”.  Back taxes and liens can derail your attempts to get financing for a mortgage so be sure to have your books in order before filing your loan application.
  5. Comprehensive Loss Underwriting Exchange (CLUE). CLUE is a data base of insurance claims for both people and property.  Your home insurance rates are determined by the information about you and the property you plan to purchase which is contained in this report. Past claims for water damage, falling trees and even dog bites from present and past owners can multiply your insurance rates. Consult your agent about the CLUE report for your future home as soon as possible once your home purchase offer is accepted.

When purchasing a home there will be challenges which you can plan for and the unexpected hurdles.  By educating yourself as a consumer and choosing a well trained real estate agent you can avoid many of the pitfalls of 21st century home ownership.

What about you? Tell us if you have had any “deal breaker” experiences.

The post 5 Deal Breakers that can blindside home buyers appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.