In a current episode of "Buy Me!" on HGTV, the homeowners fell into a vicious trap.  They saw their dream home and bought it without selling their current home first.  The home they were living in had significant maintenance issues that should have been addressed prior to putting it on the market, but weren't, because their agent (also their friend -- their first mistake).  didn't advise them about the dangers of putting a home on the market in its run-down condition. 

I've only written one paragraph and already we see two BIG mistakes:

• Hiring a friend to represent them, and making the contract long-term
• Buying a home before selling their own, which put them in the position of having to make TWO mortgage payments

First, make sure you have a clear understanding -- not what your friend/agent tells you -- about how long it will take to sell your house in its current condition, and how much it would take to fix major repairs that most buyers will not want to pay to undertake.  Demand market data. 

First, a disclaimer.  I'm an Exclusive Buyer's Agent.  I never take listings.  But I DO know the market and how to sell a home properly.  And I DO know what buyers think, and most likely what they'll do in this kind of a situation.  They WON'T pay for repairs you should have made.  Or if they do make an offer on your house, the offer will be discounted according to what they estimate the repairs will cost them to make.

So, either make the repairs yourself.  Or advertise it as a fixer-upper, sold as is.  But if you do that, price your house close to what it will likely sell for in a reasonable amount of time.

Every home has three asking prices:  a 30-day price (current market price), a 60-day price (a little higher), and a 12 month price (even higher).  If you want to sell it fast, PRICE IT RIGHT!!  If you price it too high, then you've made the classic mistake of having a tired listing languishing on the market long after the initial excitement your home made when it was first listed.  But if you price it within a few thousand of what it should realistically sell for, then you stand a good chance of selling it when you need to.  And make your agent show you the data for what comparable homes in your area have sold for over the last 6 months.  And, don't flinch when your agent gives you his or her realistic view of what needs to be done to sell the house!

Which comes to why you should rarely use a friend to help you sell your house (or buy another one, for that matter).  You don't know whether your friend has enough or the right kind of experience to take on what will be the biggest financial transaction of most people's lives!  If your friend has a solid reputation for being a great agent, knowledgeable about YOUR neighborhood, familiar with all the latest techniques used to sell a home fast, AND if your friend is willing to give you a listing contract that will allow both of you to cancel it with reasonable notice if it doesn't work out the way you hope, then fine, use your friend.  But if your friend doesn't possess all those good qualities a good real estate agent should have, then DON'T hire him or her to sell your house.

What should you do to find a good real estate agent to help you sell your house?  First, don't just open up the Yellow Pages, point and choose.  Don't just go online and look for an agent serving your neighborhood.  Ask your friends, your co-workers, your family members who they've used and if they've been satisfied with the work their agent has done for them.  Hopefully, that'll yield you a few names.  If you can't find someone that way, then go online, but AVOID LIKE THE PLAGUE THE FOLLOWING:

• Any site that looks to be a large commercial "find your agent here" type of website.  A few are HomeGain, Just Listed, HouseValues.  Many of these lead aggregators buy ads at the top of the search engine list.  You'll see them, they say "Sponsored."  Or they may be ads down the right side of the search engine page.  Those ads are largely purchased by large companies who want to gather up your name and phone number and sell them to the highest bidder, the agent who will pay the most.  Do you have any assurance that the agent you'll find this way is any good??  No.  Even though they may say the agents used are screened, check a little further and you'll see that their only qualifications (in order to be included in the referral site) are $$$!  They farm out these leads to agents in their system who are willing to pay the lead aggregator up to about 35% of their commission!  Does that make the agent a GOOD real estate agent?  Not necessarily, just one who's willing to give up part of their commission to be given a lead.
• The ads running down the side of the page are PAID advertising for whoever wants to bid the most for the first through fifth places from the top, which are the most desirable placements for all the search engines.  Why isn't this the best way to find someone to represent you?  Because until you call them and interview them as you would anyone you want to be able to trust handling a large financial transaction, you won't know anything about them.  And they WILL sell you on their services, but may not be able to provide the kind of service you need.  A well-design web site does NOT guarantee that the brokerage or agent on the other end will work to serve YOUR best interests!

So how DO you find a good agent who you'll be able to trust to do the very best job for you??  You CAN go online, plug in your neighborhood's name and your city and state name, and then the term "realtor" or "listing agent" or "real estate agent" and take a good look at the sites that come up.  First, does it have a place where you can check out client testimonials or client references?  If not, go on to the next.  If it does have a place like that, then check out some other things.

• Is there a place where you can ask for a Comparative Market Analysis (a CMA)?
• Does the agent seem to have specific knowledge of your neighborhood, what's for sale there now, what has sold there, etc.?
• Does the agent (or brokerage) have a presence in your neighborhood?  You can find out by looking around while you're out driving around.  Are there a lot of signs there from the brokerage you're looking at?

I have a good ariticle on the subject just for the asking.  Post your request here and I'll send it to you.

Remodeling is predicted to continue at a heavy pace this year.  Why?  The home market is cooling and homeowners want to put a personal stamp on their homes.  They have equity, and lenders will hand over upwards of $200 billion this year to help homeowners personalize their homes.

But how much personalizing is a good idea?  All REALTORS(R) have seen remodeling "botches," the kind of thing that doesn't help a home sell when it's put on the market.

I saw one recently where the homeowners had put an addition onto the back of their house, even though the back yard just couldn't hold that much house and still look inviting.  What was left  was just a strip of grass around the addition.  It took up so much space that it looked massively OUT of place on the small 4620 square foot lot.

That's one example.  Another is a beautifully remodeled attic, but the homeowners didn't upgrade the steep stairs up TO the attic!  I don't know if they thought climbing steeply pitched stairs would appeal to everybody just to have an "up to the minute" attic bedroom.  My aching knees wouldn't have gone upstairs at all if I hadn't had to answer a question my clients had about the remodel.

Another mistake.  Making a kitchen (or any other room) over in a style only the owners could love.  I saw one recently that sported a "tropical" feel.  NOT in a kitchen!  Unless you plan to live there forever.

Homebuyers are looking for NEUTRAL!  Something they can put their own personal stamp on.  Yes, maybe they'll remodel their master to look like a tribute to Elvis, but YOU have to appeal to the "average" homebuyer when comes time for you to sell.  What to you may be a "funky" dining room, to a homebuyer screams "UGLY!" 

Make sure your remodeling project stays within the realm of what most homebuyers could go for, IF you plan to sell your house any time soon.  Paint it tropical flamingo if you will, but plan on painting it a warm neutral color before you put it on the market.  AND replace that lamp made out of melted down LP records!

A few days ago I wrote about the value in reverse mortgages.  But they're not for everybody.  You have to check the numbers.  See what you could do if you sold your home, moved into a rental or lower priced home, and invested your money in Treasury bills.  If you take out a reverse mortgage, automatically you'll lose 20% of your equity.  If you sell, you'll have access to 100% of it.  But there are cautions here too.  Check with a local real estate agent to see what your house is worth.  You don't want to do the figures if you don't have accurate data.  Also check out what it would cost to take out a reverse mortgage.  Significant costs may make you think twice. 

If you need the cash another iidea is to take out a home equity loan.  Of course, you'll have to make payments on it, which makes it significantly different from a reverse mortgage.

Check out all the options before doing anything that may jeopardize your retirement financial situation.

Realtor.com is a favorite place for homebuyers to look for homes (54% of buyers using the internet to find a house use the site), but it's not the best.  But the Denver MLS posts the following data.

Res Condo Income Land REALTOR.com 94.03% 94.29% 89.89% 89.72% REcolorado.com 94.61% 94.70% 91.89% 90.21% IDX 99.25% 99.16% 98.94% 97.33%

REColorado.com is the public Denver MLS site, but it still doesn't post all listings.  IDX (internet data eXchange) posts nearly all listed homes in the metro area.  My IDX home search function is available to anyone who wants to use it at Power Search.  If  you have any questions about how to use the feature, post a comment here.

Here's a link to a great article on real estate related tax deductions you can take, "Top 10 Tax Breaks, On the House" from Realty Times.

http://tinyurl.com/7gwj9

And after you've looked at that, check out Denver real estate market conditions here: 

http://tinyurl.com/dyzdb

If you're thinking about buying here's a short list of some things you shouldn't forget.

1. Don't forget to get preapproved before you look.  If you don't, and you find a place you love enough to make an offer, you run the risk of the seller not taking your offer seriously.  You may have to scramble to get preapproved while another offer with a preapproved buyer sails through.  The risk is losing your dream home.  And you'll need to know exactly how much you can afford.
2. If you want to make an offer, make it toward the end of the month if you plan to move at the end of the following month.  That way the seller won't have to wait for another month while you give notice (if you're renting).
3. Hire an Exclusive Buyer's Agent (EBA) to represent your best interests.  Don't rely on the Seller's agent to look out for you -- their fiduciary obligation is to get the highest price for the Seller.

If you have any other questions, post it here and I'll respond pronto!

If youre at least 62 and have equity in your home, you may be able to have your home equity pay you in the form of a reverse mortgage.  Even if youre still paying on your home mortgage, you may be eligible to apply for one of the most creative loans ever available.  The income from a reverse mortgage is tax free, which cant be said about a lot of investments. 

The income from a reverse mortgage can be used for anything, there are no restrictions.  You can use it for whatever needs you may have.  When do you pay it back?  When you move out of your house and its no longer considered your principal residence, whether you sell the home, you (or your surviving spouse) die, or whether you move into a nursing home or go to live with family members.  Where do you get the money?  Well, you could sell the home, or you could use other existing assets to pay off the mortgage (or both mortgages, if you still have your purchase money mortgage).

If you take the mortgage out as a home equity line of credit, you take out what you need when you need it.  You can also receive a fixed amount monthly, the amount being dependent on how much equity you have and your age at the time you take it out.  If you take it out as a lump sum, you have to spend it all in the first month you receive it in order for it to be completely tax-free, and it doesnt bump up your taxable income for Social Security or Medicare purposes. If you take out a lump sum, spend some of it and leave some of it in your checking (or savings) account, the amount you dont spend in the first month will be counted as a resource, and could affect Medicaid eligibility.  If Medicaid is a concern (and it may be, if youre thinking about nursing home care), you should probably consult a Medicaid specialist.

Before you can receive the funds from a reverse mortgage, youll be required to talk to a Reverse Mortgage Counselor.  The U. S. Department of Housing and Urban Development (HUD) provides a list of counseling agencies that you can consult for more information.  You can also consult AARP.  The counselors can answer all your questions about reverse mortgages.

The amount you receive can never be more than the equity in your home.  If you die, and the house is sold, the proceeds will first go to pay off the mortgage and the excess will go to your estate.

There are costs and risks to use this kind of loan, and if you still have a first mortgage the reverse mortgage will have to be considered the primary loan.  Closing costs apply, and may be higher than a purchase money mortgage.

If you're looking for a list of reverse mortgage lenders in the Denver area, check out http://tinyurl.com/oh9n3. 

There's a lot of talk about a "real estate bubble," and whether Denver will see a gradual cooling off or whether the bubble will actually burst, sending home values plunging.  That may be the quandary in the rest of the country, but in the Denver area we're NOT in a bubble at all.

Denver's fast-growing years were in the late '90's with homes experiencing double-digit increases in value.  But when the economy imploded, the Denver real estate market went through a "correction" period where inflated prices returned to normal, much to the chagrin of over-eager sellers who couldn't believe their homes wouldn't sell in a week with two or three offers coming in at the same time.

Good homes in good locations maintained a steady increase of 3-5% in the early 2000's and 5-6% in the last few years.  So don't believe everything you read.  News reports rarely tell you that the "bubble" is regional and isn't occurring everywhere.  Denver's still a great market for buyers, with a lot of inventory on hand and anxious sellers willing to make concessions to sell their homes.

For more info on the Denver market, give me a call at 303-587-3509.