The media is in full court press mode about the real estate market in Denver, and it's about time.  The Denver market has been the center of frustrating and confusing information about foreclosures.  The market is dropping in value, and everybody has a point of view of why that's so.

This morning's Rocky Mountain News discusses the kind of square footage included in descriptions of homes for sale and whether or not some misleading figures are contributing to the high foreclosure rate.  One of Denver's top real estate brokers, Sonja Leonard, argues that including finished square feet in the home's description gives a misleading picture of how big the home is.  In her market, which is in central Denver, basements don't count for much.  They're not the large professionally finished basements you can find in suburbia.  Other brokers who work in suburban markets say that professionally finished basements are common and ought to be included in total finished square footage.

The article suggests that people shouldn't buy homes they haven't seen.  Excuse me?  I know a lot of that happens with investment buying.  But people who want to relocate generally DO want to see the home they're buying before they move in.  In my ten years in real estate I can count on the fingers of one hand the number of clients who didn't see the home they were purchasing before they moved in.  And even in those few cases they trusted me to pick their home because I had extensive knowledge of what they wanted. 

Buyers need to exercise their own "due diligence" when buying a home.  If you have a competent agent, preferably an Exclusive Buyer's Agent who represents only your best interests, then that agent will provide you with all the information you need to make a responsible decision.  At the very least you should expect to know how long a home has been on the market, whether or not other offers have been made on the property during that time, what the current sellers paid for the home, how much they owe on it (as far as can be determined), whether the home is in pre-foreclosure, meaning the sellers are working with the bank to get it sold before it goes into foreclosure, or whether it's owned by a bank, meaning it has already been through the foreclosure process and now the bank owns it.  You need to know what's included in the purchase and what's not, the square footage of the main floor, the upper floor, and the basement, and whether or not the basement has been professionally finished, or whether it's a "homeowner's special" which may not be the best work.

Another article this morning, this time in the Denver Post, talks about homeowners who have adjustable rate mortgages (ARM) and whose payments are about to go up because interest rates have gone up.  The article cites one homeowner who refinanced several times to fund her business.  Now the rate increases are forcing her monthly mortgage payment to jump from what was affordable when she refinanced to an amount she can no longer afford to pay.  The mortgage industry has come in for its share of criticism about the way they push "exotic loans," loans that have the potential to force homeowners out of their homes when the payments become too steep to afford. 

But where's the criticism of the individual making decisions to continue refinancing with potentially escalating payments until they have no choice but to let their homes go into foreclosure?  Many homeowners treated their houses as "cash cows" during the period when rates were low and refinancing was easy.  But tomorrow always comes, and if they'd been paying attention and exercising their own "due diligence" they should have known that the sky might fall and prepare for it.

All these issues are reasons to suggest that potential home buyers should be choosing a real estate professional to represent them who's looking out for their best interests and who will honestly advise them about the home they want to buy and the loan they want to use to buy it.

"Caveat emptor," let the buyer beware.  There are many things to know when you make one of the the biggest purchases of a lifetime, so be a smart home-buyer.  Get the facts before you buy.