Our Team and Services
Real estate agents and companies regularly encounter circumstances in which they are working directly with both the buyer and seller in the same transaction. This situation favors the agent because they can double their commission on a sale, but we know this creates serious conflicts of interest for them. Do they try to get the best price for the seller, or the buyer? If a serious problem comes up in the inspection, should they counsel the buyer to terminate the contract? Advising the buyer this way could risk the loss of the listing as well as a future commission if the seller had planned on buying another home with the agent. We never list homes because we are committed to representing the interests of our buyer clients completely and consistently, while minimizing conflicts of interest that would result from representing sellers at the same time.
- We are Exclusive Buyer Agents, which means that we have a level of commitment to representing buyers that few other agents have.
- We avoid many of the conflicts of interest inherent in the practice of trying to represent both buyers and sellers.
- We work as a team with each of our buyer clients. This means that you’ll have our support when you need it because one of us is always available. As a bonus, you’ll benefit from multiple points of view, instead of just one.
- Finally, we’ve developed a multi-layered, systematic approach to the buying process that provides you with better information to make critical decisions. Using this system, we dig deep to get you information on properties other buyers and their agents aren’t aware of, helping you to have a safe and satisfactory transaction.
Like other real estate agents, we get paid only when you close on the purchase of your home. If the home is listed with a seller’s agent, they will be offering a commission to the buyer’s agent. If we are working directly with the seller of an unlisted property, they will almost always agree to pay our commission. Since 1992, we’ve only had two cases where the seller refused to pay our commission.
We cover the city of Boulder as well as the other towns and cities in Boulder County, both in the plains and the mountains. We also work extensively in Broomfield, Westminster, Arvada, Northglenn, Thornton, Firestone, Frederick, Dacono, Erie, and Berthoud. If you’re looking elsewhere, we can probably help you find a good buyer agent in that area.
Norris Minick, the owner and managing broker of Agents for Home Buyers has had his broker’s license for over 25 years, and has been working full time representing home buyers the entire time. Lindsey, Claudia and Shannon have all worked in real estate for 10+ years as well. As a team, we have helped more than 1000 buyer clients through the process. For more information on the team’s background, education and experience, see Meet Our Team under The A4HB Difference.
Over the course of a typical home search, you’ll usually look at homes with all the agents on the team. When one of us is out looking at properties with you, someone else is back in the office handling the paperwork, setting up showings for the next day, or digging up information about the houses you’ve just seen. We work in a common office and meet daily to review what’s happening with our clients, so we’re up to speed on your situation and can help you out if you have questions. You’ll get better service during the home search and once you’re under contract, and you’ll get more than one perspective if tough questions arise. You’ll have access to all of our agents for the price of one.
Most of our clients take anywhere from one to six months to find a home. We have systems in place that help us work effectively with out of town buyers who want to find a home in a week or less, but the pressure to buy will come only from you and your situation…not from us. We’ll work patiently with you if you need the time. One client spent 9 1/2 years looking for the perfect home but we’ll scramble like mad if you’re under the gun. You are the quarterback. We are your team. And if you don’t end up buying, we’ll wish you luck and hope you’ll refer your friends because we’ve done our best for you.
We do this all the time, most commonly with past clients who need to buy new home but also need to sell the home we helped them buy. We can connect you with some of the best listing agents in your area. We have the experience to know who they are, and they’ll represent you on the sale of your home while we help you locate and buy the replacement. You can have the best representation on both ends of the transaction at no added cost. In addition, if you use an agent that we recommend, we will rebate any referral fee we are paid right back to you since we will already make a commission when you close on your purchase.
We can help with the purchase of any property. We have extensive experience working with home builders. We also do a lot of work with owners of unlisted properties, in part because we frequently mail to owners in neighborhoods and condo complexes to locate unlisted properties for our clients.
We can certainly help with the purchase of vacant land. This can be a very tricky endeavor if you are planning to build a home on the land, particularly in Boulder County. We do not have the knowledge or skills required to help with the purchase of commercial or industrial property.
Whenever possible, it’s best to start out with a face to face meeting where you can outline your goals and we can give you some in-depth information about the process and how we work. After meeting with us for an hour or two, you’ll know a lot more about the real estate market and the home buying process, and you’ll be able to make an informed decision about whether you’d like to work with us to buy a home. Call 303-448-8808 anytime to make an appointment.
Our office is open 8:30 am to 5pm Monday through Friday, but we’re frequently out of the office looking at properties with clients, attending inspections, and so on. If you’d like to meet with us, call or email to set up an appointment. Assuming we’re not already booked working with current clients, we can meet with you just about any time, weekdays, evenings or weekends.
We look at properties with clients weekdays, weekends and evenings, from about 8:00 am to around 7:00 pm. Since we work as a team, it’s pretty rare that there isn’t someone available to look at homes with you when you need to.
Usually, we start by plotting available properties matching your search criteria on street level maps so that you can see where they are. We plot the recent solds and under contract properties too. With a little diligence on your part in the first week or so, you can use this data to understand your niche in the market, defined by your search criteria. You will have a better picture than most buyers, and many real estate agents for that matter, who’ve worked in the area for decades. In the first week, you’ll know a lot about every neighborhood where there’s any realistic possibility of buying a desirable home, and you’ll know how many in those neighborhoods sell every month, how quickly they sell, and the difference between asking and selling prices.
Depending on market conditions, we often look at 20 to 80 homes with our typical buyer, over a 1- to 6-month search period. In most cases, we’ll look at 10 to 20 homes in the first couple of days of working with a client. By running through a lot of homes quickly in the first few days of your search, you’ll be able to supplement the information we provide you through our property mappings. You will develop a fairly complete picture of what types of homes are available to you and what they’ll cost in a given neighborhood or community. This gives you the knowledge base you need to make good judgments when you’re negotiating the price of a home or an inspection resolution.
After we complete an initial mapping of the homes that are on the market when you start your search, we’ll update you every morning on listings that have just hit the market and those that have just dropped into your price range. To give you a complete picture of what’s happening in your niche of the market, we’ll also update you when any of these homes have gone under contract, have been taken off the market, or have sold.
We subscribe to both local MLS systems where homes for sale are listed in the areas we cover. We work hard to make sure that we’re seeing every relevant home in both systems. Once you’ve identified the neighborhoods or townhome/condo complexes where you’d really like to buy, we routinely mail to homeowners in these areas to find unlisted properties that may be offered for sale.
Throughout the purchase process, you are in the driver’s seat and you’re the one who makes all the final decisions. With very few exceptions, we will draft the offer and review it with you, explaining the terms of the contract and the timing of key events. We’ll also help you understand the market value of the property and take the lead in negotiations with the seller or the listing agent on your behalf.
Once you’re under contract, you’ll have the right to have inspections of the physical condition of the property and to evaluate many other aspects of the property. We work as your support team throughout this process, arranging the inspections and advising you whenever issues arise.
The most important work we do relating to the closing happens in the weeks prior to closing day. We work diligently to facilitate communication between the buyer, seller/listing agent, lender and title company to ensure that the closing itself is a relatively dull affair. We will be there with you when the papers are signed to advise you if you need it and congratulate you when it’s done.
What’s a Buyer Agent?
No, but a good agent can take a large part of the work load off your back and help you avoid mistakes that can have costly results. We can locate properties that you normally wouldn’t know about and lead you through a home buying process that can be very complex. You’ll also avoid the hassle of having to call and talk to dozens of listing agents to look at the homes they have listed. Less work, better results, less hassle…and the seller or listing company routinely pays the buyer agent’s commission.
You can, but you’ll quickly find that many of the homes you call on are already under contract or have sold. Much of the information you’ll find on the Internet is either dated or intentionally misleading. You’ll also be missing out on a lot of information that any competent buyer agent has at their fingertips. Agents can quickly pull up the history of pricing changes on any listed property, the history of prior sales and prior contracts, information on what the seller paid for the property, and data on the amount of the mortgage loans the seller has taken out against it.
They certainly would like to, but remember, they aren’t working for you. Their listing contract with the seller obligates them to represent the interests of the seller, which means it obligates them to ignore your interests when your interests and those of the seller are in conflict. If you were involved in a court case where the stakes were high enough to ruin you financially, would you rely on the advice of your opponent’s attorney? Why would you do that when you’re buying a house, particularly when the seller is offering to pay for an agent to represent you?
When working with a buyer, a real estate agent should help you understand the purchase process and help you through it. This would include helping to locate properties, setting up showings so you can see the properties, draft an offer, handle inspections, and help you though the closing process.
With very few exceptions, the seller pays the buyer’s agent, either directly or indirectly through the listing company hired to market their property. When a seller lists a property for sale, they negotiate a contract with the listing company that specifies a commission (typically 4%-6% in our area), a portion of which is designated to be paid to the agent who brings the the buyer. If the buyer doesn’t have an agent assisting them, the contract usually specifies that the listing company retains the full 4%-6% commission so there is no financial advantage to going it alone.
Under Colorado law, an agent can work with a buyer under either of two legal relationships. These are called “transaction brokerage” or “buyer agency.” Working as a transaction broker, an agent is required to act with absolute neutrality between the buyer and seller. In fact, a transaction broker is expressly prohibited under Colorado law from doing anything that could be construed as advocating “for the interests of any party to such transaction.” Thus, if they know about any negative aspects of the property or risks in the contract, they are prohibited from telling the buyer. This same agent working with the buyer under an agency relationship would be required by law to tell the buyer these things, and would be legally liable for failure to do so.
In the standard Colorado buyer agency agreement, it specifies that a buyer agent must (and a transaction broker must not): (1) promote the interests of the buyer, (2) seek a price and terms that are acceptable to the buyer, and (3) counsel the buyer regarding any material benefits or risks of a transaction actually known to the agent.
Under Colorado law, if you don’t sign a buyer agency agreement with the real estate agent who is helping you find a home, that agent must act as a “transaction broker” rather than a buyer agent. This means that they are prohibited from working to protect your interests in the transaction. By law, the only way to overcome this default position is to sign a buyer agency agreement, which makes it clear that your agent is accepting the legal responsibility for representing your interests in helping you locate and purchase a home. You can, in fact, sign an agreement to work with an agent under a transaction broker relationship, but you gain nothing by signing such an agreement and you may assume some serious obligations by doing so.
Under the standard Colorado buyer agency agreement, you may be committing to work with a specific agent over an extended period of time. The contract may also obligate you to pay all or part of that agent’s commission. At Agents for Home Buyers, we modify the standard agreement to allow our clients to terminate the agreement at any time. We also add clauses that strictly limit the buyer’s obligation to us and make those limited circumstances crystal clear. No gray areas. No surprises.
In Colorado, any agent can work with a buyer as a transaction broker or buyer’s agent. Exclusive Buyer’s Agents (EBAs) are truly committed to representing the interests of buyers, so we always work as buyer agents, never as transaction brokers and never as listing agents. Conflicts of interest are inherent in offices where agents represent both buyers and sellers. Exclusive Buyer’s Agents work in offices where all the agents are committed to representing buyers only. No agent in an EBA office will list properties for sale, or represent home sellers.
Our Local Real Estate Market
There are enclaves of both expensive and affordable homes throughout our market area. Prices are generally highest in west Boulder, dropping as you move from west to east within Boulder, and continuing to drop as you move out of Boulder to nearby communities. If you look at our pricing charts under the Market Data tab you’ll see that homes in east Boulder neighborhoods tend to sell for about 75% of what those in west Boulder neighborhoods do. Homes in nearby Gunbarrel, Louisville, and Superior sell for 65-70% of the prices of Boulder homes. Homes in Lafayette and Erie sell for about 55% and those in Longmont, Arvada, Broomfield and Westminster sell for about 45% of comparable Boulder homes. A twenty-minute drive gets you a home for less than half the price. Prices drop still more if you drive 30-40 minutes east of Boulder to communities like Thornton on the east side of I-25.
Homes in the rural and foothill areas within 15-20 minutes of Boulder tend to sell for prices comparable to those of Boulder’s most expensive neighborhoods. Many people move to the area with a dream of living in the foothills or of having an acre or two with horses on the plains near Boulder. This inevitably puts a lot of pressure on the available housing, which is very limited in these rural areas, in part, because the local cities and counties have purchased much of the undeveloped land as public open space. State and county regulations also place very strict limits on the rights of private landowners to build housing on the land they own. Strong demand and tight supply leads to very high prices.
If you drive 30-45 minutes west of the city of Boulder into the high mountains of Boulder County, you’ll find prices comparable to those you’d find for Lafayette, roughly 50-55% of those you’d find in Boulder. If you drive a bit south to Gilpin County, you’ll find pricing similar to what you find in Longmont or Arvada, roughly 45% or so of Boulder prices. With altitudes of 8,000 to 10,000 feet, you’ll also find an entirely different climate in these high mountain areas. To find comparably lower prices in the rural plains areas, you’ll generally have to drive 30 minutes to an hour east to find more affordable rural properties in the plains area.
While the construction costs involved in building a home in Boulder County aren’t dramatically higher than other local areas, the high cost of a building lot in Boulder County (if you can find one) will generally push the price of a custom built home well beyond what you’d pay for an existing home in the same area. Most of the towns in Boulder County are at or near build out. There are very few legal building lots available, which puts a high price premium on the few that exist. And in the mountain and rural areas, regulations prohibit subdividing land into parcels of less than 35 aces. This means that the few building lots that exist sell for roughly what 35 acres would sell for, since both represent a single building lot. To find affordable building lots, you need to look in the same areas where you’ll find affordable homes, that is, 30-45 minutes west to the high mountains or to the plains east of I-25.
It’s commonly suggested that the months of November and December are the best time to buy a home. Since there typically aren’t many buyers in the market during “the holidays.” The idea is that you’re more likely to find a seller who is desperate to sell and willing to drop their price. While plausible, this argument overlooks two factors. First, there are not only fewer buyers in the market in November and December, but fewer properties listed by sellers. Buyers who want to contract on a home in November/December can get at least as desperate as the sellers who have their homes on the market. Second, most sellers anticipate that more buyers will be looking actively in January and February. Since there are very few sellers who can’t hold out for a month or two if they think the market will pick up, the panicked November/December seller is not as common as you might think. To the extent that market dynamics influence your decision on “the best time of year to buy,” we would suggest buying when lot of sellers are putting their homes on the market which is in the spring and summer months. While there may be lots of competition from other buyers, the larger selection will give you a better chance of finding a home that fits your needs and desires well. However, in a hot market, as the one that we have had from 2013 to the present, when prices are going up 8-12% over a three to six month period, waiting to buy can be a huge disadvantage. If you were looking for a 600k house in December, by March, what was coming on the market at 600k, is not coming on the market for 630k-660k. You really need to buy when it makes sense for you to buy.
Most agents would tell you that more properties are listing in the late spring and summer than at other times of the year. They will also tell you that there is a dramatic drop off in new listings as the holidays approach in November and December. This is one case where the data actually support popular wisdom. Distributed equally over the year, about 8.3% of properties should be listed each month. For single family houses in Boulder County, only about 1/2 this number are listed in November and December, while in March, April, May, June and July 10% to 11% are listed each month. If you look at the data carefully, you’ll see that the same general pattern holds for condos and for houses in the mountains. However, there is a tendency for more condos to be listed in the early spring, while listings of mountain properties shift more to the late spring and early summer. More than 1/2 of all mountain listings are listed in April, May, June and July, when the snow is gone, the flowers are out, and the meadows are green. However, in 2013 through the present fewer homes have been listed for sale than ever before.
The charts in our Market Data section provide a history of price appreciate and depreciation in Boulder County and the Denver Metro area from 1984 to date as compared with that of the state of Colorado and the United States as a whole. Averaged over more than 25 years, these data show Boulder County appreciation rates averaging about 5.2% annually, while those of the Denver Metro area and the state of Colorado averaged about 4.4% and the US as a whole average about 4.2%. But the market experienced by buyers and sellers has been more interesting than that. The charts clearly show the bust in the Colorado real estate market in the late 1980s associated with the downturn in the oil and gas industry and extremely high interest rates. This was followed in the early 1990s by a sharp upturn in prices as interest rate dropped below 9% and the state’s economy picked up. From 1992 through 1995, prices increased by 10-15% on an annual basis, rates of increase that we saw again just a few years later from 1999 to 2001. Throughout this period, buyers were often competing in “multiple bid” situations for properties and were often under pressure to buy quickly to avoid price increases that seemed to occur on a monthly basis. Because we have a lot of high tech jobs in the area, our market took a hit from the bursting of the “dot.com” bubble in 2001 and appreciation rates have been below historical averages since 2001. They went back up in 2005 and 2006 slightly and then dropped during the recession, but have been on a steady uptick since 2013.
Not as often as you might think and the price reduction will probably be less as well. In our local market, the period from 1998-2001 was one of the hottest markets you’ll ever see, with appreciation rates running between 10% and 15 percent annually, until 2013 to the present. In contrast, from 2004-2007 our market was flat or appreciating at sub-normal rates, and from 2008-2010 our market was generally quite weak. Our charts under Market Data provide summary data on differentials between list prices and actual sale prices in Boulder and Longmont during these three periods. Most homes (80% to 90%) sold within 5% of asking price. But in the strongest market, 20-30% more homes sold at asking price or slightly above. In the weakest market, 10-15% more sold for 2-5% under asking price and 8-10-% more sold for 6-10% under asking price. While many buyers negotiated more off the asking price in the slow market than in the hot one, it looks like the additional amount was generally small, only about 2%. The numbers of buyers negotiating more than 10% off the asking price doubled from the strong to the weak market, but the increase was from 1% to 2% in Longmont and from 2% to 4% in Boulder. Most buyers paid at or near the asking price from boom to bust.
The data (see Market Data) do indicate some increase in the seller’s price flexibility the longer the home is on the market. First, note that properties that went under contract within the first 2 weeks after listing were more likely to sell within 1% of the asking price. Thirty percent sold for asking price when the property went under contract in the first two weeks, about 10% more frequently than when the property had been on the market longer. However, consistent with our other data on this issue, most sellers hold out for a sale price within 5% of their asking price no matter how long their property is on the market before it sells. This includes just over 75% of those who had their property on the market for 6 months or more versus 85% of those whose houses took only 2-4 weeks to sell. Still, you are more likely to negotiate more than 5% off the asking price if the house has been on the market a while. Only 8% of sellers dropped the price this far if the offer came in the first two weeks, but 16% did when the property had been on the market for 1-2 months and almost 24% did when the property had been listed for 6 months or more. But again, few sellers dropped their price more than 10%. Only about 1% of sellers who got a contract within the first month dropped their price this much, but only 2-5% of sellers whose properties were on the market more than a month ever dropped their price more than 10% off the asking price.
Let’s try to answer this question by looking at the differential between asking price and sale price for the most expensive 25% of homes sold in various communities, as well as the cheapest 25%, and the 2nd and 3rd 25% in the middle. As illustrated in our Market Data charts, it looks a bit less likely that the seller will be demanding full price or more if you’re buying one of the more expensive homes in the community. Only 2% of buyers of the most expensive homes paid more than asking price in 2008-2010 vs. more than 7% who bought the least expensive homes. Once again, however, about 80-85%% of buyers either paid asking price (20-25%) or 2-5% under asking price (60%), irrespective of whether they were buying an expensive home or a cheap one. You will see that buyers of both the cheapest and most expensive homes were more successful than others in negotiating more than 5% off the asking price. In fact, if we dig into the data a bit, we find that the buyers of homes priced at the top 5% and bottom 5% of the market in each community accounted for about 65% of all sales where more than 20% was negotiated off the asking price and about 43% of all sales where more than 10% was negotiated off. This leaves only about 200 of the remaining 11,600 sales where the seller accepted an offer more than 10% off his asking price.
Our data tracking price appreciation over the past 20 years would strongly suggest that the highest priced areas in our market have also experienced the strongest price appreciation. Medium and small sized homes in the city of Boulder have appreciated about 250% over this time frame, where appreciation of similar homes in the nearby communities like Gunbarrel, Lafayette, Louisville and Superior has been closer to 175%. Further out, homes in Longmont, Erie, Arvada, Broomfield and Westminster have appreciated about 130%. Our neighborhood level data shows similar differences. Neighborhoods in west Boulder appreciated between 300% and 350% over this time frame, where neighborhoods in east Boulder tended to group in the 200% to 250% ballpark. In Longmont, prices appreciated about 200% in the old town neighborhood, while they tend to range between 100% and 150% elsewhere.
It is common to hear that smaller homes will tend appreciate faster than larger ones. Our data on appreciation rates of homes in the various communities we cover don’t provide clear support for this notion. It is also commonly assumed that buying a single family house will provide a better return on investment than buying a condo. Our data provides mixed feedback on this question. If you look at appreciation rates from 1991 through 2001, when our market was booming, condos appreciated more rapidly than single family homes in every community we cover. After the market slowed in 2002, however, condos did worse than houses in every community we cover. The net result from 2001 to 2010 was very mixed, with homes appreciating 15% to 25% more than condos in Boulder, Gunbarrel and Westminster, but with very mixed results in the other communities. Given these data, it appears the best course is to buy the type of property that makes the most sense for your needs, rather than trying to guess which type will appreciate more during your term of ownership.
If you take a look at our chart (see Market Data tab) tracking price appreciation/depreciation data for Boulder County, the Denver Metro area, Colorado and the United States from 1984 to date, you’ll see that our local housing markets have never really followed changes in the national market. And while our markets have certainly weakened in connection with the national market since 2007, our markets were still either flat or showing modest appreciation when the national market hit rates exceeding 8% depreciation in 2008. Moreover, our markets only began to drop below 1% depreciate rates in late 2009, just about the time the national trend began to shift from 8% to 1-2% percent rates. In fact, as illustrated by our stats on prices and price appreciation in our local communities, many of the communities and neighborhoods in our market have continued to appreciation in value throughout the recent national downturn. Much like the weather, real estate markets are impacted by broad seasonal and climactic changes, but they are highly localized.
Real estate markets are highly localized, so the fact that our local markets have never closely tracked the national market should be no surprise to anyone. With respect to the recent downturn in particular, it is important to understand that while many cities in the United States experienced an unprecedented increase in real estate prices in 2004 to 2006, creating a pricing “bubble” that burst in 2007 to 2009. If you look at the the New York Times summary of home pricing data based on the S&P/Case-Shiller index, you’ll see this boom and bust cycle in the pricing of cities like Las Vegas, Miami and Phoenix. These saw price increases in the 30-50% range in 2004 through 2005, followed by similar drops in 2007 to 2009. In contract, prices in cities like Dallas and Denver, were relatively flat from 2004 to 2006, a time frame that was followed by relatively flat prices with modest drops from 2007 to 2009. In general, the price increases for almost every city S&P/Case-Shiller data were mirrored by decreases on the same scale from 2007 to 2009. There was in fact a “bubble” in real estate prices in many US cities, but in many other cities this bubble neither existed nor burst.
Before prices in our market flattened out in late 2001, most sellers set their initial asking price by looking at recent sales of similar homes and setting their price near the top of that price range. Depending on how motivated the seller was to get the home sold, they would generally retain that asking price for 2 weeks to 2 months and then begin dropping the price in $5,000 to $10,000 (2% to 5%) increments every 2 weeks to 2 months until they began receiving serious offers. With each price drop, the seller was hoping to get an offer within $5,000 to $10,000 (2% to 5%) of asking price. Rather than accepting an offer $15,000 or $20,000 below asking price, a motivated seller would drop the price another $5,000 in hopes of finding another buyer. As a consequence, most homes sold within 2% to 5% of the asking price. However, in 2013 the market changed. In 2015, 2016 and 2017 it got even worse. Many homes were going under contract in less than 7 days and going for 10k-100k over asking. This was mostly due to the lack of inventory in our market.
The Home Buying Process
Most buyers will just be spinning their wheels until they take the time to sit down and talk with a real estate agent or two and a lender or two. You need to know what you can afford to buy and how much cash you will need to arrive at the monthly payment you want. You can learn a lot about this on the web, but it’s important to go through things with a knowledgeable loan officer if you really want to know what you’re doing. If you’re going to approach the home search and purchase process systematically and effectively, you need to talk with and agent who knows the market and how to help you through the process.
It’s important to talk with both to get a clear plan in place, but it’s best to start with the lender. Your initial conversation with a real estate agent will probably be more productive if you know what you can afford from the outset.
You can actually learn a lot by looking at our pricing stats on various home sizes in the communities we cover. To get a full picture of your place in the market, we will put together a comprehensive printout and mapping of homes matching your search criteria. While you can stumble into a good home by scanning the web or driving neighborhoods, this isn’t the most efficient or most effective approach to the home search process.
Any good agent will provide you with information on listed homes meeting your search criteria and can set up showings on potentially interesting homes. We go substantially beyond this basic level of assistance. Usually, we start by plotting available properties matching your search criteria on street level maps so that you can see where they are. We plot the recent solds and under contract properties too. With a little diligence on your part in the first week or so, you can use this data to understand your niche in the market, defined by your search criteria. Depending on market conditions, we often look at 20 to 80 homes with our typical buyer, over a 1- to 6-month search period.
Some states require that attorneys handle certain parts of the legal transaction. In other states, they are not required but given the complexities of drafting contracts and other legal documents, it is difficult to complete a home purchase without them. In Colorado, the Colorado Real Estate Commission has produced standardized contract forms that are used by real estate agents to negotiate and establish contracts for the purchase and sale of homes. As a consequence, attorneys play little or no role in most real estate sales in Colorado. This doesn’t mean that you shouldn’t have an attorney involved, however. Real estate agents generally have limited knowledge of the law and have very limited skills in contract drafting and interpretation. If you do decide to hire an attorney, make sure that they have expertise in real estate law and practice and make sure that your attorney and real estate agent have a clear understanding of how they will coordinate their work over the course of the purchase process.
There are a few pieces to this puzzle and it depends on what type of market you are working with. First, in a slower market we consider the current value of the home. We’ll pull up information on the sale prices of similar homes in the same neighborhood or community which, combined with the knowledge you’ve gained by looking at other similar homes, should give you a fairly clear picture of the market value of the home. Second, we consider strategic issues. If you’ve been looking for six months and this is the first home you’ve seen that you like, your kids need to be in school next month, and there are already multiple offers on the home, you may want to offer near the top of the market value range. We usually describe this as a price point where you would be OK winning the bidding war (as in no buyer’s remorse, or concerns you overpaid) and comfortable losing the bidding war (you gave your best offer with the best price and terms you could). If you’re an investor with a year to look and you’ve seen dozens of homes that would meet your needs, you may want to make a low ball offer and see what happens.
When you submit an offer to the seller in Colorado, it is typically accompanied by a check for several thousand dollars which is held by the listing or title company and forfeited if you default on the contract. Where you have a contractual right to terminate the contract, the earnest money should be returned to you. If all goes well and you get to closing, the earnest money is brought to closing and pays all or part of your down payment and/or closing costs. But if you just back out of the deal after all of your deadlines to properly terminate the contract have passed, the seller may keep your earnest money as compensation for you’re having failed to live up to the terms of your contractual agreements.
The standard Colorado purchase contract has evolved to be very buyer friendly in this respect. Though limited by strict deadlines, you will generally have the right to terminate the contract if you’re not satisfied with the results of an inspection of the property, if you can’t get a loan you’re happy with, if you can’t get insurance that’s satisfactory to you, or if you are unhappy with the HOA rules, fees or assessments.
In general, the seller has no right to terminate the contract once accepted, however, there is one exception under the standard Colorado contract. Primarily with FHA loans, the lender will sometimes require that certain repairs be completed on the home before closing. If the lender requires such repairs, the seller may have the right to terminate the contract.
With the seller’s permission, you could. The only time that this could make sense is in a really hot market. Let’s say a house hits the market on a Wednesday and the seller is going to look at offers on the following Monday. Having an inspection before writing an offer could potentially allow you to make an offer not contingent on an inspection, thus, making it more attractive. But this makes little sense under the terms of the Colorado contract, which allows you to terminate if you find anything unsatisfactory in your “sole subjective discretion.” Paying money to inspect the property before you know whether you and the seller can reach agreement on price, when you have an open ended right to terminate under the contract anyway is probably not worth the risk.
You WILL always find problems with the property if you hire a decent inspector. When you do, you have the right to terminate the contract if you desire. In most cases, however, you’ll submit a list of objections to the seller indicating what you’re not happy with and what you want them to repair or compensate you for. Once that objection is submitted, there is typically a negotiation process which ends in an agreement regarding what the seller will and won’t do. If you don’t reach agreement by a specified date, you have the right to either let the contract terminate or take the house “as is.”
We consistently recommend a video scoping of the main sewer line from the house to the street to make sure it is draining properly and a test of the radon (radioactive gas) levels in the home. We also strongly push for a meth screening. In the state of Colorado a house can be considered a meth lab if someone has smoked inside only a few times. To clear the house of meth can cost a whopping $20k-100k. That’s a bill that you do not want to get stuck with! Also, if the home is on a well and septic system, you’ll want to evaluate the quality and quantity of water you can expect it to provide. Beyond this, on a case by case basis, there may be other issues that you will want specialized inspectors to take look at. We will be here to advise you when the time comes.
Absolutely. Routinely, we look for any restrictions on the use of the property that you should know about, have an appraisal done to make sure that the property is worth what you’re paying, and make sure that you’re not assuming any debts that the current owner has. If the property is subject to a home owner’s association, we’ll look into the finances of the association and review the minutes of HOA meetings so that we’re aware of any important issues there.
If you’re getting a loan, your lender will require an appraisal of the value of the property to make sure that it is worth what you’re paying for it. If you’re not getting a loan, it’s up to you whether you have an appraisal done or not. If an appraisal is done and the appraiser indicates that the value is less than the purchase price you’ve agreed to, you’ll have the right to terminate the contract if you’d like. Appraisals generally cost between $350 and $450.
In Colorado, the seller routinely pays for what is called a “title insurance” policy on the property to cover the buyer. The title company will conduct a search of legal records related to the property and issue a title commitment. This commitment will disclose any restrictions on the use of the property and any debts that are owed against it. You’ll have the right to review this and to terminate the contract if there are problems that can’t be resolved. If you close on the property, the title company will insure your ownership of it under the terms disclosed in the commitment.
Under terms established by covenants (agreements) that were recorded when a neighborhood or condo complex was built, a home owners’ association (HOA) may have powers to set rules for the neighborhood. These include controlling alterations to homes or landscaping and assessing fees to maintain the neighborhood and/or the buildings. We you buy a home under the jurisdiction of an HOA, you’re effectively buying into a corporation which may have rules you don’t like and debts that you’re assuming partial responsibility for. We’ll routinely obtain the minutes of HOA meetings, their financial statements, and the rules, regulations and covenants which govern the association to make sure that you’re not buying into unknown problems.
Once you have found a home and made an offer, your lender can give you an estimate of how much money you’ll need to bring to closing. This estimate should be within a few hundred dollars of the actual amount you’ll need. If there is no loan, we can provide that estimate. Settlement statements, which provide a precise accounting of what you’ll have to bring to closing, are compiled by the title company in collaboration with the lender. You’ll generally have these final numbers 2 to 5 days prior to closing.
Except for the settlement statements outlining the fees and costs that they’ll have to pay at closing, most buyers never see the 2-4 inch stack of papers they are expected to sign until they are sitting at the closing table. While most of these are standardized documents that you’ll either have to sign “as is” or decline to buy the home, it is somewhat disturbing to be asked to sign 50-100 pages of documents that you haven’t had a chance to read. We push hard to get all documents to you several days prior to closing so that you have a chance to review them and ask questions.
The closing is generally held at the title company. If there is a loan involved, the lender will wire funds to them or bring a certified bank check. You will also bring a certified bank check for any additional funds required from you. A “closer” at the title company will work their way through a stack of papers, asking the buyer and/or seller to sign the appropriate documents and answering any questions about them. The agents for the buyer and seller are generally there. The loan officer is also sometimes there to address any questions on the loan documents. The signing generally takes about an hour. The seller is given a check for the proceeds of the sale. The buyer is given the keys to the house which they now own.
Lenders and Loans
To expedite the loan process, you should meet your lender with 1) social security numbers for both you and your spouse; 2) copies of your checking and savings statements for the past 6 months; 3) evidence of any other assets like bonds or stocks; 4) a recent paycheck stub; 5) a list of all credit card accounts and the amounts owed on each; 6) a list of account numbers and balances due on items such as car loans; and 7) copies of your last 2 years’ income tax statements. Depending on your lender, you may be asked for other information.
Discount points allow you to lower your interest rate. They are basically prepaid interest. Each point equals 1% of the loan.
When you apply for a mortgage, the government requires your lender to give you a “Good Faith Estimate” (GFE) within three days of your application. This document lays out all of the costs that come with the mortgage. We would recommend against committing to a loan before seeing it.
You will have your monthly utilities (the cost of these will depend on the size of the home and whether or not it is a condo or a single family home). In addition, you might have homeowners association or condo association dues. You will definitely have property taxes, and you may have city or county taxes. Taxes, however, are normally included in your mortgage payment.