Should the $8,000 tax credit be extended? Should everyone just calm down already and stop writing and talking so much about the tax credit. Yes, and yes. I’ve written about it previously, and this likely won’t be the last time.
Why?
Well, in a world of bad real estate news free money! always cheers people up. Is it the right thing to do? I’m really not sure. I know that I’ve come out in favor of it in earlier posts and I still do like the idea because I can see the effect it has had on some “on-the-fence-buyers”. Enough to get them off the fence and writing on a home.
But honestly, if an $8,000 tax credit is your only reason for buying a home,then…maybe it’s not the best idea for you right now. Home ownership is an expensive commitment, and you had better have more reason than Uncle Sam’s 8k to jump in.
I recently wrote a bit about the new Boulder house size regulations and how an organization called Leave My Home Alone has formed to oppose the recently enacted rule.
I do hope this organization has some luck in their endeavors. That said, I wanted to acknowledge the spirit of the rule in regards to keeping so called “McMansions” from sprouting up all over Boulder. I understand the good intentions of the rule. I do. And even though I don’t agree with it, I do think that the City Council had good intentions when drafting it.
The main issue I have with the rule is that it was enacted by a small group of 5 City Councilmen, and was not put to a vote to Boulder residents. Boulder is home to some pretty bright folks, and I’m certain they have the brain power to digest the details and decide for themselves.
In the land of the broke, the one-nickle man is king. Let me start by stating the obvious: I may be wrong. My opinion doesn’t really mean anything. It’s just my opinion. And I’m not brilliant, just average intelligence at best. But it seems painfully obvious to me that if you encourage a new round of first-time home buyers to jump in to the real estate game when they don’t even have enough for a down payment, then you’re just asking for trouble.
This is pretty much what the current administration is doing by creating this “fake” bond market. I’ve mentioned earlier how the housing collapse took this bond market with it. It just disappeared…there was no longer a bond market where investors bought and sold mortgage-backed securities. Makes sense, right? If those securities are worthless, then who is going to buy them. Well, you are. And me. We are buying them.
The Federal Government is jumping back into the mortgage security game and plans on buying up Fannie and Freddie assets backed by state bonds in order to finance loans to first time home buyers. Part of program also helps people with BAD loans get refinancing. I’m not opposed to that at all, in fact that seems like a good idea to me. If you can take someone from an arm loan that adjusted to 12% to a fixed loan at 5% and they can avoid foreclosure, then great! I’m all for it.
My problem with this program is that it appears that we haven’t learned anything from our recent mistakes. Wouldn’t it be great if everyone could afford a home? Sure, that sounds really nice. Maybe even Utopian. But is that that case? Should we be messing around like this and continuing to encourage home ownership to people who just can’t afford it? What’s wrong with renting and saving for a down payment? I’m NOT talking about saving for a 20% down payment, no. The current FHA minimum down payment is only 3.5%. Just three and a half percent. That’s $7,000 down for a $200,000 home. Doesn’t it seem reasonable to expect a potential home owner to come up with 3.5%? And if they can’t, then that’s ok. It doesn’t mean your a bad person if you need to rent for a while in order to SAVE up that 3.5%. I’ve rented for more of my adult life than I’ve owned a home. I’m a decent guy, not some sort of miscreant.
Rent does not equal Bad. Ownership does not equal good. Let your reality dictate whether you rent or own. RESPONSIBLE home ownership is a great thing. Responsible renting is also a good thing, especially if it affords you the opportunity to SAVE some money.
One of the big debates in the City of Boulder has to do with the proposed “pops and scrapes” ordinance which will limit structure size in Boulder. This issue has been debated and detailed in many other blogs and news sites around town, so I won’t bore you with all the details. But basically, City Council wants to limit what Boulder homeowners can do with their own property. It’s not known as The People’s Republic of Boulder for no reason…
Now, in theory, this sounds fine. Who wants to wake up one morning and as Councilman Macon Cowles says, “find the Queen Mary parked next to their house?”. But the problem is that there are only about 100 6,000+ square foot homes in Boulder. And the council is aiming its actions at “preserving” neighborhoods/structures in the 1200-2000 square foot range. Those are they guys they’re protecting. But…
Listen to this interview on CPR Colorado Matters between homeowner Warren Hultquist and councilman Macon Cowles. In it, Hultquist points out that he simply wants to make an addition in order to access his basement square footage, and that his home is in the neighborhood of the 1200-2000 square foot range mentioned above. But this new ordinance would prohibit him from making such modest additions.
The part that just rubs me the wrong way about Macon Cowles’ championing of the new size limit ordinance is this: councilman Cowles lives in a 4,800 square foot home. That’s a huge home for Boulder. A huge home. Does anything about this rub you the wrong way?
Furthermore, the City Council is opposed to the idea of putting any such ordinance to a general vote because, as council member Macon Cowles says in the attached interview, the issue is too complex for laypeople to understand. Hmmmm…
I’d encourage Boulder residents to visit the website Leave My Home Alone when they have a moment. This is taken from the LMHA position statement on their website:
“The Proposed Regulations are Anti-Family and Unfair
The proposed regulations are anti-family and would unfairly restrict the right of Boulder citizens to build additions to or remodel their homes and unfairly decrease property values, thereby effectively snuffing out the hopes, plans, and dreams of people living and working in Boulder. The proposed regulations are a “one-size fits all” approach that goes too far and would prohibit many types of appropriate additions and remodels. The proposed regulations would have a disproportionate impact on relatively modest neighborhoods like Martin Acres, Aurora 7, West Highlands and Columbine. If families can’t grow in their homes, they will move elsewhere, thereby exacerbating the loss of families with children in Boulder and the declining enrollment in Boulder’s schools.”
Fair warning to all Boulder residents: you need to inform yourselves and voice your concerns to your City Council!
Uncle Sam is indicating that he’d like to use a few of our tax dollars to finance billions in loans. Great. Now, I’m all for the current $8,000.00 tax credit as I’ve seen first hand benefits for buyers I’ve been working with in the Denver and Boulder markets. But this is a much different creature.
The program I’m referring to is the one announced today by the Obama Administration whereby the Federal Government will become the new buyer in the previously evaporated mortgage-backed security market, thus allowing state agencies to fund millions of mortgages. What? Basically, when the economy and housing market imploded last year the bond market for mortgage backed securities disappeared. This caused various HFA’s (housing finance agencies) to cease giving loans or raise rates considerably. So now Uncle Sam is Subprime Sammy!, your mortgage backed security expert and buyer extraordinaire.
All kidding aside- how is the potential of this program any different than what subprime lenders did over the last decade or so to “encourage” first time buyers to jump into the market? Aren’t we currently living through the aftermath of the collapse of just such a program?
Part of this program would allow first-time buyers to use the future $8,000 tax credit as part of their down payment. Another bad idea. This means that this new round of buyers will have the same amount of skin in the game as the subprime borrowers who got 100% financing in 2003. None. So there is no incentive to stay in the game, and we might as well look forward to another massive wave of foreclosures 3-5 years from now when some of these new homeowners realize that this is not their cup of tea.
I’m all for helping first-time buyers…we do it all the time at Real-a-Save. But if a potential buyer has ZERO dollars, then maybe, just maybe, they’re NOT a potential buyer after all. FHA loans require 3.5% down right now. That’s a pretty darn good deal. Why are we looking for ways to require zero down? Isn’t that exactly what got us here in the first place?
Email bob@realasave.com if you have any real estate questions, or if you would like to know about our Colorado commission rebate program. And no, you cannot use a commission rebate towards your down payment;-)
We’re looking for some new agents in the Fort Collins, Colorado area. If you or one of your friends or family members would like to join the Real-a-Save team then please email us at bob@realasave.com, or simply call 303-415-2541.
Experience: you’ll close a higher volume of deals, and will gain more experience, thus becoming a better agent. Period. There’s really no faking experience.
Best technology and tools: maybe you’re an agent who is not up to date on things like digital signatures, blogging, social media, electronic contracts, virtual offices. We’ll show you how to use these tools in ways that your clients will love and you’ll appreciate.
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Systems: we’ll train you on the best client management systems, blogging, work-flow, and advertising.
Real-a-Save is a great company- sure, I’m biased because I own the company, but I really believe in what I’m doing. I love coming in to work- which is much more than I can say about my time in a traditional real estate company. The traditional company is set up to benefit the Brokerage. That’s it. The brokerage employs as many Broker Associates as possible (reminiscent of “Boiler Room“) and hopes that a few of them will pan out. They charge lopsided splits of up to 50% or more. Then there’s the whole “administrative fee”…but I’ve already written about that one and it’s a total joke. Not here. You’ll keep at least 90% of what you earn, and there’s no “administrative fee”.
So pass along this post if you’ve got a friend who works the Fort Collins real estate market, or just tell them to email me at bob@realasave.com. And remember that we’ve got the best Colorado rebate program around where home buyers receive 50% of our commission, see www.realasave.com for more details.
Yes, the sky has fallen. Agreed, the real estate market has been rocked over the past year and a half. Yes, the economy sucks. Yes, it’s completely annoying to hear another tool-box Realtor telling you how GREAT! everything is and WHAT A WONDERFUL TIME IT IS TO BUY!. I’m embarrassed by some of my esteemed colleagues, and completely annoyed by the NAR advertising campaign telling us how GREAT! things are. Puke.
The truth is wrapped in an old cliche: all real estate is local. Maybe it is a great time to buy. Maybe it’s an awful time to buy and you should just keep renting. It all depends on where you live and where you’re looking to buy. Sounds obvious, right?
Colorado has been hit hard, really hard, by the real estate downturn. But there are areas of relative strength. Louisville, Colorado is one of them. It doesn’t hurt that Louisville keeps getting mentioned by Money Magazine as the best place to live. It also doesn’t hurt that it’s a great little town with a lot going for it. But there are a lot of great little towns with a lot going for them that are AWFUL places to buy right now. What sets this one apart?
Conoco Phillips just purchased an office campus a few minutes from Louisville in the Northwest corridor between Denver and Boulder. There are future jobs. They’re building an office tower. Future jobs. IBM, Sun Microsystems,WhiteWave Foods, and Amgen (just to name a few) are some of the big companies just a stone’s throw from Louisville.
But really, the proof is in the pudding. There were 21 sales in Louisville in the last 30 days where the sellers got almost 98% of list price. Anecdotal point: every time we represent a buyer in Louisville it seems that we’re in a competing offer situation; the last home we sold in Louisville was on the market for one weekend before we had 2 offers. Louisville is a good place to buy. Period. Great lifestyle, Boulder Valley Schools, lots of technology jobs.
No kidding.
Check out all the Louisville, Colorado homes for sale on this map search link. And email bob@realasave.com if you have any Denver, Boulder, or Louisville, real estate questions. And remember that we rebate 50% of our commission back to you in our Colorado rebate program.
You’ve got a contract on your home and you’ve just sailed through inspections without a hitch. All’s well, right? Maybe.
It used to be that once you get through inspections it was all downhill from there. Closing is just around the corner and unless the buyer decides to bail on the contract then the property should close (Incidentally, buyers are really in charge and have lots of protection in Colorado. More on that another time ). But with the way that the lending industry is reacting, and often overreacting, to the recent housing meltdown, there is a new hurdle that’s often more treacherous than inspection: The Appraisal.
I have no problem with an honest, experienced, reliable appraiser doing his or her job and placing a proper value on a home. And if that value is less than the contract price then so be it. Appraisers serve a very important function in the real estate world. And honestly, if there were more rigorous appraisals in years past then maybe we would have had the severe run up in housing prices we saw over the last decade or so…that’s debatable, but an interesting issue none the less.
The problem I have with the way that appraisals are currently done is that we are getting inexperienced appraisers who are often NOT familiar with the neighborhood trends and micro-market they’re working in. Does this sound like typical BS from a Realtor who just wants the deal to close? Sure, I understand skepticism like that. But all real estate IS local. And you truly need to understand how pricing works from one city and one neighborhood to the next if you’re going to put a proper value on a place.
What to do? Well, since there’s really no way for sellers to change appraisal laws/rules and force lenders to hire experienced, impartial, LOCAL appraisers, then we have to do the next best thing: make sure you have pricing support IN HAND at every moment when your home is for sale. Sounds obvious, right? Well, not to everyone. Maybe you’ve had your home listed for 9 months and you started out at $350k, and dropped to $345k a few weeks ago. You remember the comps from 9 months ago and they clearly supported a price of 345-350k, so you priced on the high side (which is not the best tactic anyway…). But it’s quite possible that the market has dropped significantly since then. And when an appraiser comes to value your home they’re only going to be interested in the last 3 months of sold comps. And there had better be about 3 of them.
So be sure you are constantly updating your sold comps as you sit on the market. Numbers don’t lie. If home values are dropping significantly in your area then it’s best to SET the market then to chase the market. Price just under what the numbers support, generate some interest and get your place sold.
Remember that www.realasave.com can help you save lots of cash on commissions with our Colorado commission rebate program and flat-fee listing service, so email bob@realasave.com for more info.
Real-a-Save is a full-service, licensed Colorado real estate company. We offer services to both buyers and sellers.
We feel it’s very important for home buyers to have someone on their side when negotiating a contract, and so we offer exclusive Buyer’s Agency. Many buyers just want to be left alone at the start of their home search- and that’s fine. The Internet has certainly put a ton of information at the savvy buyer’s feet. But when you are ready to look at a home, or if you have some questions about a particular property, then that is the time to give us a call and let us help.
It’s best for buyers not to simply start calling random real estate agents and asking questions. The listing agent is trying to sell that lovely Denver condo that you fell in love with. And his/her job and loyalty is clearly on the side of the seller. So it seems wise that you have someone on your side.
Let us be on your side. No only will you be hiring a local Realtor with tons of experience, but you’ll also receive significant savings from our Colorado Commission rebate program. We basically split our paycheck for you. Sound too good to be true? Well, the US Department of Justice supports companies like Real-a-Save. Just take a look at what the US DOJ has to say about rebate real estate companies like ours.
For more information about our commission rebate program and how you can receive 50% of our commission, you can email bob@realasave.com, or simply go to our website at www.realasave.com and join the scores of Denver/Boulder real estate consumers who have taken advantage of the great savings we offer.
If you’re a first-time home buyer here in the Colorado Front Range region you should have someone on your side. Whether it’s Real-a-Save or some other agent, or even a lawyer, it really doesn’t matter. The main point is that you should have someone who is representing your best interests.
Many home buyers start their home search by calling listing agents directly. Now, that’s fine if you plan on using that particular listing agent as your representative, but maybe not so fine if you plan on having a Buyer’s Agent represent you. If it’s your intention to use Real-a-Save, or some other real estate company as your agent then it may be best if you direct all information requests and especially showing requests through your agent and NOT through the listing agent.
Just out of courtesy, it’s advisable not to waste the listing agent’s time. But you also want to avoid raising the specter of Procuring Cause. Procuring Cause is a sticky issue in real estate and one that cause many a mediation session between Realtors. When an agent claims procuring cause they’re basically saying that they’re the reason you bought the house. Some listing agents have tried to claim procuring cause when they’ve opened doors for a buyer (like you) and then that buyer later comes back with their own agent to make an offer. Personally, I think this is a ridiculous practice and those listing agents should be ashamed of themselves for this level of greed.
Be very careful when you begin your home search. Feel free to email bob@realasave.com if you have any questions about Buyer’s Agency.
