Posted On: July 24th, 2018 2:52PM
Last week, I read an article on how a generic credit score differs from the one mortgage lenders use and see. I also attended a small talk hosted by Fairway Bank regarding the buying power of the millennial generation and it got me thinking: do people really not know? Recent statistics on our beautiful city of Fort Collins show that we now have 164,207 individuals living here with a median age of 29.5. I can tell you that over the course of my real estate career, I’ve sold very few properties to 29 and a half year olds. I personally believe that a common misconception and a lack of education concerning one’s buying power may be plaguing our millennials. For a generation burdened by student debt, it is understandable that priority number one (for some) is putting those loans in the rear-view mirror. However. You realize that you can still buy a house with student debt, right? Keep reading for 3 tips to strengthen your buying power and discover the truth behind affording a home.
#1 Understand what your credit score is and isn’t. A simple truth about your credit score obtained from a third-party business (i.e. anything that isn’t TransUnion or Equifax) is an educational guess on what your credit score might be. While FICO credit scores range from 300 to 850, scores from credit bureaus range from 501 to 990. It’s obvious by looking at the numbers that there’s a pretty good chance that the credit score you think you have, you don’t. I’m sure some of you noticed that I didn’t list Experian, and that’s because they only release FICO credit scores to lenders. Go to annualcreditreport.com and and click “request yours now” Follow the prompts and the questions to access your free credit report. I’d recommend only selecting one (i.e either TransUnion OR Equifax, not both) so you can come back in 3-months and check again if you’d like. I believe the fee to access your FICO credit score is under $5. Most mortgage lenders will accept a credit score of 620 for traditional loans, and FHA lenders will typically accept a 580 credit score. So, what’s your real buying power look like?
#2 Understand what debt is and isn’t. Say you bring two individuals into a mortgage lenders office. You tell the mortgage lender that person A is fresh out of college, $80,000 in student debt, and makes $22 an hour at a job they’ve held for a month. Person B has held a job for 5 years, makes $25 an hour and is great at their job, but has no credit history. Who do you think the lender will most likely lend to? If you guessed person A then you are correct. This is because mortgage lenders count college attendance as work experience and would rather lend to an individual with a credit history, than to someone with no history at all. This suggests that a certain type of debt can strengthen your buying power and prove favorable to certain mortgage lenders. Debt isn’t always a bad thing, and making on-time monthly payments (whatever it is) will only help. A good rule of thumb mortgage lenders use to determine what you can qualify for is your debt-to-income ratio. This is your Total Monthly Debt divided by your Gross Monthly Income which equals your Debt-To-Income Ratio. Lenders typically want to see a ratio at or below 36%, however each lender is different and has their own set of requirements. I’d recommend checking with a mortgage lender, even if you’re not ready to buy, to see what your potential buying power is and work towards strengthening it from there.
#3 Understand what a mortgage is and isn’t. Many of us consider a mortgage as a “home loan” but some argue that is not an accurate definition. A mortgage is not a loan and it is not something that a lender gives you. It is a security that you give to the lender which protects their interests in your property. To simplify, let’s look at the difference between a mortgage and a student loan. A student loan is a relationship between the lender (the bank) and the borrower (you) in which money is “loaned out” for certain use. Failure to pay the debt back may result in collections that will remain on your credit report until the debt has been paid in full. Mortgages are a type of security you give to the lender which places a lien on your property that is recorded in public records. Failure to pay your mortgage results in a foreclosure on the property. The foreclosure process ensures that the funds a lender provided are returned, liens on the property are paid, and whatever remains is given to the homeowner (if any). To understand your buying power, it is important to understand what you’re “buying” in the first place.
If anything in this article got you thinking, feel free to reach out. I have worked with a number of first time home buyers, investors, and people from all walks of life who want to know where they stand. If you or someone you love is interesting in determining their buying power, have them give me a call. “You were born to win, but to be a winner, you must plan to win, prepare to win, and expect to win” - Zig Ziglar
Kurt Breuer - Managing Broker
HomeSmart Realty Group Fort Collins
P: (970) 219-3771
Posted On: June 20th, 2018 1:25PM
To Buy Or Not To Buy? That is the Question!
The National Association of Realtors (NAR) released some pretty substantial information regarding the health of our US economy and gave special attention to specific western states. The top performing markets show a housing price appreciation between 10% and 11%. For example, the top performing market is Seattle at 11.2%, followed by Portland at 11.1% and Denver at 9.9%. While various entities have made several predictions regarding what homebuyers should expect in 2018, keep reading to see whether you should buy or wait.
Here is the low-down on the market status of Northern Colorado’s three biggest cities:
Fort Collins housing prices are on the rise from $422,000 in 2017 to $455,000 in 2018
Loveland housing prices are on the rise from $412,000 in 2017 to $440,000 in 2018
Greeley housing prices are on the rise from $346,000 in 2017 to $377,000 in 2018
Low inventories and a never ending demand for affordable homes in Northern Colorado is projected to be our States biggest challenge in 2018. Builders are continuously increasing their costs on materials and fees to account for our scarce and/or unskilled labor market, making it difficult to construct homes under $400,000. Given this information, if I ask you right now “would you buy a home in Colorado?” your answer will probably be “nah, I’ll wait for the market to cool off” But what if a chief economist and market connoisseur told you “now is the time to buy a home”? Matthew Gardner has predicted interest rates to raise 0.5% one year from now. That’s 2019 folks and we all know it’s coming quick. While that might not seem like a lot, a 4.4% interest rate on a $400,000 home is the difference between a $1,598 monthly payment today and a $1,886 monthly payment next year. That’s almost an extra $300 a month!
If you’re thinking about buying a home soon, which you should be if you want to be a homeowner in Northern Colorado, contact a lender and get pre-qualified today. I work with a number of specialist who can help get you into a home today (if you’re pre-qualified, of course. I’m not a genie). Give this some serious thought, and reach out to me when you’re ready to buy.
Managing Broker - HomeSmart Realty Group - Fort Collins
W: itstime2makeamove.com P: (970) 219-3771
Posted On: June 6th, 2018 2:26PM
When you’re sitting at work and find out that it’s going to be 90 degrees this weekend, what crosses your mind first? Summer is officially here, folks! While many of you may be preparing for that Carribean cruise you’ve fantasized about all winter, us Colorado real estate agents are gearing up for that #SummerHustle. Whether you’re going on vacation or working your summer into an early grave, one thing is true: it’s time to get organized. There is nothing more unprofessional than an individual who can’t stick to their schedule, pay attention and get it together. Keep reading for 3 obvious signs and accompanying tips to get yourself in gear this summer.
#1. You had an “Oh Sh*t” Moment
As I’m sure we’ve all learned by now, life is extremely unpredictable and things come up all the time. I think it’s worth mentioning that I’m not talking about a family emergency or that moment you realized you didn’t buy enough beer for your cookout. For the sake of context, the Urban Dictionary defines an “Oh Sh*t” moment as “the point when you realize you forgotsomethingcrucial, but it’s too late to do anything about it”While many of you work with multiple clients and have numerous tasks to perform throughout the day, I’m sure you can agree that success in business stems from making strong connections, having a solid reputation and repeat customers. Even one “oh sh*t” moment can cost you, a lot. So, what do you do?
Tip: When someone calls asking you to do something, write it down. If you’re not in a place where you can do so, ask them to text you, email you or call back and leave you a voicemail. Whether you use pen and paper or type up everything in your smartphone, make sure you’re taking note of every commitment that you make. In 2018 it’s appropriate to turn those hand written notes into a calendar reminder with an alarm. If you don’t want to forget, then don’t let yourself forget. Click here for instructions on setting up reminders on an iphone orclick here for instructions on setting up reminders on an Android phone.
#2. You’ve Started Feeling Overwhelmed
We have literally all been in this situation. If you haven’t, then you should probably be writing this article instead of me. Whether you’re stressed out about that closing meeting, moving 5-minutes up the road or preparing for that awesome vacation, everyone gets overwhelmed at some point during this journey. This might sound cheesy, but sometime you’ve got to remind yourself that you’re a beast (in a good way, of course). You are in control of organizing your tasks and your time. There is nothing wrong with scheduling something on Friday even though it’s only Tuesday. Don’t let anyone make you feel rushed or pressured, and work at your own pace. From a business standpoint, if a potential client is rushing you before the initial meeting, what do you think they will be like once a signed contract is involved? What do you do when you’re feeling overwhelmed?
Tip: The first thing you should do when you wake up in the morning or step into the office is to assess how you’ll spend your time today. Take a couple of minutes to sketch up your priorities or sort them out in your mind. Create a to-do list if you think it’ll help you get organized. Leave empty spaces between each task just in case something more pressing takes priority. Schedule your time accordingly and make goals for yourself. For example, if you find yourself spending too much time on emails, limit yourself to checking emails between 9am and 10am, again at 1pm to 2pm, and once more from 4pm to 5pm before you head out for the day. Flag the emails you need to respond to immediately in red, and prioritize the remaining colors as you choose. You can even go as far as creating yourself folders in your emails like “Immediate attention”, “Semi-Urgent” and “24-Hours” Go ahead and snag that peppermint patty you’ve been staring at as a reward to yourself for being awesome! I believe in psychology they call this “positive reinforcement”
#3. You Aren’t Meeting Your Financial Goals
The interesting thing about financial goals, and goals in general, is that you have to treat them like a marriage. For your goals to succeed they can’t stand alone (just like for a marriage to succeed you can’t stand alone). From a business standpoint, you may be impacting your ability to reach desired financial goals without even knowing it. For example, say you attend a local networking event and you have no business cards. No big deal right? Wrong. Then assume the announcer states that everyone is to introduce themselves in 30-seconds, but you’ve never practiced your pitch. That’s fine, right? Wrong. Every potential lead you lose is money out of your pocket.
Tip: Go to your backyard with a shovel and dig up your motivation. Lacking the motivation to do something you find difficult will not only hinder your personal financial goals, but could negatively impact your brand. What would the world be like today if Einstein or Edison just weren’t in the mood? The best way to keep motivated is to get organized. If you’re not organized you’ll forget things, become overwhelmed and inevitably lose your motivation. Set yourself daily, weekly and monthly goals, track your progress and reward yourself for a job well done. If you’re working on your personal finances, start with trying to save 10% of your monthly income. When you reach that goal, set your savings percentage a little higher to 15%. If you have any setbacks, ask yourself why and determine how to prevent that from happening in the future. For real estate agents, set yourself the goal of obtaining 2 new clients per month. Track what’s working and what isn’t working, get organized and get yourself in gear for the summer.
Managing Broker - HomeSmart Realty Group - Fort Collins, CO
W: itstime2makeamove.com P: (970) 219-3771
Posted On: May 29th, 2018 3:23PM
Some of the most common mistakes homeowners, investors and realtors make when choosing the right property management company is *cue the drum roll* not doing enough research. Since property management is an ever expanding business in Northern Colorado, and everyone seems to be an expert, I thought I’d seize the opportunity to offer my audience a crash course in what to do (and what not to do). Keep reading for the 3 best tips you’ll find on the internet for vetting the right property management company.
#1. Pay Attention to Company Reviews
It is pretty easy to tell if a property management company has authentic reviews, or if they have created multiple accounts to give themselves a boost. The first indicator of inauthentic reviews is that the company has almost as many bad reviews as they do good reviews. If your gut is telling you that something looks a little suspicious, it’s probably because it is. Go ahead and click that exit button and move on because dishonesty is not the best policy. The second thing you want to look for is if the company is responding to their negative reviews and, if so, what that response is. For example, say Frank left WTF Property Management Company a bad review regarding their maintenance process and WTF responds that Frank has smelly feet which is why no one wants to go over there. What’s going on here? A obvious lack of professionalism. If a property management company responds to their negative reviews, great! But if their response includes sarcasm or jabs towards their tenants, how do you think they will treat you as a client? Keep your eyes peeled for these minor signs and save yourself the headache of dealing with an unprofessional and dishonest company. Accountability is the best approach.
#2. Ask the Right Questions Since You Get What You Pay For
After homeowners have completed their online search, the next plan of action is to call their narrowed down list of property management companies and ask them how much they charge. From a real estate standpoint, this should be the last question that you ask. The first things you want to figure out as a future client is:
Did they answer the phone? If not, how long did it take them to get back to you? Whether or not they answered the phone is a great indicator of how easy the company will be to get ahold of. Say, for example, you have a vacant property that is ready to be rented. If you can’t even get ahold of these people as a prospective client, how will potential tenants get ahold of them? Ask yourself, how long will your home sit vacant simply because of this? But let’s not jump to conclusions because property management companies can get pretty busy. The next thing we want to look out for is how long it takes them to get back to you. The appropriate amount of time to wait is honestly up to you as the homeowner. While some people are fine waiting a couple of days, others may require a more timely response.
Let’s say they answered the phone, are you doing all the talking or are they asking you questions? Similar to a job interview, homeowners and property management companies should first try to figure out if this relationship could be a good fit. Property managers and homeowners should take turns asking each other questions to figure out what your needs are as a client, and what they can feasibly offer as a prospective PM company. If the property manager is sitting there quietly and saying yes to everything you’re asking and mentioning, hang up. Nobody likes a “yes” man and they’re probably being dishonest. A key takeaway for homeowners is: while essentially all property management companies offer the same service, they do not all offer the same level of service. For example, the property manager on the other line says “we do monthly exterior inspections on our properties” Great! What do they look for? Do they have proof? Do they create reports and send them to homeowners? Do not believe everything you hear, and ask the right questions to make sure you’re not just another cog in the machine.
Let’s say you’re finishing up the conversation and you ask them “how much can my property rent for?” While many real estate professionals can give their clients a guestimate, fact is they don’t know unless they do a rental market analysis. As a homeowner or investor, if you hired a real estate agent to work on your behalf and they said “yeah, we could totally sell this place for $430,000” without doing a Comparative Market Analysis, what would you do? The savvy homeowner or investor would tell that agent to bugger off! Then why treat your prospective property management company any differently? A key takeaway for homeowners is that the market sets the price, not the property manager and not the homeowner. If you decide to move forward with the company who told you that your $1,800/month property could rent for $2,300/month, you’re setting yourself up for an extended vacancy and a lot of disappointment.
When you finally get around to talking about price, make sure that their fees make sense to you. Afterall, property management companies are in the business of making money (unless there’s a non-profit PM company out there, which is a pretty scary thought). Most companies charge a standard monthly management fee and what you’re comfortable paying is up to you as the homeowner. Make sure that you read the management agreement thoroughly and ask enough questions. If the property manager doesn’t even know why they charge certain fees, what are you paying for? Bigger isn’t always better, a smaller doesn’t necessarily mean you’ll get the attention you deserve.
#3. Pay Attention to Follow-up
Companies that want your business will follow-up with you, probably multiple times and usually within 24-hours. If you do not get a follow-up, what does that tell you? A competent and reliable property management company should follow-up your conversation with a rental market analysis and their management agreement for you to review.
There you have it folks. For reliable real estate services, give me a call and I’ll point you in the right direction. Real estate should not just be about buying a house, but finding a home and developing lasting friendships. Are you ready to take the next steps?
HomeSmart Realty Group
P: (970) 219-3771
Posted On: April 27th, 2018 4:22PM
So you’re trying to sell your house because you decided to take that amazing job halfway across the country, or you’re just sick of the traffic. Either way, selling your home will require similar methods used by your local real estate agent. While some homeowners prefer selling their home FIZ-Bow Style, For Sale By Owner (FSBO), this blog busts the 3 most common myths associated with selling your home yourself:
#1 Myth: For Sale By Owner Saves You Time and Money
Popular websites such as Zillow and Trulia have made determining the market value of a home much easier. Owners can go to these websites, search for their address and be magically provided with the market price of their home. Excellent! Now it’s time to take pictures, post the home on various websites, buy a “For Sale” sign, host open houses, follow-up with leads and negotiate the price. That’s not too time consuming, right?.
Homeowners with real estate agents are getting more money for their homes and saving their own personal time. Fact is, Zillow and Trulia do not gather data based on property upgrades or neighborhood conditions, which means you’re most likely getting a skewed number to begin with. If you really want to sell your home, you’ll have to spend a few hours conducting a thorough market analysis by comparing your home to at least five other similar properties for sale in your area. In a study by Levitt & Syverson (2008), the authors found that agents sell homes for 4.9% higher than unrepresented FSBO transactions. While not having a realtor showed to have little impact on the listing price of a home, homes with a realtor sold homes for higher than the list price (p. 5). Furthermore, similar studies have suggested that agents result in higher selling prices on homes with little difference regarding time-on-market (p. 6).
#2 Myth: For Sale By Owner Homes Receive The Same Exposure
The spawn of modern websites and apps have made it increasingly simple for homeowners to create a property ad and receive a decent amount of exposure. Free websites including Craigslist, Trulia, Zillow and Realtor are some examples of commonly used outlets for advertising a property that is for sale. Zillow, Trulia and Realtor offer amazing lead tracking technology as a homeowner can see how many times their property ad has been viewed, clicked on, saved and inquired by potential home buyers. This is the best way to get leads, right? Wrong.
Homeowners with real estate agents are getting more exposure on their homes. In a study by Pullig et al., (2008), the authors surveyed 1,175 real estate agents to collect data on the most effective lead generation activities. The data was then narrowed down to reveal the 9 most effective lead generating activities, with referrals in first place, Interactive Voice Response (IVR) technology in second place, and repeat business in third place. Homeowners who are interested in selling their own property will most likely turn to researching advice before getting started, and an abundance of articles suggest homeowners “make flyers” However, print advertising and direct mail have shown to be the least effective method for generating new leads and are all more cost intensive (p. 5). Fact is, many homeowners typically do not have a list of referrals, automated technology and repeat business clients in their back pocket.
#3 Myth: For Sale By Owner Homes Are Accurately Advertised
By this point you’ve researched to determine the market value of your home, you’ve take a few pictures with the new iphone you got for Christmas, and now you’re ready to welcome in potential homebuyers. You move forward with advertising a few open house dates and can’t wait for the leads to start rolling in. You’re excited because you know that tomorrow will bring floods of potential homebuyers who can’t wait to scoop up your home, right? Well, not always.
One of my good friends is currently in the market to buy a home and a consistent statement she keeps repeating is that “homeowners have stars in their eyes” Having been in the industry myself for several years now, I wouldn’t say that she is entirely wrong. Homeowners are individuals who have invested hard earned money and time into making their home a home. So, it is reasonable to understand their “my child can do no wrong” outlook. With their rose colored glasses intact, FSBO homes in your area may not be accurately advertised. As a real estate agent, it is my responsibility to sit down with my client and communicate the reality of the situation, which sometimes requires a carpet replacement, appliance upgrades or a new hot water heater to get the price they want. To make sure your home is accurately advertised, give us a call and I’ll be more than happy to provide you with a free evaluation and consultation. Also check out last weeks blog on 4 Tips To Get Your Home Spring Ready if you’re planning an FSBO transaction this spring.
The HomeSmart Realty Group
Levitt, S.D., & Syverson, C. (2008). Market Distortions When Agents Are Better Informed: The Value of Information in Real Estate Transactions. Department of Economics University of Chicago, 1-35. Retrieved from http://home.uchicago.edu/~syverson/realestate.pdf
Pullig, C., Indergard, L., Blake, S., & Simpson, J. (2008). Lead Generation: What Really Works?. Keller Center Research Report, 1-11. Retrieved from https://www.baylor.edu/business_new/kellercenter/doc.php/194248.pdf