From the inbox: what is a short sale?

Good question!  A short sale is where a seller has listed their home for less than the mortgage value of the property.  For example, say the market value on a home is $150K but the seller owes $170K.  The seller must sale, though.  One option is to list as a short sale, wherein the seller seeks the permission of their lender to sell the home at a loss.  There are some consequences and risks to both sides (on the buyer side, the risk is primarily investment of time).   Always consult a tax or legal professional as needed; this post is not legal advice.

Here is a list of current short sale properties in the MLS for the Colorado Springs area:

Interested and/or want to know more?  Call Rob at 719-440-6626 or email!

From the inbox: why is the rent still so darn high (in Colorado Springs)?

That’s a good question and opinions will vary.  The short answer: supply and demand.

The longer answer: we have a limited supply of rental homes and an app. 94-96% occupancy rate (recent anecdotal statements indicate it may be even higher). As a result, landlords can charge more for their properties.  But even this is as incomplete answer — it’s also a function of the economics of the purchase.

Say a landlord is looking at purchasing a home for app. $135K as an investment property (single family home).  This is a 3 bedroom home that will rent on average for $1106.  However,  the investor must put around 20% down due to the home not being owner occupied ($27,000).

Assuming $1100 a year for homeowner’s insurance and $650 for taxes, the mortgage payment on this home will be $717.38 (using the interest rate that I just recently closed an investment on).  If the home rents for $1106, the spread month to month for the investor is $388.62.  This doesn’t account for property management (10% or $71.74 a month) or maintenance (1% over a 10 year span) — call it $1350 for this home in a hypothetical year (or $112.50 a month).   Thus, the $388.62 margin is reduced to $204.38.

That’s the anatomy of a basic deal for an investor owned home and I hope illustrates part of the core reason behind pricing…and this was a $135K home.  The margins change as the price goes up without breaking the next rent price point (e.g., a $145K home won’t necessarily rent for more than an $135K home).

Looking to buy or sell in Colorado, I’d be honored to earn your business!  Call Rob @ 719-440-6626

**This is not financial advice, just a practical analysis of a purchase.

From the inbox: what’s the inspection objection?

Good question!  In Colorado (all others, please check with your local Realtor in the group!), the Contract to Buy and Sell Real Estate allows for a buyer to have the opportunity to have a property inspected after the home has gone under contract.

The inspector produces a report for you the buyer (that’s YOUR report and your inspection!).   Your agent will then draft an “Inspection Objection” for you; this document is a request to the seller to repair any items on the form.   The seller will respond with an “Inspection Resolution,” which is their statement of what they will fix from that list.

This is in Colorado ONLY.  This isn’t legal advice and please consult your local professionals for specific state guidance.

Looking for a home in Colorado?  We can help!

Rob – 719-440-6626

Food for thought: Thomas Jefferson on property rights

“The right to procure property and to use it for one’s own enjoyment is essential to the freedom of every person, and our other rights would mean little without these rights of property ownership. It is also for these reasons that the government’s power to tax property is placed in those representatives most frequently and directly responsible to the people, since it is the people themselves who must pay those taxes out of their holdings of property.”
– Thomas Jefferson

As I was working towards become an agent, this quote really resonated with me.  If you’re looking for an advocate in your real estate transaction in the Colorado Springs or Denver area, my team and I would be honored to earn your business.   Outside the area?  We have an alliance of local agents that want to earn your business, too.

Call Rob @ 719-440-6626 and let’s talk options.

From the inbox: what is earnest money?

Good question!  Simply put, earnest money is your deposit on a home.  (See: The Earnest Money Deposit)  When you make an offer on a home, the seller will often require earnest money to ensure you are a committed borrower.  This can range from $1 – 1% of the purchase price of the home.   Often, you can get this money back at closing, too (though that’s subject to negotiation between you and your lender!).

Looking to buy or sell in Colorado Springs or Denver?  We’d be honored to earn your business!  Call 719-440-6626!



Mortgage Debt Forgiveness Act extended for 2015

If you owe more than your home is worth, there may be more options than you know.  One such option is a short sale, in which the bank agrees to allow you to sell the home for less than the mortgage balance owed.

If the home is your primary residence, you may also be exempt from paying taxes on the forgiven debt.

What does this mean?  If the lender forgives $10K in debt, the IRS may treat this as income, meaning you could owe taxes.  This Act – the Mortgage Debt Forgiveness Act – is meant to exempt you from those taxes (provided you meet the conditions, etc.).

Questions?  If you’re in Colorado, I’d love to help.  If you’re in one of our sister states, let me know and I will connect you with the local agent!

This is not legal advice.  Always consult a CPA, Attorney and local Realtor as needed!

From the inbox: Can I really buy a home for $780 up front on a VA loan?

I get variations of this question a lot! The short answer is, “Yes, in Colorado Springs and with a VA loan, it is possible (other areas, please consult your local Realtors!).”

Longer answer: there are three costs to a home buyer generally in the purchase process.

1. Earnest money: this is “good faith” money a buyer puts up to compensate the seller if they (the buyer) breaches contract for a non-protected reason.  I’ve had a lot of success w/$500 earnest money in town.  When that hasn’t worked, we try $750 or $1,000. Note: coordinate with your lender but you can often get this money back at closing.

2. Inspection costs: a home inspection costs about $280 in Colorado Springs. This is a sunk cost; even if you choose not to continue with the purchase, this isn’t reimbursable in the normal course of a purchase.

3. Appraisal: there is an appraisal cost that some lenders will charge upfront, others charge as part of the loan costs.

In sum, it is entirely possible to buy a home for an upfront cost of $780-$1280, depending on the lender and the earnest money required…and that earnest money can often come back to you.

Questions, please give me a call! If you’re looking to buy or sell in Colorado Springs or Denver, I’d be honored to earn your business.

Food for thought: On “knowledge is power”

I’ve long held to the idea that “knowledge is power.”  However, I read something today that simply clicked. Is knowledge power? Napoleon Hill doesn’t think so, to a degree.

“Knowledge is only potential power. It becomes power only when, and if, it is organized into definite plans of action and directed to a definite end.”  (Hill, Think and Grow Rich)

This, Hill argues (and I agree) is a key component of success.  It should also be noted Mr. Hill isn’t advocating for power for power’s sake.  Rather, the kind of power he’s talking about is the power to act, to make your way through life and build success.  Knowledge is potential power.  Specialized knowledge, applied to building success, is the key to achieving that success.

The short takeaway: education is important — acting on your knowledge even more so.

This is a fascinating book, providing much food for thought.

Colorado Springs Realtor