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New FHA Policy Will Have Denver Home Sellers Making Repairs

Denver Home Sellers Restricted on Buyer Credits

Denver Home Sellers

Beginning this summer, new FHA regulations will reduce allowable seller concessions from 6% to 3% according to a recent announcement from US Department of Housing and Urban Development.  Every new regulation that comes out is designed to protect consumers in some way.  This new policy will be put in place to restrict inflating property values in order to pad the purchase price with lending fees, closing costs and repairs.  The less desirable effect of this policy change will effect Denver home sellers as well as home buyers if there is a need to give a credit to the buyer for home repairs that the seller cannot complete prior to closing.

3% Seller Credit Used to Pay Buyer Closing Costs

FHA loans require that a buyer have 3.5% down payment ( rumored to be increasing to 5% some time this summer ) in order to get an FHA loan.  Many home buyers have to save and scrape together just enough for that down payment.  Since much of their money goes towards the down payment, they do not have and extra 3% to pay for closing costs, escrows, insurance, pre-paid interest, and appraisals so they ask the seller to contribute that money on their behalf.  Many sellers agree to these terms because they understand that the buyer for their home doesn’t have the additional funds and if they did not make those contributions, the buyer would not be able to purchase the home.

And Then Comes the Dreaded Inspection

Imagine that the full 3% seller concession has to be used for closing costs etc.  Now imagine that a few items show up on the home inspection that require repairs.  On FHA loans, the FHA appraiser also inspects the home to make sure that the property is FHA insurable. Lets pretend that an independent inspector that is hired by the buyer finds repairs that should be made totaling $2,000.  In the past, the seller could credit $2,000 to the buyer at closing for the repairs and the buyer did the work after closing.  That type of credit will quickly become a thing of the past for many real estate transactions.  The transaction would no longer be in compliance with the new policy because seller concessions exceed 3%.

There is Risk for Sellers Who Make Repairs

Many sellers prefer to give buyers a credit at closing for repairs instead of fixing the problem or perceived problem.  They prefer that because there is risk in doing the repairs.  Have you ever heard of a real estate closing that didn’t happen?  In my 17 years of selling real estate I can assure you that financing can fall apart the day of the closing. The sellers may have spent money to complete repairs needed to close the deal only to end up empty handed at the closing.  Just to complicate things even more, what if the transaction is a short sale and the seller doesn’t have any money to do the repairs?  How would you comply with the policy and get the repairs done?

Creative Solutions Required to Navigate the New FHA Policy

This policy isn’t even in place yet, but the announcement will be made in February. I am looking for ideas from lenders, Realtors and others in the industry to address this issue that will effect real estate transactions in Denver this summer.  One idea that I have is to have a check cut to the contractor at closing from the sellers proceeds.  The credit to the contractor would be in compliance because it is on the HUD and disclosed to all parties.  The buyer would hold on to the check until the work is complete.  The only problem that I see is that a red flag will go up for the lender asking what that credit to the contractor is for.  One thing to be sure of, expect delays during the next few months while everyone figures out what they can do and not do.

Anti-Flipping Rule Good for Denver Investors???

Housing and Urban Development Removes 90 Day Seasoning Rule

Investors Rehab Home

This might not seem like a big deal to most home buyers in our average to higher end real estate market, but this will effect many first time home buyers in Denver.  In the past, an investor had to wait 90 days to sell a fix and flip home to an FHA buyer.  Since many of these investors need to turn their cash quickly, the homes sold to buyers with cash or conventional financing.  That left many FHA buyers looking at homes that they could not buy due to the government restrictions.  Those FHA buyers in Denver are now going to be on a level playing field with other buyers who have cash and conventional financing.

Will competition for lower priced homes increase?

The competition for homes in good condition under 200K is already pretty intense in and around Denver.  Now that the restriction is lifted Read the rest of this entry »

North Star Academy West Coming to Highlands Ranch

Charter schools are in high demand in Douglas County

Your may want to learn about a new Core Knowledge preschool – 8^th grade charter school is coming to Highlands Ranch.  The original vision for the school was created in 2004 by a group of Highlands Ranch parents with a strong desire to create a more challenging and meaningful educational program for their children and the community at large.  The founders successfully opened North Star Academy in Parker in August 2006.

Familiar Faces at North Star Academy West

Many individuals from the original founding team have joined our NSA West Board of Directors and parent volunteer base to ensure a successful opening. Read the rest of this entry »

How To Get Free Snow Removal in Highlands Ranch

South Facing Reality About Snow Removal

I love getting things for FREE.  Why do you think one of the most popular categories on Craigslist is the FREE section?  You are probably an el cheapo like me and that is how you ended up on my blog looking for free stuff.  Maybe you thought that it was a teen youth group doing good deeds to reach out to the neighbors.  It’s not even that complicated.  All you need to do is buy a house or town house with a south or southwest facing driveway and a little patience.  In fact if you are REALLY patient it doesn’t matter what Read the rest of this entry »

New Homes in Denver Under 150K

Low Priced New Homes Are Selling Well

Are you sick and tired of waiting for the bank to approve your Denver short sale offer?  Did the small of the last bank foreclosure that you looked at turn your stomach.  It just needs new carpet and paint!?!?!? Yeah Right?  Builders that construct brand new homes with a garage under 150K actually exist in Denver.

Two Bedroom Condos Under 100K Brand New

If you are a Denver First Time Home Buyer, you can end up buying a property and end up with more money than you started with.  In addition to being paid to buy a brand new Denver Condo, low interest payments make it cheaper than paying rent.  The best deals in Denver Real Estate are actually with brand new construction.

Denver New Constructions Starts are low

2009 will be one of the slowest years ever in the new construction industry for Denver.  Very few builders are drawing housing permits at this time. Many new home builders in Denver have filed for bankruptcy or gotten close to it. The new home builders in Denver that provide great new homes for under 200K are staying very busy. Click here to find out how to get information about a few of these communities. Read the rest of this entry »

Denver Single Family Homes Rise in Value

Home Values Rise in Denver Over Last October

For the entire area that Metrolist ( Denver’s MLS ) covers the average sold price in October was 4.6% higher than in October 2008.  The average sale price of a single family residential was $250,172 in October 2008.  The average sale price of a Denver area home that sold in October 2009 was $261,771.

Inventory of Denver Homes Still Low

Many sellers have decided to remain on the fence when it comes to placing their home on the market. In fact the Denver real estate inventory is half of what it was in October 2007.  In two years our inventory has been cut in half.  If you were to take short sales and foreclosures out of that mix our inventory would be almost 66% less than in October 2007.

Denver Real Estate Sales are Down

The lack of Homes for sale in Denver is the number one reason that the number of sales is down 15.2% YTD compared to last year.  There is incredible pressure on existing homes listed on the market with several offers submitted within days on well priced Denver Properties.

Denver Real Estate For Sale October 2007 to October 2009

Compare Denver Craigslist to The Denver MLS IDX

Craigslist is FREE

When I think of Craigslist, one word comes to mind. FREE  Oh how Denver buyers love free stuff.  I know REO Agents ( Realtors that list bank owned properties for sale ) that post free stuff on Craigslist to get rid of evicted tenant’s belongings.  And yes their are people who have made a living out of chasing down free stuff on Craigslist.  One person sits at the computer and constantly refreshes the page while a driver in a truck is waiting to speed over to the location where the free stuff is located.

Craigslist Makes You work hard for Real Estate Information

Free Denver Real Estate information on Craigslist can come at a Read the rest of this entry »

Thanksgiving Leftovers for Denver Realtors?

November will be Stressful for Denver First Time Home Buyers

Many Denver Area Homes went under contract during the past month and they all want to close by the end of November to qualify for the First Time Homebuyer $8,000 tax credit.  Now the pressure of getting the properties to close is on the Realtor, mortgage lenders, title companies and buyers.  Add to the stress the fact that we lose two days at the end of the month for Thanksgiving and Black Friday.

Don’t Wait Until Thanksgiving

Only a turkey would delay in getting on top of the details.  You may have 10 days to get your home inspection completed.  Order it done asap and get past this hurdle first.  That way the lender can order the home appraisal.  The appraisers are going to be swamped this month. Watch those dates and deadlines on your real estate contract and get the items done well before the deadline.

Get Your Mortgage Broker What They ask for Right Away

Many closings that get delayed are blamed on banks and underwriters.   While from time to time these human beings do mess up real estate deals in Denver, often the borrowers did not get them the information that was needed to complete the loan.  So many times borrowers give their broker only part of what is asked for.  This November you do not have the luxury of doing things half baked.  If you are asked for your last two pay stubs, you need to get them exactly those items on the day they ask for them.  Remember that you are the one getting $8,000 for closing in November.

There will be leftovers in December.

Will we see a bunch of Denver homes back on the market December 1st?  Will the buyers back out because they aren’t getting the $8,000 credit?  Maybe the government will step in and extend and expand the program.  I think that most people will still close on the home they are buying even if they miss the end of November deadline.  The tax incentive is only one of many reasons why now is a great time to buy a home.  People need a place to live and low prices and interest rates are good enough reasons for most people to buy.

Pass the potatoes!

But Uncle Fred Got His House for $40,000 Under List Price in Highlands Ranch

Fact or Fiction

If I had a quarter for every time I hear somebody brag about the killer deal that so and so got just last week I’d travel to Alaska.

I mean really, how do you expect me to respond to that?

“Uh okay lets offer $40K under asking price on that new listing that just came out on the market with 3 offers on it asking for highest and best.”

So now that I have that off my chest lets talk.

The Facts

There are some fantastic deals out there in Highlands Ranch and the low financing rates make it more affordable than it has been in a long long time.

The statistics say that the average house in Highlands Ranch sell for 97% of the asking price.  If the average sale price is close to $330,000 then you can expect close to 10K in discounts or incentives.

The Lesson

I appreciate that you need to ask advice from trusted friends when it comes to making a big decision like buying a house.  Just make sure that the person giving you advice on value has enough CURRENT experience to advise you correctly.

Is it Good or Bad to own the Newest and Nicest Home in a Development?

Who wants to just keep up with the Jones’s? Isn’t it better to make them keep up with you? As far as your sports car, manicured lawn and super white teeth go, I leave that up to you. But I can help you with owning a house in Littleton that will make them jealous with envy. And to top it off you can own it for less than most of them paid for their smaller less desirable houses. Just check out the video below of the property on Jamison. The owner has recently added new carpet and paint along with a host of other upgrades. It also has a full basement just waiting for your finishing touches.

And just to make them squirm with envy, I’ll throw your welcome to the neighborhood “Open House” party and tell all of them what a screamin deal you got in Southbridge.