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Tuesday morning coffee ~ Did you know...

by Allison Simson

Happy Tuesday to you!    
 
Last week the National Association of REALTORS (NAR) has it's annual conference. Among the most eagerly anticipated sessions was NAR's Chief Economist, Lawrence Yun's annual summit.
 
He predicted that the extended and expanded tax credit will have additional positive impact on the economy as a "middle class wealth building mechanism". He estimated that the initial first-time home buyer tax credit resulted in an additional 350,000 to 400,000 sales nationally, and he predicts the second credit will fuel an additional 15% boost in sales activity and a 3% - 5% boost in sales prices across the nation.  
 
He described the nation’s current bifurcated market in which lower priced homes are experiencing more sales and fewer months of supply while higher priced homes are experiencing the opposite. Regardless of price point nationally, the market has an 8 month supply of properties for sale, and Yun predicts that in 2010, we will see a drop to 6-7 months.  In Summit County, CO today we have about 18 months of residential inventory- we tend to lag behind the national economy anywhere from 12-18 months.
 
According to Yun, activity in 2010 will be partially driven by pent up buyer demand. He described the dichotomy of a pre-boom 2000 market in which 11 million renters had the necessary qualifying income for a median priced home purchase and our current 2009 market of 16 million such individuals.
 
He predicted a modest mortgage rate increase in 2010 from the current 5.2% average to 5.7%.  He indicated the greatest concerns to the market in 2010 will be consumer confidence, job losses, and the impact of federal spending. He described the 7 million job losses this year as the “Great Recession” and expressed concerns about how federal stimulus and bailout spending will impact the federal budget deficit. He said if Washington lawmakers do not develop a credible plan to reduce the deficit, there is concern for the future of interest rates.
 
Keep in mind, this is a forecast, just like the weatherman's forecast.  We all know how reliable weather forecasts are.  Additionally, real estate is local.  However, one main driving force that is not just local and has a major impact on the economy is consumer confidence.  I whole-heartedly agree that we need to see job creation and a lowering of the unemployment rate to experience a rise in consumer confidence. 
 
What I do know is that it is a great time to buy, and if you have owned a home for 5 of the past 8 years, it's a great time to sell and buy up.  We will never see conditions like this again....great inventory, low interest rates, and major tax credits!
 
If you'd like to discuss your options, please give us a call!
 
And now for your Tuesday Coffee Break....click the link below for an interesting look at technology and it's effect on our daily lives....enjoy

did you know?

Make it a great day.....and Happy Thanksgiving to you and yours!

When banks won't lend: seller financing

by Allison Simson & Joyce Nenninger

Question:   I live in here in Frisco, Colorado. I was talking to one of my friends who lives in California. He has been hearing about "private" sales out there, especially in the higher price ranges where financing is hard to obtain. What is a "private" sale and are these legal?  

Answer: I suspect what your friend is referring to is something called a "land contract" or "land sales contract." Given the lack of financing in the jumbo loan market, this may a viable option for some sellers in this market. Land contracts were used extensively in the early 1980s, when home mortgage rates jumped to over 18 percent.

All land contracts involve having the seller carry part of the financing. Since 35 percent of all homeowners own their property free and clear, seller financing can be an attractive option for those who must sell.

When the seller finances the sale, there are normally no points or fees. This saves the buyer money. The deeds and other documents work in the same manner as in a transaction where there is bank financing.

Unlike other types of financing, though, in a land contract the title normally does not transfer to the new buyer until the purchase price is paid in full. (Some states require the title to transfer after a certain percentage of payments have been made.) The deed transferring the title doesn't record until this payment threshold has been reached.

When the rates went sky high in the early '80s, creative financing became the order of the day. Many sellers had low-interest-rate loans. It was common practice for buyers to assume the existing financing. This could be through a direct assumption that the lender approved or it could be through what was known as a "wraparound" or "all inclusive deed of trust" (AITD).

Here's how wraparound mortgages work: Assume that a property sold for $200,000 and there were two loans on the property -- a $100,000 first mortgage at 5 percent and a $20,000 second mortgage at 8 percent. The buyer puts down $20,000. The seller could wrap the existing mortgages and give the buyer an AITD.

If the current bank interest rate was 14 percent, the seller might charge 12 percent for the AITD. This was a great deal for both the buyer and the seller. The buyer gets an interest rate that is 2 percent less than the current market rate.

The seller would make an additional 7 percent annual interest on the $100,000 first mortgage, 4 percent on the $20,000 second, and 12 percent on the additional $60,000. Since the seller was only loaning $60,000 out of his pocket, the total interest of $15,000 per year represented a 25 percent return on the actual amount borrowed.

Needless to say, the banks weren't thrilled with this situation. Congress passed regulations so that the banks could stop borrowers from assuming or wrapping a loan without the lender's permission. If the seller wrapped the loan without the bank's consent, the bank could enforce the "due on sale" provisions by foreclosing.

To avoid the due on sale provisions, the next wave of creative financing involved land contracts. Since the original owner is still on the title and is continuing to make payments, there was no way for the bank to know that a sale had taken place. The normal structure was to have the buyer make payments directly into an escrow account. The escrow then made the payments to the lender on the original seller's behalf.

The lenders eventually caught on to this strategy and started checking to see whose names were on the utilities. Many sellers then opted to keep the utilities in their name and simply increased the monthly payment.

So is this still a viable option today? Land contracts are legal in most states. For sellers in today's market who own their property free and clear, a land sale contract could be a desirable way to sell their property. The reason is that if the buyer defaults, the buyer forfeits the right to purchase the property.

There are definitely pitfalls to land contract sales, though, as it may be challenging to remove a defaulting buyer from the property. And buyers may have trouble receiving a marketable title even after making all of the payments to the seller.

The seller can place a provision in the land contract that in the event of a buyer default, the past payments the buyer made are converted to rental payments. Once the buyer defaults, the owner can file an eviction notice.

This is much faster and easier than going through a foreclosure proceeding. But because of the complexity of this type of sale, you will need a real estate attorney to make sure all the provisions are drafted correctly.

The more interesting issue that your question raises is whether a seller can wrap an existing mortgage in today's environment. Virtually all loan documents have "due on sale provisions."

Today, the banks are struggling to keep pace with the huge number of defaults, foreclosures, and short sales. The real issue is whether they would elect to foreclose on an owner if the payments are current. Personally, I would be reluctant to embark on the steps it would take to hide this from the lender.

On the other hand, if the seller owns the property free and clear or receives enough money from the downpayment to pay off the existing loans, a land contract could help a seller close a property that might not be able to qualify for traditional financing in today's market. Inman News

 

For answers to your real estate questions, call Allison at 970-468-6800. Email - [email protected]. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com   

Happy Thanksgiving to you!

by Allison Simson & Joyce Nenninger

History of Thanksgiving 
Though many competing claims exist, the most familiar story of the first Thanksgiving took place in Plymouth Colony, in present-day Massachusetts with the harvest celebration of the pilgrims and the indians in the autumn of 1621. Although they did have a three-day feast in celebration of a good harvest, and the local indians did participate, this "first Thanksgiving" was not a holiday, simply a gathering.
 
There is little evidence that this feast of thanks led directly to our modern Thanksgiving Day holiday. Thanksgiving can, however, be traced back to more than 200 years later in 1863 when President Abraham Lincoln became the first president to declare the final Thursday in November as a national day of Thanksgiving. Congress finally made Thanksgiving Day an official national holiday in 1941. 



Thanksgiving  Day
 
The truth can hurt....did you know that the average American consumes 3,000 calories and 229 grams of fat?  If you snack throughout the day before the big feast, your caloric intake can be as high as 4,500 calories.  But, it's just one day a year, so who's counting!  I say, enjoy!  Eat, drink and be merry!
 
Hmmmmm..........coincidence? "Thanksgiving dinners take 18 hours to prepare. They are consumed in 12 minutes. Half-times take 12 minutes. This is not coincidence."   ~ Erma Bombeck


Summit Real Estate Gives Thanks!
We here at Summit Real Estate truly have much to be thankful for. In a down market we've been fortunate to have a good year.  While nothing is easy in this current economic climate, we've been blessed with the opportunity to serve the Real Estate needs many of our friends and families in 2009.
 
Simply put, we are thankful for YOU. We are thankful for not only your business, but also your friendship. 
 
We wish you a very Happy Thanksgiving!
 
"He who thanks but with the lips, thanks but in part; The full, the true Thanksgiving comes from the heart."   ~ J.A. Shedd    

For answers to your real estate questions, call Allison at 970-468-6800. Email - [email protected]. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com   


 

what is the difference between appraised value and assessed value?

by Allison Simson & Joyce Nenninger

Question: Allison, what is the difference between appraised value and assessed value?

 

Answer: A home's appraised, assessed, and market values can sometimes vary drastically, because different criteria are used to judge each value.

Sellers and salespeople consider factors such as the number of bathrooms and bedrooms; curb appeal; the local school system's quality; and the home's proximity to public transportation to set a sales price. But some buyers are willing to pay tens of thousands of dollars above market price, if they fall in love with a property, says American Society of Appraisers Executive Vice President Edwin Baker.

An appraiser will determine a house's value based on the prices of similar homes that have recently sold in the area, as well as the number of bedrooms and bathrooms, yard size, additions, and the property's overall condition.

The assessed value--used to calculate the amount of property tax the homeowner must pay--is typically less than appraised and market values. To determine the home's worth, assessors will either compare recently sold homes, factoring in influences that may have boosted or reduced the sales price; tabulate the cost of replacing the home with a similar one; or calculate how much income the property would generate if it was rented.


 

 

For answers to your real estate questions, call Allison at 970-468-6800. Email - [email protected]. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com   

What types of remodeling projects give the greatest increase in property values?

by Allison Simson & Joyce Nenninger

Question: I am going to remodel an older home in Silverthorne, CO. What types of remodeling projects give the greatest increase in property values?

 

Answer: Many homeowners upgrade their residences with property value increases in mind. The key for these consumers is to determine which improvements will produce the most value for the money.

According to Remodeling magazine's annual Cost vs. Value report, kitchen remodels are the most profitable upgrade, offering homeowners an 88 percent return on project costs. Some homeowners actually stand to lose money on a sale if they fail to modernize their kitchens and bathrooms, says Vince Butler of the Northern Virginia Building Industry Association Remodelers' Council.

On the other hand, homeowners only recoup an average of 55 percent on the costs of a home office, making it the least profitable improvement. Remodeling investment returns are tied to the properties' values, as well as local market conditions.

 

Making an Offer: Tips for Painless Purchase

by Allison Simson & Joyce Nenninger

Question: Allison, what is the best way to make an offer on a property?

 

Answer: The overwhelming number of properties on the market and still-attractive interest rates make now an excellent time for first-time buyers to purchase a home, as well as for existing homeowners to trade up.

Prospective buyers should obtain written mortgage approval from lenders for the amount they will spend on a home, as well as find a Real Estate Broker who knows the local market and is skilled in negotiating. Your Real Estate Broker will find answers to questions that could influence the purchase price.

When negotiating, prospective buyers avoid low-balling their first offer just to see what the seller says; but they should have a good idea of how much room they have to negotiate. They should never reveal how much they are willing to pay and should be prepared for counter-offers.

They should keep in mind that having too many conditions will make them less attractive to the sellers. Prospective buyers should focus on trying to get their dream property at a fair price.

 


For answers to your real estate questions, call Allison at 970-468-6800. Email - [email protected]. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com   

Tuesday Morning Coffee - Market Recap

by Allison Simson & Joyce Nenninger

This just in from one of my favorite lenders....

MARKET RECAP

We can finally stop talking about the federal homebuyer credit extension and start living it. This go around, the credit has not only been extended, it has been improved. First-time homebuyers – anyone who hasn't owned a home in the past three years – will still get up to $8,000 to apply against their federal tax liability, but buyers who have owned their current homes at least five years will also be eligible for tax credits of up to $6,500. To qualify, buyers must sign a purchase agreement no later than April 30, 2010 and close by June 30.

Just as important, if not more so, the extension also raises income ceilings. The new version has the credit phasing out for individuals with incomes above $125,000 and for joint filers with incomes above $225,000. The phase-out increase means the new credit will be applicable to higher-priced homes (though the purchase price can't exceed $800,000); thus, stimulating sales in more expensive categories.

The Federal Reserve's stance on interest rates was another home-buying positive. On Wednesday, the Fed stated that it will maintain the federal funds rate – the rate banks lend to each other – near zero for “an extended period” and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline. The fed funds rate is an important benchmark for other lending rates, so the Fed's pronouncement bodes well for borrowers seeking a mortgage loan.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

Quote of the day from Ellen DeGeneres:  "I know that "personality can open doors, but only character can keep them open."

5 things to never tell a buyer

by Allison Simson & Joyce Nenninger

Question:  Allison, our home in Dillon, CO is on the market and we like to be present when the buyers come to look it so that we can answer any questions they might have.  Our Realtor has asked us to leave when the buyers come through.  What do you recommend?

Answer:  As a seller, you may find yourself at home when a buyer is looking at your home. In most cases, it's smart to leave during the showing because the buyers will not express any objections because they don’t want to offend you!  If you are gone, they’ll let their Realtor know what they don’t like, and the Broker may be able to overcome their objection. If you are at home and the buyer or his/her agent asks a question, tread carefully. Here are five things to never tell a buyer.

1. Where is the property line?
It's easy to point to the fence and say that's where the property line is. The correct answer to this question is, "I don't know where the exact property line is. If you want the exact location, you will need a survey."

I remember selling a property where my client's brick fence was encroaching on a 2-inch-by-2-inch part of the property next door. My buyers didn't learn of the issue until they decided to add a room to the house. They hired a surveyor who discovered the problem. It cost almost $2,000 and a considerable amount of hassle to obtain an easement (i.e., permission to use) this tiny piece of land. Part of the expense was due to having to re-record the deeds for both parties as well as obtaining a written approval from each of the lenders.

2. Do any ______ live in this neighborhood?
If a buyer asks you a question that references race, ethnicity or religion, it is a violation of the fair-housing laws to answer the question. A better response would be to say either "I don't know" if you would like to know more about the general characteristics of this area, you can check the US Census data.

3. Is this a safe neighborhood?
While you might be tempted to say, "We have never had any problems," that's not a good idea. You may not have had any problems, but what about the neighbor on the next block who had her car stolen or who was burglarized? You may not be aware of the problems, but your representation of the safety of the neighborhood could come back to haunt you.

A better response is to say, "If you are concerned, please check the crime statistics for this area either online or at the local police department."

4. Is there anything wrong with the roof (or any other major system in this house)?
Your roof may have been watertight all last winter, but it may have developed a leak over the summer. There is no way to know the exact condition of the roof, even if you climb up and look at it. In fact, when roofers climb on your roof to make repairs, it can be extremely difficult to pinpoint where a leak originates. About the only way to tell for sure is to be on the roof when it is raining. Even then, the roof may leak when the wind is out of the south and not leak when it is blowing from other directions.

The state of Colorado does require you to disclose in writing the conditions about which you are aware.

5. Why are these floors so uneven?
Buyers often ask about the condition of the property. It could be a stain on the ceiling or a crack in the wall. It's important that you avoid diagnosing what the problem is. Again, advise the buyers to obtain their own inspections to determine the exact condition of the property.

To minimize your exposure, avoid being at home during showings. If you must be at home, avoid volunteering verbal information to the buyer. Instead, obtain your own inspection report prior to listing the property and make that available to any buyers who view your home.

Second, fill out any required disclosure statements as completely as possible. Third, encourage the buyers to seek their own inspections regarding any concerns that they may have. Finally, place a home warranty policy on your home that covers the major systems on your property during the listing period as well as for the first year the new buyer owns the home. Copyright Inman News 2009.

 

For answers to your real estate questions, call Allison at 970-468-6800. Email - [email protected]. Want to know the value of your Summit County property? Visit www.SummitHomeValue.com   

Allison is November's "Ninja Mom"

by Allison Simson

I was honored this month to be interviewed by Nicole Mangina, founder of The Ninja Moms blog...and organization devoted to helping Mom's who are as commited to their families as they are their real estate careers.

Read my interview here:

Ninja Mom interview

 

 

Tuesday Coffee Break - Pre-ski season exercises!

by Allison Simson & Joyce Nenninger

Happy Tuesday!

Loveland Ski Area and Arapahoe Basin are already open and Keystone opens on Thursday!  ARE YOU READY???

Here are some Pre-Ski Season Ski exercises…..

1)    Visit your local butcher and pay $30 to sit in the walk-in freeze for a half an hour. Afterwards, burn two $50 dollar bills to warm up.
2)    Soak your gloves and store them in the freezer after every use.
3)    Fasten a small, wide rubber band around the top half of your head before you go to bed each night.
4)    If you wear glasses, begin wearing them with glue smeared on the lenses.
5)    Throw away a hundred-dollar bill now.
6)    Find the nearest ice rink and walk across the ice 20 times in your ski boots carrying two pairs of skis, accessory bag and poles. Pretend you are looking for your car. Sporadically drop things.
7)    Place a small but angular pebble in your shoes, line them with crushed ice, and then tighten a C-clamp around your toes.
8)    Buy a new pair of gloves and immediately throw one away.
9)    Secure one of your ankles to a bedpost and ask a friend to run into you at high speed.
10)    Go to McDonald’s and insist on paying $13.50 for a hamburger. Be sure you are in the longest line.
11)    Clip a lift ticket to the zipper of your jacket and ride a motorcycle fast enough to make the ticket lacerate your face.
12)    Drive slowly for five hours- anywhere- as long as it’s in a snowstorm and you’re following an 18-wheeler.
13)    Fill a blender with ice, hit the pulse button and let the spray blast your face. Leave the ice on your face until it melts. Let it drip into your clothes.
14)    Dress up in as many clothes as you can and then proceed to take them off because you have to go to the bathroom.
15)    Slam your thumb in a car door. Don’t go see a doctor.
16)    Repeat all of the above every Saturday and Sunday until it’s time for the real thing!



Why do we do it???  Check out this short video by my favorite Vail Resorts Videographer, Rex Lint, for a reminder.... SkiTeaser

See you on the slopes! 

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Photo of Summit Real Estate Real Estate
Summit Real Estate
The Bright Choice
330 Dillon Ridge Way, Suite 10
Dillon CO 80435
970-468-6800
800-262-8442
Fax: 970-468-2195

Allison Simson, Owner/Broker, is a licensed Colorado Real Estate Broker