3 Reasons To Have a Buyers Agent Work For You

I've gotten a lot of questions lately about why a buyer agent might be necessary when purchasing a home.  While there are many reasons that having a buyer agent can be very beneficial to you, I've picked out my three favorites, enjoy!

1.  Buyer Agents are FREE, FREE, FREE
Yep, that's right, buyer agents cost you nothing.  They can drive you around for months, prepare countless market reports, put in offers, and facilitate each and every transaction, and you still don't pay them a dime!  Typically, when purchasing a home, the real estate commissions are paid by the seller.  In Northern Colorado, its very common for the seller to pay 3% to the listing agent and 3% to the buyers agent.  So, because your buyer's agent is willing to do so much for free, I suggest you take advantage of the opportunity and get as much as you can out of your Realtor.

2.  Access to Every Home on The Market
Contrary to popular belief, buyers agents not only have access to every home that they are listing, they also have physical access to every home on the market!  Any home you want to see can be show by your very own buyer's agent.  Without an agent, access to homes can be limited, as homeowners can be wary about letting random unsupervised folks into their house for an extended period of time.  It's a toss up whether or not you'll be able to see every home you want to see, unless you're lucky enough to find an open house or model home.  Also, their access online is further reaching than the average person.  Having access to the MLS system provides the agent with access to more properties and more information.

3.  A Buyer Agent Will Negotiate for You
Buyer's agents are trained in negotiation and have a grasp on the ever changing real estate markets.  They are experts in valuations and can let you know if a property is overpriced, saving you money.  Also, a buyer agent will be equipped with the tools and experience necessary in negotiating tough deals; its what we do every day.  Want the seller to pay some of your closing costs?  Want that washer and dryer to stay when you buy?  Hate the price but love the house?  A Realtor has a feel for what can get done and what can't, and they're always willing to listen to you and negotiate with the seller as long as it takes.

So, if you haven't considered using a buyer's agent, your next purchase might be the time to start.  Beyond the three points mentioned above, think about all the time and energy you can save by utilizing a buyer's agent.  Searching out new homes, calling for showings, filling out contracts, and dealing with the transaction can be a major headache when all you want to do is get into a new home.  My advice:  Get a buyer's agent, it'll be worth every penny you don't have to spend.

How to Make an Offer They Can't Refuse

This is a tricky market.  With so many distressed properties (Short Sales, Foreclosures, REO's) out there, you may have no clue what to do when making an offer on a home you want to purchase.  Sure, you want to get a good deal, and you should, but your offer won't be taken very seriously if you present an extremely low-ball offer with ridiculous terms.  Of course you want the house, but what do you have to do to make an offer that will be accepted or at least counter-offered, as opposed to an offer that will get you laughed out of the neighborhood?

First and foremost, a good Realtor should always be on your team when making the decision on how much to offer.  A Realtor can be worth their weight in gold by saving you from offering too high and missing out on a deal, or offering too low and missing out on your dream home.  Your Realtor should be there for you to take all the market data, economic data, and micro-geographic data and boil it down into simple, easy to understand advice, so that you can make your most informed decision.  Here's how they do it:

1)  Determine Affordability:  First and foremost, when making an offer, you need to know what you can afford.  If you've got a job and good credit, chances are you'll be able to visit a lender (most likely recommended by your Realtor)  and get pre-approved for a certain amount.  Chances are the price you're pre-approved is much higher than what you might be willing to pay for, so keep it in perspective.  Know your monthly budget and don't overspend and become "house-poor".  Find something that you can comfortably afford to set your pricing parameters.

2)  Perform a CMA:  When performing a CMA (Comparative Market Analysis) your agent will take similar properties in the neighborhood or micro-geographic area, and create a comprehensive report that will help you determine your offering price.  Your agent will take the active listings, recently sold and recently expired or withdrawn properties with characteristics similar to the home you want to make an offer on, and compare all the aspects of value.  NEVER make an offer on a home without a CMA.

3)  Motivation:  Gut check time!  What is your motivation to get in the home?  Do you believe this is the home you'll want to be spending a significant portion of your life in? If you're making an offer 30% below the fair market price just to get a good deal, remember, you have to live in that house.  If you really want to live in a house, make sure you make an offer in line with your intentions.  Also, try to gauge the seller's motivation as well.  Ask your Realtor how long the home has been on the market, and how many times that price has been reduced.  If it's been on the market for months and months, without reductions, chances are you don't have a motivated seller.  If you've seen reductions, that's a good indication that they are motivated to get out of the house. 

All of this information can be provided to you in a relatively short period of time so that if and when you want to make an offer, all you have to do is review the facts and come up with a number.  Its easy when you have the right people on your team and have the faith to take the leap.  Happy hunting!

Hot Home Tax Tips for Tax Season

Tax season is just around the corner folks, and here are some great ideas to consider when filing your tax return.  Even if you are using TurboTax or your own CPA, make sure you cover all your bases.

1.  Consider the Tax Implications of Refinancing and/or Reducing Your Property Taxes
A lot of people have refinanced over the past few years to save some money on their monthly mortgage payments.  I mean, who wouldn't have refinanced their 8% loan to a loan at 4.5%?  Also, people are looking to save a little money on their property taxes by getting their home re-assessed because they were likely to have lost some home value over the past three years.  Remember, come tax season, the mortgage interest and property taxes you're trying to reduce, are also the greatest tax benefits you have as a homeowner.  Don't get me wrong, refinancing and re-assessing your home is one of the best things you can do to save on your monthly payments; however, make sure that those savings don't wipe out some of your best deductions.  Consult with your CPA when considering your options.

2.  A Large Portion of Closing Costs are Tax Deductible
If you took advantage of the low interest rates and abundant inventory in 2010 by buying a home, a good portion of your closing costs are deductible.  Discount points or any origination fees that were paid to your lender at closing are deductible.  This hold true even if the seller paid your closing costs!  To find your deductible costs, simply pull out your HUD-1 settlement statement, and if you can't find it, your Realtor should still have a copy.

3.  You Need to Itemize Your Return to Claim Your Deductions
Believe it or not, about 40% of homeowners fail to itemize their return, and therefore get no credit for their most major tax advantage.  If you have a relatively simple return and think that taking the standard deduction will make your tax season a piece of cake, think again!  You could be missing out on thousands of dollars of deductions from owning a home.  If you have a simple return (i.e. simple income, few investments, homeowner) TurboTax (and CPA's for that matter) will do all the math for you to determine which option is best for you, and it won't cost any more either way.  So, take the time to save yourself a little extra money, and weigh your options.

Lastly, I'm not a seasoned tax professional, and if you don't claim to be super tax-savvy, then save yourself the time, effort, and late night calculator crunch sessions, and get professional help.  The costs associated with hiring a CPA or going to a professional Tax Preparer will pay for itself when they find a big deduction that you missed.  Happy tax season!

First Time Home Buyer Start Up

It's time.  You're tired of renting, you're tired of roommates, you're tired of not having something to call your own.  It's time -- time for your first home.  This is one of the most exciting times in your life, but its also filled with apprehension and confusion.  Let's relax and try to make it easier for you.

Who are first time home buyers?

First timers are typically anticipating a major life event like an upcoming marriage, birth of a child or completion of school.  They are most likely currently living with friends or relatives in a rental property.  The best attribute of the first timer is that they value the emotional and financial benefits of owning a home (i.e. personal satisfaction, pride, asset building, etc...)

What do first time home buyers want?

If you're a first timer, you know exactly what you want, but you might not necessarily know how to go about getting it.  Today's first timers are more and more savvy than ever before, with the majority of first timers doing an extensive amount of research on the internet before contacting a Realtor.  First timers want and need a broad array of products, with clear explanations of the entire process from offer to possession. 

Debunking Financing Myths

One of the first things a first timer will need to do is get pre-approved for a loan.  These days, there is a lot more honesty and transparency required on your part, but if your financial house is in good order, you have plenty of great options.  Think you need to put 20%+ down on your first home?  For younger first timers, coming up with that huge down payment is usually prohibitively expensive.  20% is not the norm! 

FHA (the Federal Housing Administration) provides loans that require a minimum of 3.5% down, with a minimum credit score of 600 and mortgage insurance paid up front monthly.  For those who have served in the military, VA (The Department of Veterans Affairs) loans are available for 0% down with any credit score (up to home value of $700k) and.  Conventional financing requires 5% down for first timers with a minimum credit score of 620 with mortgage insurance paid monthly.  One of my favorite loan options is USDA financing.  This type of loan is typically used in more rural areas (i.e. Weld County) but can also creep into the boundaries Fort Collins, Loveland, Greeley and Windsor.  This loan requires 0% down with a credit score of 600.  There are published maps of areas that the USDA provides these loans.  Don't let anyone tell you that you need a hefty chunk of money to put down on a home.  You can afford a down payment, and you can find a great home for nearly the same as what you're renting for right now.

What to do next

A Realtor is going to be able to put you in touch with everyone you'll need to be in contact with.  Take your time, do your research online, and contact a Realtor to get the process started if you're ready to make your dreams into a reality.  If you have any questions, I'm always here to answer them for you -- and the next time you come across someone who is tired of renting and wanting to get into a new home, pick up the phone and call me to let me know how I can help them.