Colorado Springs Vintage Homes Blog » For Buyers

Short Sale Addendum help answer questions

Kathy Torline — Mon, 14 May 2012 14:00:16 +0000

Mandatory Colorado Short Sale Addendum is part of the contract

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It continues to look like short sales in Colorado Springs are going to be here for awhile longer, and they are definitely a viable option for some buyers. Even though they can take some time to get short the sale acceptance from the lien holders, for a patient buyer, they can definitely be a good deal.

Having written two short sale offers this week for buyers, I thought it would be a good topic to discuss the short sale addendum that is required in Colorado. The Colorado Real Estate Commission has came up with a couple of forms called a “Short Sale Addendum.” These forms try to cover some of major and minor complexities a short sale brings to the purchase and sale of property.

The addendum should be included with the Contract to Buy and sell Real Estate between the buyer and seller and has several key points.

** The buyer enters details on how long the seller has to submit the short sale information to the lien holders.

** The buyer can also say how long they will wait for short sale acceptance.

** The buyer can also check a box regarding Early Termination that says either the seller or the buyer can terminate at any time with written approval. This is a very helpful clause for a buyer who has waited for months for approval; and essentially just wants to give up on this property and find something else.

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Kathy (719-287-1049) KTorline@msn.com

Disadvantages of buying a new home

Kathy Torline — Tue, 08 May 2012 13:15:32 +0000

Interested in buying a new home in Colorado Springs

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I certainly understand the appeal of buying a new home. Nothing better than being the first owner of a house; everything new, everything in good shape. BUT, there are some disadvantages to buying a new home. Since I spent part of this week looking at new builds and visiting model homes; it reminded me of some of these disadvantages.

Window coverings not included. Don’t underestimate the cost of what it will take to get window coverings on all your windows. If you are buying a $300,000 to a $500,000 home, I’m guessing you don’t want the cheap $20 blinds that you can buy a Home Depot. Make sure and include this in your budget

Landscaping is also important to include in your budget. Many of the communities include front landscaping, most don’t include back landscaping. But some new communities don’t include it and they required the landscaping to be completed within 6 months to a year after you move in. By the time you put in sprinkler systems, install sod, put in bushes, trees, rock, etc, it doesn’t take long to spend $5000 to $10000; and even more if you have to put in retaining walls or terraces for sloped lots.

And then there is the lot premium for the more desirable lot. The large cul-de-sac lot, or the lot with the great view can cost anywhere from $20,000 to $100,000 more. Granted the lot a house sits on is extremely important, but almost always you won’t get that money back when you go to sell it. There is some consideration in the resale market for a nice lot with a view, but it’s not even close to the amount charged when you originally buy the property.

Also, if you need to sell within a year or two, you are competing against the other homes that are still being built and can be customized. Buyers will almost always choose a brand-new home rather than a 1-year-old home.

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Kathy (719-287-1049) KTorline@msn.com

Less Inventory = a more stable Colorado Springs housing Market

Kathy Torline — Thu, 03 May 2012 12:58:35 +0000

Colorado Springs housing inventory is down

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Why should you care that there is less inventory on the market?

Real estate has always been about supply and demand. When there are more houses on the market then the demand, the market conditions start to adjust and pricing goes down. When there is less houses on the market, pricing starts to stabilize and go up. As the information listed below, housing inventory, is down. In fact, it’s way down.

I’m not sure if this means we are going to start to see a rise in pricing, but I do think the market has hit bottom. As usual, time will tell ………………

Existing Single Family Homes on the Market

April 2012 4,433 Sales 2,289

April 2011 4,866 Sales 2,252

April 2010 6,228 Sales 2,382

April 2009 5,304 Sales 2,009

April 2008 6,787 Sales 2,298

April 2007 6,372 Sales 3,007

April 2006 6,114 Sales 2,725

April 2005 6,512 Sales 2,659

April 2004 6,181 Sales 3,068

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Kathy (719-287-1049) KTorline@msn.com

4 Real Estate Investor tips

Kathy Torline — Mon, 02 Apr 2012 22:40:51 +0000

Interested in buying Colorado Springs Real Estate Investment properties?

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Here’s 4 key points to remember when you starting to invest in real estate

1. What are your real estate goals?

Why do you want to purchase investment property?

Do you want to flip properties? Are you willing to take the risk? Do you understand home construction and remodeling? Do you have the skills to do it; or to manage the process?

If you aren’t flipping, how long do you plan on holding a property? 5 years? 10 years? 15 years?

If you are looking into buying rental properties, what type of renters do you want to attract? Would you prefer a duplex, a single family home, a fourplex, or an apartment building? Do you want to own near a college? Near a military installation? Near a hospital? Near major industry?

Do you want to finance a property, or are you a cash buyer? Have you already talked to a lender to understand your financing options? If you are a cash buyer, do you have fairly quick access to your money?

Would you prefer to be a passive investor? If so, flipping is probably not for you.

What percentage return are you looking for on your investment?

Are you looking for a property that may benefit future appreciation in pricing?

2. Decide where to buy

This is decision that will make or break your real estate investment. Consider places of good employment, development and decent growth. Don’t buy in an area where the economy is declining, unless you really want to own for the long term. Where’s the demand for properties? Where’s the strong demand for rentals? Remember your real estate goals.

3. Who should manage the rental property?

Are you going to be the landlord? Do you want to hire a property manager? Do you want to screen the potential tenants? Can you be gentle but firm with your tenants? Do you want to take the calls from tenants when things need fixed?

4. Remember, it’s strictly business

As an investor, you need to guided by your goals; not your emotion. Your goals and guidelines should be at the forefront of all of your decisions.

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Kathy (719-287-1049) KTorline@msn.com

Don’t forget about the pipes

Kathy Torline — Thu, 08 Mar 2012 16:32:14 +0000

It’s important to check the sewer lines in older homes

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If you are looking at buying an older home in the Colorado Springs area, especially a Historic Home, don’t forget about inspecting the sewer pipes.

Why should I check the sewer lines?

Sewer lines are buried underground and are susceptible to intrusions like tree roots and excess waste products and paper, not to mention the general aging of the pipes. Common sewer line problems can include roots in the lines, holes, cracks, and pipe separation.

Once tree roots get into sewers, they are often expensive and messy to deal with. It can mean calling in a backhoe to dig up the your yard which adds additional costs to the sewer replacement. Also, it can bring up interesting questions, such as what if your neighbor’s tree rots finds its way into your pipes?

A residential sewer is critical in the proper operation of the whole home’s plumbing system.

Should I get my pipes replaced?

There are several different types of sewer lines, including clay (85+yrs old), cast iron (50+yrs old) and ABS or PVC. Clay can collapse on its own as it ages and can be expensive to replace. Some experts believe that cast Iron, is the best. A plumber can advise you whether you should get the pipes replace or not.

What is a sewer scope?

A sewer scope is a fairly inexpensive procedure performed by an experienced plumber, involves inserting a cable into the sewer line from the main in the home or in the clean out all the way to the connection with the municipal sewer or a septic tank. The clean out may be located in the basement, crawlspace or outside where the sewer line exits the home.

On the end of the cable is a tiny television camera that “scopes” through the pipes and detects blockage, breaks and potential clogs in the line. These images can be recorded on a DVD and may be reviewed by the homeowner and/or prospective buyer to verify the condition of the sewer line.

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Kathy (719-287-1049) KTorline@msn.com

97% high school graduation rates are possible

Kathy Torline — Mon, 30 Jan 2012 11:38:56 +0000

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There are many different ways to evaluate Colorado Springs schools, but one measurement is the graduation rate. The percentages are based on a federal formula that takes the number of students receiving a regular diploma divided by the number of students who started 9th grade + students transferred in – students transferred out. Graduation rates are one indicator of whether the local Colorado Springs public school system is doing what it is intended to do: enroll, engage, and educate youth.

The complete reports are on the Colorado Department of Education web site, and you can download the data into an Excel Spreadsheet. For someone who loves statistics (which is me), it’s full of amazing information including the graduation rates by gender and by race; and you can even pull data by each High School in the districts. As an example, in District 11, Mitchell High School has a 74.4% graduation rate vs. 81.2% for Coronado High School vs 61% for Wasson. Also, it’s interesting to note that the average graduation rates in Colorado is 73%. For another take on the information, check out the article in the Gazette, the Local Colorado Springs newspaper.

There is another web site that I’ve recently been seeing television commercials for called www.coloradoschoolgrades.com, where you can search for schools by many different ways including by district, by zip code, by address. It grades the schools (A-F); and breaks down the grades by different subjects including Reading, Math, English and Science. It rates the Cheyenne Mountain Grade School an A+, and Chipeta in District 11 in Mountain Shadows is also rated an A+.

Here’s a quick recap of the Colorado Springs Schools High School graduation rates:

Organization Name	All Students Completion Rate	Female Completion Rate	Male Completion Rate
CHEYENNE MOUNTAIN 12	97.2	97.8	96.6
MANITOU SPRINGS 14	96.2	100	92.4
PEYTON 23 JT	95.1	95.8	94.6
LEWIS-PALMER 38	94.5	96.1	93.1
ACADEMY 20	91.7	93.6	90
CALHAN RJ-1	89.1	100	80
FALCON 49	89.1	91.2	87.4
ELLICOTT 22	87.5	83.3	90
FOUNTAIN 8	86.6	91.8	82.4
WIDEFIELD 3	84.2	89.4	79.7
ELBERT 200	82.4	66.7	85.7
HARRISON 2	75.3	78.6	72.4
HANOVER 28	73.3	66.7	83.3
COLORADO SPRINGS 11	68.8	72.8	65

Organization Name	All Students Completion Rate	Female Completion Rate
CHEYENNE MOUNTAIN 12	97.2	97.8
MANITOU SPRINGS 14	96.2	100
PEYTON 23 JT	95.1	95.8
LEWIS-PALMER 38	94.5	96.1
ACADEMY 20	91.7	93.6
CALHAN RJ-1	89.1	100
FALCON 49	89.1	91.2
ELLICOTT 22	87.5	83.3
FOUNTAIN 8	86.6	91.8
WIDEFIELD 3	84.2	89.4
ELBERT 200	82.4	66.7
HARRISON 2	75.3	78.6
HANOVER 28	73.3	66.7
COLORADO SPRINGS 11	68.8	72.8

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Kathy (719-287-1049) KTorline@msn.com

Cash continues to drive the REO Market

Kathy Torline — Wed, 25 Jan 2012 13:10:08 +0000

Cash is still King

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There was an interesting article in DS News about how cash investors are pushing down prices. According to a quote in this article “In December 2011, data collected for the HousingPulse Survey shows that the overall proportion of cash buyers in the housing market surged to a record 33.2 percent, up from 29.6 percent a year earlier.” There is also a Press Release put out by Campbell, that essentially was repeated by DS News.

I did a quick calculation of Colorado Springs home transactions for 2011 and came up with the following information on what type of financing was used for home purchases in the area;

Cash 19%

Conventional Financing 31%

FHA Financing 19%

VA Financing 31%

One of the reasons that the numbers are different from the national average in the Colorado Springs Housing market, could be because of the strong military presence in the area which is shown by the 30% of home buyers that use VA financing.

This article has several key points on why they think cash buyers were bringing down prices

More cash buyers are the winning bidders on REO properties, and REO banks prefer transactions that can close within 30 days
Even though investors may not be the first offer accepted, they often end of getting the property because other buyers can be eliminated because of lengthy mortgage approval timelines. Since cash sales can typically close in 20 to 30 days and financed offers, especially VA and FHA can take closer to 45 – 60 days, REO banks have a strong preference for cash.

In my opinion, investors are important in this market. They often buy homes that are distressed and can’t be financed because of the condition of the property. If the house is in disrepair, most lenders don’t want to lend on them. As an example, the roof may be in bad shape, plumbing may not work, the house may have been stripped of all of the appliances and cabinets by the foreclosed home owner. Seems to me it’s much better to get the house sold, and fixed up, vs. letting it sit empty. (Although I have to admit that I’m biased, as I’m also a real estate investor).

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Kathy (719-287-1049) KTorline@msn.com

Don’t Assume anything in Real Estate Series, #1

Kathy Torline — Thu, 19 Jan 2012 14:01:23 +0000

I’ve decided to start a new Series, Don’t Assume Anything in Real Estate.

This series is really just a bunch of random articles about the many assumptions buyers and sellers make when selling, leasing, or purchasing a home.

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You aren’t under contract yet!

Some buyers are under the mistaken impressions that once they write an offer on their dream home, or their first investment property, they are under contract to purchase the home. This is definitely not correct.

After they put together their offer, their Buyer’s Agent submits the offer to a Listing Agent, and the offer is then presented to the seller. The seller has many options on how they respond.

They can reject the offer and not respond.
They can counter the offer
Or they can accept the offer.

THE MOST IMPORTANT THING TO UNDERSTAND ……….. Until the offer is completely accepted and all of the appropriate documents are signed and acknowledged, a buyer and seller are not under contract. Another offer can always be presented to the seller from a completely different buyer and the seller can accept it.

The terms “under contract” may seem like a technicality, but it’s not. After a seller presents a counter-offer to the buyer, it’s important to remember that another offer can come in on the property and the seller can certainly accept it.

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Kathy (719-287-1049) KTorline@msn.com

Build a good team

Kathy Torline — Tue, 29 Nov 2011 12:42:46 +0000

Colorado Springs Real Estate Investors need a good team

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Since I’m a real estate investor, as well as many of clients are also investors, I’ve continued to realized how important it is to have a team of people to help you when you are an investor.

Henry Ford was famous for saying he did not know all the answers, but knew where to find them. An investment team is no different. You don’t have to know all the real estate answers, just know where to find them.

Here’s a quick list of some of the professionals you may want to have on your team:

Real Estate lawyer
1. Tenant issues, leases, evictions, etc.
2. Ownership of the property. LLC, Corporate, etc.
Home Inspector
CPA/Accountant
Insurance Agent
1. Make sure you know what your policy covers and does not cover. Also, not all insurance policies will cover a property when it is going thru substantial renovation and is vacant
2. Also, it’s good to have a name you can refer renters to; as you want any renters to have renter’s insurance
Contractors
1. Overall handyman/carpenter
2. Painter
3. Flooring installation and purchase
4. Flooring refinishing for wood floors
5. Cabinetry, including countertops
6. Landscaping
7. House Cleaner
8. Plumber
9. HVAC
10. Roofer Pest Control

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Kathy (719-287-1049) KTorline@msn.com

BPO’s can kill a short sale

Kathy Torline — Mon, 03 Oct 2011 13:15:53 +0000

Killer for Colorado Springs Short Sales

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One of the fastest way to “kill” a short sale you are trying to purchase, is for the lender to receive an inflated BPO.

Let’s start with the basics

What is a BPO? The initials stand for Broker’s Price Opinion; and most lenders will order at least one, maybe two or three BPO’s , which is how they come up with a value on a property.

Who does the BPO?

BPO calculations are not an exact science, they are based on an opinion. Most lenders will hire Realtors to put together a BPO on a property, and in turn pay a Realtor a fee for the BPO. The fees can range from $25.00 to $125.00; and in my opinion the lenders get what they pay for. As an example, a typical BPO order requires the Realtor to drive by the property, take pictures, upload the pictures, find 3 active properties and 3 sold properties; and put all of the information together in some of format that the lender requires. A BPO can take from 3 hours to 7 hours to complete. If the lender is paying $25.00 that equates to $8.00 an hour; not much pay for how much work they are asking to have completed. At 7 hours it equates to less than $4.00 an hour. Most Realtors will try to complete the BPO as quick as possible.

Many lenders don’t have many requirements for a realtor to be qualified to do a BPO; hence a brand new agent who doesn’t have any experience actually selling properties can qualify.

It’s important to know that BPO’s are not an exact science. As an example, if I was hired to do a BPO for a house selling in a Stratton Meadows, a subdivision in Southwest Colorado Springs, near Fort Carson, I could choose from 40 houses that have sold in 2011. If I narrow the list down farther to houses less than 1000 square feet there are 27 houses that sold. The sold prices have ranged from $45,000 to $105,000. Hence if I pick the higher-end houses for the BPO, my final value for the BPO will come out higher. If I choose the lower end houses for the BPO, my valuation will come out lower.

The lender will typically take the BPO price and come up with a decision from this document on what to accept on a short sale offer. In this particular Stratton Meadows subdivision, my BPO can be as low as $50,000 or as high as $90,000. The high BPO valuation could definitely kill a deal, as a qualified buyer may only want to pay $60,000 to $70,000; but the bank may say that they’ll only accept a minimum of $70,000 based on the recent BPO they received.

Seems to me the process is flawed. Maybe a lender should always get 2 to 3 BPO’s and average them out? Every realtor who has ever been involved in short sales has a story about a transaction that didn’t go through because the BPO was too high, hence the transaction never went through.

Seems like there should be a better way.

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Kathy (719-287-1049) KTorline@msn.com