October 18, 2017

 

HARRY’S BI-WEEKLY UPDATE

                        A Current Look at the Colorado Springs Residential real estate Market

As part of my Unique Brand of Personal Service, it is my desire to share current real estate issues that will help to make you a more successful and profitable buyer or seller.

 

THIS IS A BIT LATE BECAUSE…

I was hoping to include the comprehensive neighborhood reports are usually in the 2nd eNewletter of the month, but they have not been produced by PPAR as of this morning and I did not want to delay sending this.

Any one of you who would like a copy of the detailed report, or simply the page covering your individual neighborhood, please send me an email and I will have it sent to you directly.

Business is still going at a record pace and there doesn’t seem to be any rhyme or reason as to a particular “buying season” anymore.  Starter homes are continuing to receive multiple offers, some over listing price and they are on the market for a very short time—sometimes just hours. 

This can be discouraging to first time buyers and others who want to sell and trade up but there are lots of ways to help improve your chances and working with me is number one on that list. 

I have seen it all in my 45+ years in the local residential real estate arena and know the ins and outs of the business.  I can help from beginning to end—from finding properties that meet your individual needs, wants and budget to recommending lenders to obtain pre-approvals and then writing an offer that will most certainly get noticed, if not accepted the first time.  

If you, a family member or co-worker need help in making your residential real estate dreams come true, my special brand of customer service is simply a phone call or email away.  I can be reached at 593.100 or at Harry@HarrySalzman.com .

 

MILLENNIALS’ NEW WEAPON IN BIDDING WARS:  A PARENT’S HOME EQUITY

The Wall Street Journal, 10.10.17

Parents are refinancing their own homes to help their children compete as all-cash buyers in hot housing markets. When the purchase closes, the children pay the parents back.

This has been referred to as the mortgage merry-go-round:  Parents refinance their own home to fund the full cost of their son or daughter’s home.  This allows the child to compete as a “desirable all-cash buyer” in areas such as Colorado Springs where bidding wars are common and we find that many sellers today often prefer cash transactions because they can close quickly without making a deal contingent on financing.  Then, when the purchase closes, the new home is refinanced by the child and the parents are paid back.

This strategy is also indicative of how hard it is for most millennials to get into their “starter home”, where competition is the fiercest.  Even those with high paying jobs and large down payments are losing out, most especially in hot real estate markets such as ours.

Certainly, this will not work for everyone.  Parents must have enough equity in their homes to make it worthwhile, and the same goes for the child’s new home.  And both parties must be willing to take on the added hassle and cost of two loans.  Additionally, mixing family and money can be tricky—especially when large sums and people’s homes are involved.

Here are a couple more things to keep in mind:

  1. Loan Options.  Parents have several options for using the equity in their homes, including a cash-out refinance, which allows the borrowers to refinance an exiting mortgage plus an additional amount and take the difference out in cash; a home-equity loan, which is a loan against the value of a home, including a second mortgage; or a HELOC, which works like a credit card, allowing homeowners to qualify ahead of time and withdraw funds when the child is ready to close.

 

  1. Finance Fail.  The biggest risk, however, is that the children will not qualify for a loan—or one as big as expected—especially if they pay above the asking price or the market cools before obtaining the loan.  To avoid this, let the lender know your plans ahead of time and if possible, use one loan officer for both transactions.  Also, some lenders want buyers to live in a home for at least 3 to 6 months prior to refinancing.  An alternative here would be a “delayed-financing mortgage”, which allows a buyer to purchase the home in cash and refinance the day after closing for up to 80% of the value of the home.

 

  1. Think Like a Lender.  Parents should do the same kind of due diligence as a lender, including vetting children’s finances.  It might be best to work with a lawyer to draw up a family loan agreement setting out repayment terms and other stipulations.  For example, parents may want to ask for 5% of the eventual sale price.  Buyers may also want to get a home inspection.

 

  1. Consider the Costs.  A purchase mortgage or a refinance would typically cost about 2% of the loan value.  Most closing costs would apply to two loans instead of one.  And while repayment penalties are rare on primary-residence homes, they may apply to investment properties.

 

  1. Tax Tips.  Gifts of more than $14,000 per person per year are subject to federal gift taxes for the giver, which could apply to both parents and children.  Both parties should consult a tax professional to determine how this type of transaction could affect them.

 

DOWN PAYMENT MYTHS DEBUNKED:  An Infographic:

 

THE COST OF WAITING TO BUY

Keeping current matters, 9.29.17

I get asked this question a lot:  “Should I buy now or wait?” and my answer is always the same.  It all depends on your individual circumstances.  That said, in general, and most especially in today’s escalating market prices with the good possibility of mortgage interest rates rising in the near future, there’s no better time to buy than NOW.

Here is an illustrations explaining why:

 

Some Highlights:

  • The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices and interest rates were to increase over a period of time.
  • Freddie Mac predicts interest rates to rise to 4.4% by next year.
  • CoreLogic predicts home prices to appreciate by 5.0% over the next 12 months.
  • If you are ready and willing to buy your dream home, find out if you are able to.

So, if you are ready, willing and even thinking about buying a new home—whether to sell and trade up or buy for the first time or for investment purposes, please give me a call sooner than later and let’s see how we can make this a reality for you and your family.  I can be reached at 593.1000 or by email at Harry@HarrySalzman.com.

 

AND FINALLY, A LITTLE BIT OF BRAGGING…

As most of you know, I was in Chicago for an International relocation Conference the last week of September.  The Pikes Peak Association of Realtors (PPAR) held a formal dinner on September 29th, which I was unable to attend.  To my great surprise and with much gratitude, I found out that I was awarded the “Extra Mile Award” at that dinner.

According to PPAR, this award was presented for:

“Excellence and service to the real estate industry.  Harry Salzman has served as a member of the Government Affairs Committee (of PPAR) for over 20 years.  As part of the association’s advocacy efforts he has represented PPAR in city and county with his famous statistical and economic outlook, making him and PPAR the go to source for housing statistics in the region.  In addition to his advocacy efforts, Harry has been a valuable member of PPAR’s investment task force.”

I have been doing what I do for more than 45 years in the local real estate arena and know that my clients enjoy getting my special brand of customer service.  Knowing that people trust me enough to allow me to play a big part in their family’s biggest financial investment and that I can help them make their residential real estate dreams come true is a reward in itself.  To be able to do the work I love is also a reward in itself.  This special award from PPAR and being recognized by my local peers is the “icing on the cake” and is special to me and I wanted to share it with you—because, let’s face it, without all of you, an award like this would not have been possible.