Denver and Boulder Colorado Real Estate 

May 3, 2018

The Ultimate Guide to Buying New-Construction in Colorado

The Ultimate Guide to Buying  

New-Construction in Colorado!

 

With housing inventory at an all-time low in Colorado, finding an existing home to purchase can be a major challenge.  Fortunately, home-builders have finally begun to ease the inventory shortage with an influx of new-construction.   However, the process of buying a new home from a builder can be much riskier than buying an existing home from an individual.  Unlike the “buyer friendly” contract agents use for resales; builder contracts are written in a manner that greatly favors the rights of the builder.   If you are interested in purchasing new construction, it is wise to hire a Real Estate agent who is well-versed in interpreting builder contracts.

 When you visit a new-home community, the builder’s salesperson is present to “sell you” on the community and convince you to buy a home there.    However much like a car salesman, the builder’s salesperson absolutely serves the best-interests of the builder... not you.  Their primary goal is to help the builder maximize profits and reduce the builder’s risks.  Smart buyers understand the importance of having their own real estate agent present, to protect their best interests as well.    Walking into a builder’s sales office without an agent representing you, is a lot like walking into divorce court without an attorney and expecting your former spouse’s attorney to structure a fair deal for you.  It simply isn’t going to happen!

 

 

These are the top 12 things to know before buying new construction...

 1. Be careful how you fill out the builder’s Registration Form.   The builder’s salespeople are tenacious about pressing everyone who enters the model homes to fill out a registration card.  Much like an “Open-House” on a resale, the onsite salesperson wants to capture your information for follow-up purposes.  However, those registration cards also serve a more insidious purpose. The card always includes the question about “how did you hear about the neighborhood”?   It will usually give options like “online,” “radio commercial,” “Zillow,” or “My Realtor.”   If you check any box other than “My Realtor” or “My Agent,” then the sales office records this, and may use it in the future to avoid paying the agent that you bring in to represent you.   Builders only want to pay an agent, if they feel that the agent was the “procuring cause” that helped you discover and visit their model homes.   If they feel that your agent didn’t help you initially find them, they may refuse to compensate the agent.

 

 However, If you initially visit the sales office without an agent, you’ll still be OK as long as you check specify on their registration card that you are represented by an agent   The other acceptable alternative is that if you always politely decline to fill out their card.  They typically won’t force the issue, if you don’t want to fill it out.  Remember they are sales people, so they usually don’t want to alienate your or appear too pushy. 

 

 

 2. You are paying for agent representation, whether you utilize it or not.     An additional 3% is already added into the price of every home they build, to cover the cost of paying agents who bring in buyers.  Contrary to popular misconception, you will not be able to negotiate a lower price if you choose not to bring an agent.   If a buyer chooses not to bring an agent, the 3% simply goes onto the builder’s bottom line as additional profit.  Almost all the major builders now operate on a “One-Price Policy,” that insures that they do not negotiate any differently or offer additional incentives to buyers without an agent.  The major builders realize that real estate agents are crucial to their long-term survival during down markets, so they are extremely careful not to alienate them during hot-markets.   Builders also realize that most of the best-qualified buyers have already hired agents.   Therefore, offering better pricing to unrepresented buyers, would be extremely counter-productive and downright foolish on the part of the builders.  They certainly didn’t grow to be multi-million-dollar operations by making foolish business decisions.   Bottom line, the price you pay a builder entitles you to bring representation, so it's foolish not exercise your right to have a real estate agent in your corner representing your interests. 

 

 

3. Builder contracts are 60-80 pages of legalese, designed to limit your rights in the transaction.

In Colorado, most people’s issues with builders arise from the builder-slanted verbiage contained in their proprietary purchase contracts.    Because the Real Estate laws in Colorado are extremely “Consumer Friendly”, all agents buying or selling “re-sale” properties are required to use a standard, state-provided purchase contract which is drafted with terms designed to offer buyers maximum protection of their earnest money.   However, Colorado allows builders to circumvent the standard state-provided resale contract and substitute a contract of their own instead. These proprietary contracts are crafted by the builder’s attorneys and contain extensive language that heavily favor the rights of the builder.  This language makes it FAR easier for a builder to keep a buyer’s deposit money if the deal fails to close, or a buyer chooses to back out.   An experienced real estate agent will interpret the builder’s contract and carefully explain the buyer’s rights (and lack of rights) as stated in the contract.  This includes noting any crucial deadlines related to the buyer’s right to terminate without forfeiting the deposit.

 For example, if completion timelines are delayed by things like bad weather, materials shortages, labor strikes of unionized trades, delays with county permit issuance, project financing issues, etc., the builder’s contract makes sure they aren’t liable.  Most builders typically promise delivery somewhere between 6 and 13 months, but the contract may allow them to delay completion up to a full 24 months without penalty or legal recourse.  These kinds of details are why it’s critical to bring an agent who understands (and can explain) all the legalese contained in the builder’s contracts.

 

Because a typical builder’s contract is 60 to 80 legal sized pages long, an experienced agent will often obtain a copy of the contract in advance, so that they can carefully read it in its entirety and highlight any crucial dates or clauses that a buyer should be particularly aware of.  This makes the signing process go smoother because you won’t have to interpret a massively long contract on the spot.   Or worse yet, not properly understand the details outlined in the contract you are signing.   Many experienced agents keep a file in their office containing example contracts from every active builder in their area. This means your agent is prepared to protect your interests from the start.

 

 

4. Negotiating the Price, Incentives, and Inclusions can be trickier than most expect.  Just like at a car dealership, new home salespeople often offer extra inclusions or discounts to secure a contract.  Many builders may try to insist that their prices are non-negotiable.    This may or may not be true depending on the market, neighborhood, and builder.  If a particularly hot neighborhood is selling faster than a builder can release lots, then odds are they won’t offer a deal on the price.

 

 This is often true in Denver and its more popular suburbs, where builders simply can't build homes fast enough to keep up with the present demand.   In red-hot neighborhoods, they often have no need to discount their prices for anyone. They realize that if you won't pay full price for it, the next person through their door will.  Of course, there are some exceptions to every rule. There are some circumstances were an agent can help you "work" the builder for better pricing, lot placement, landscaping, or incentives.  A good agent recognizes these instances and makes sure you're able to capitalize on them if they present themselves.

 

 However, if the builder has several unsold “spec” homes in inventory, they’re usually more willing to negotiate. The odds for negotiation are even greater at the end of the month, the end of the fiscal fourth quarter, or when the builder is down to the last few homes and they’re trying to close out the development.  In these instances, a smart agent negotiates hard for you!

 

 

5. If you have a house to sell first, most builders have strict policies on contingencies.  Builder policies on contingencies can be an extremely tricky balancing act.  In fact, most builders in Colorado won’t even entertain a contingent offer on a completed inventory home.   The ones that will take a contingent offer on an inventory home, won’t allow the contract to remain contingent for long.   Therefore, if they do accept an offer that is contingent on the sale of your current home, the time-frame they will allow your home to remain unsold is generally very brief.  If you fail to get your home sold quickly, during this time-frame, then most builders retain the right to cancel your contract and sell the home to another buyer.   Their contracts also often define this scenario as a reason to retain your deposit money in the process.  So, you can potentially be placed into a very ugly situation of losing the new home, along with the deposit you placed down on it.

 

In situations where the builder is building your new home from a “dirt-start”, the policies on contingency are often only slightly looser.   We encounter quite a few builder contracts that require the contingent sale to be completed within 6 months, even if the home they are building won’t be completed for 10 months.   Therefore, the buyer is literally forced to seek temporary housing for a few months and then make a double-move as well.   This is where it's important to have an agent in your corner that is well-versed in managing new-construction time-frames.   The agent representing you, will be responsible for timing the sale of your home to perfectly coincide with the completion of the new home.  Threading that needle can be particularly tricky, due to the need to manage marketing time, days under contract, and possession dates, all while minding the builder’s contractual deadlines as well.   If an agent mismanages this delicate juggling act… a buyer could end up with their current home sold out from under them, and the contract on the replacement home terminated by the builder.   In states with strong laws pertaining to “Specific Performance” a seller can be sued for attempting to back out of a sale, and the court can often force them to complete the transaction.   Once again, this is a situation where it is crucial to have an agent experienced with builder transactions, working on your behalf.

 

6. Builders advertised “base prices” are often quite deceptive.  The builder’s advertised base price is generally tens of thousands of dollars below the final completed price. The final price is determined after lot premiums, design center options, structural upgrades, low voltage options, appliances, landscaping, and builder incentives are factored in. The model home is packed with every imaginable upgrade. It’s extremely crucial to ask what features are included with the basic home and what items are upgrades. Even basic things like lawn grass, sprinklers, and fences are often not included. Refrigerators, garage door openers, window blinds, and central air conditioners aren’t always included either.

 

 Also, the builder won’t normally allow changes to materials or structural features once construction has started. This is because the builders cannot deviate from the initial building plans they submitted to the county to obtain the building permit.  Likewise, materials such as tile, wood flooring, counter-tops, and appliances cannot easily be changed midstream. Builders place their material orders in bulk to receive wholesale pricing; therefore, it isn’t feasible for them to make changes after the materials order has been placed.

 

 *Review my “Ultimate Builder Questionnaire for Buying New Construction” as a guide to the specific elements you need to consider when purchasing a new construction, and common questions about modern building materials.

 

 

7. Interpret the Meaning of Soil Surveys, Engineering Reports, and issues with high water tables.  A real estate agent understands how to interpret the meaning of the soil surveys and engineering reports pertaining to the chosen lot including reading blueprints and floor-plans.

The amount of expansive soils found during the soil survey determines the type of foundation the home requires. Slab-on-grade foundations can be used when the expansive soil content is low, but costlier pier-and-beam foundations must be used when high amounts are present.  

 

Special consideration must also be given to lot selection, when dealing with properties such as golf course homes, or homes on hillsides, etc.   Poor drainage, moist basements, and erosion issues that have been known to arise from unique topography and elevated water tables often found along golf courses.  An agent with extensive builder experience, will typically know the soil conditions in the various areas they work in, and know how to best advise you on the pros and cons associated with various lots the builder may have available.

 

 

8. Strategy is often required when maximizing a limited budget with a builder.    A real estate agent advises you to make the best use of your budget. Choices like lot location, structural upgrades, and design center options can all make-or-break a buyer’s budget. Some cosmetic options can be done more affordably after closing, while some structural items cannot easily be done after the house is completed. Most builders also require additional deposit money, once a buyer’s design center choices exceed a set amount. The required deposit can be up to 50% of the cost of the upgrades if the cost of the options goes past a predetermined dollar amount.

 

 Your agent questions the builder about all the inclusions, contingency terms, financing, and incentives to meet your budget. Also, a quality agent advises you not to over improve the home above the norm for the neighborhood. New construction homes almost always appraise for financing unless the buyer goes overboard with design center options. However, most builder contracts state the buyer is still required to close on the home even if the appraisal comes in low.

 

 Aside from the buyer’s loan getting declined due to no fault of the buyer or the builder failing to compete the home in time, builder contracts generally have no other provisions in place for a buyer to terminate without forfeiting their deposit. It’s critical to understand how to manage your budget to protect your investment.

 

 

9. Issues with quality and defects can arise during the construction process.    As stated above, the builder’s salesperson protects the interests of the builder. They’re not responsible for protecting the buyer.  Because building a home is a complex process, with plenty of room for errors, a second set of experienced eyes looking for potential issues during the stage-inspections is crucial.   

 

 Your real estate agent accompanies you at walk-throughs with the foreman at the various stages of construction – pre-drywall, electrical, low voltage, and the final pre-closing walk-through to identify touch-ups.  It’s the agent’s job to help to help catch deficiencies and hold the builder’s foreman accountable for completing all repairs or necessary corrections prior to closing.

 

New homes are fully covered by the builder’s warranty and a builder’s reputation depends on delivering homes that are free of problems. However, you should pay close attention to the verbiage in their contract that deals with defects that are discovered during the routine walk-throughs. Most builders will not allow a buyer to terminate over these items, but rather insist that the buyer allow them to correct the issues before the home is delivered.

 

 

10. Protecting your Deposit Money is always a major concern with new-construction.   Builders typically require a larger deposit than with a traditional resale purchase. The deposit amount usually falls between $10,000-$15,000. As we said, some builders may require additional deposits of 50% of the cost of your upgrades. Many buyers end up with $30,000 to $50,000 in the hands of the builder prior to closing.

 

This is where the builder-slanted language in their proprietary contracts comes into play. Much of the language in their purchase contract revolves around their recourse if the buyer fails to close on the home. Most of this language grants the builder the right to keep all of your deposit money if the deal gets derailed and fails to close.

 

However, the contract also contains a few clauses that grant the buyer the ability to back out of the deal with a full return of their earnest money. Don’t count on the builder's salesperson to point these out. They are incentivized to not lose a sale. Once again, an agent in your corner ensures you understand your rights.

 

Your real estate agent helps protect your earnest money. There aren’t as many crucial deadlines with a new build. However, the real estate agent works with you to ensure crucial deadlines like the loan application deadline and the contingent sale deadline are met. Also, some builder’s contracts have verbiage that entitles them to keep a percentage of the deposit even if you back out for a legitimate reason defined in the contract. A real estate agent works closely with you to avoid unpleasant surprises.

 

 

11.  If interest rates rise too much during construction, there can be major repercussions.   Most mortgage lenders typically won’t lock-in interest rates more than 90 days in advance of a closing. Therefore, when dealing with new construction that likely won’t be completed for 4 to 18 months, this can pose a substantial risk. If your debt-to-income ratios barely qualify you to purchase the home at the time it’s contracted, there’s a risk that you may no longer qualify to buy if mortgage rates increase before you’re eligible to lock-in the rate.

 

 Interest rates are unpredictable. It’s always prudent to make sure you’ll still qualify even if the rates increase. A good rule of thumb is to know whether you’ll still qualify if the rates climb by one percent. If not, then you’re taking a major gamble buying new-construction. You may find that buying an existing home where you can lock in your rate is a better choice.

 

Most builders also have an ownership stake or affiliated business arrangement with a lender and title company.  Additionally, most builders require buyers to use their lender and title company to qualify for incentives and discounts. While they cannot force you to utilize these service providers, they will routinely withhold discounts and incentives if you insist on using an outside lender or title company.  (*The good news is that the builder’s lender usually has competitive rates and wants buyers to qualify).

 

 

12. Hire a Real Estate Agent that has experience dealing with builders (*Hint... Most don’t).      The Pareto Principle (also called the 90/10 rule) describes the real estate industry very accurately.   It states that 90% of homes in the market are sold by only the top 10% of agents.   This also means that the remaining 90% of agents “fight over scraps”, for the remaining 10% of transactions.   In other words, if you lined up 10 real estate agents, one of them sells far more homes than the other 9 combined!   To make matters worse, out of the 10% who are doing most of the business, a substantial percentage of those agents have rarely dealt with builders.  This means that finding an agent that is extremely well versed at new-construction transactions, is like finding a needle in a haystack!  

 

 *David Hakimi is one of the most experienced “New-Construction Specialists” in Denver and the entire country.   When it comes to dealing with builders, there aren’t many other agents in the entire U.S., with his level of expertise.   In fact, David is nationally published by The National Association of Realtors, and Realtor Magazine, on the topic.   He has written several articles on selling new construction, and his article “The Rookie Agent’s Guide to Selling New Construction” was published by the National Association of Realtors and Realtor Magazine.  It was one of NAR’s most read articles in 2017 and was shared online by over 18,000 agents nationally!

 

 The Hakimi Team at Berkshire Hathaway HomeServices- Innovative RE, serves Denver, Boulder and surrounding Colorado communities.  They specialize in New Construction and Luxury Transactions. Contact David Hakimi today to start searching for your perfect home, 720-370-3000 or David@HakimiTeam.com

 

 *This article was adapted from David’s article, “The Rookie Agent’s Guide to Selling New Construction”, originally published by the National Association of Realtors, Dec 12, 2017.

 

David Hakimi writes regularly for NAR on their YPN Lounge and is nationally recognized as an authority on new construction transactions.

Feb. 15, 2018

Why Zillow's Pre-Foreclosure listings cause "false hope" in Denver (and other hot markets)!

Zillow Pre-Foreclosure

Several times each month, I get phone calls from would-be homebuyers surfing the "Pre-Foreclosure" section of Zillow, and anxiously asking me about a house they found listed there.   These calls always end the same way, when I have to explain that the homes in the "Pre-Forclosure" section aren't actually available for purchase (and they most likely won't be, anytime soon).   I hate having to constantly break this bad news, home-buyers that are desperate to find affordable housing in Denver!   They have most likely been given false hope, by some ill-informed friend or relative who's convinced them that they can still find an affordable house if they just look for a foreclosure.   Sure, that was great advice back in 2008, but it hasn't been valid in most markets now for at least 7 or 8 years.  

The way Zillow determines which homes get displayed in its "Pre-Forclosure" section, is by pulling public record data from the counties.  Specifically, Zillow is displaying the addresses of any homeowner who has been served a "Notice of Election and Demand" by the bank holding their mortgage.   A "Notice of Election and Demand" is the first notice sent to a homeowner who is more than 120 days behind on their mortgage payment.  It is basically the document that formally notifies a homeowner, that their mortgage bank is initiating the foreclosure process.   However, once it is mailed, the homeowner can still stop the foreclosure proceedings by filing a notice called "Intent to Cure" with the court, and catching up the late payments, or selling the property and paying off the bank.  The homeowner can file this the "intent to cure" up to 15 days before the home is to be sold at the courthouse auction (usually about 30 days after the N.E.D. has been filed).   *Read more details about the Colorado Foreclosure laws here.

In a "down" housing market, with values declining and homes not selling... these Pre-Foreclosure notices might actually mean something, to a potential home-buyer hoping to snap-up a house at a bargain price.  This is because houses tend to stack-up in the bank's inventory of foreclosures when markets are slow.   The longer the banks are stuck with these homes, the more it costs them to keep them, and the more neglected and distressed they become.  Therefore in down markets, the banks are willing to sell them dirt-cheap, to get them off their books and stop any further losses.   

Problem is, we're not currently in a "down housing market".   Quite the contrary in fact... we're in a red-hot, rapidly appreciating housing market.  In fact, most homeowners have been experiencing yearly equity gains of around 10%, since around 2012.   That means that a typical Denver homeowner in a $400,000 house, gained about $40,000 in equity last year alone.  Therefore, it goes to reason that even if a homeowner fell a few months behind on their mortgage... they probably still have a TON of equity in the house.   As you can imagine, most will do whatever it takes to keep the bank from taking that equity.  Most of them simply end up calling a Denver Realtor, and listing the house "to cash-in", before they lose all that equity to the bank.

This massive appreciation in the Denver housing market is why it is currently almost impossible to get a "good deal" on a foreclosed home here.   Because the Denver housing market is in such a "boom period", the homes that do actually manage to get foreclosed on, are usually purchased at the court-house auctions by wealthy investors.  These investors have much deeper pockets than the average home-buyer in search of a bargain house, and they snap-up most of the foreclosures before they ever make it to the open market.   In the event that a foreclosed house does make it to market, its price simply gets bid up by competing offers, and it sells at a normal price just like any other house offered for sale by an individual.   Therefore the concept of "getting a great deal on a foreclosure" hasn't really existed since about 2011, when the last of the excessive inventory (resulting from the 2008 banking collapse) dried up.  Unfortunately, websites like Zillow, are now simply praying on the "false hopes" of those desperate for an affordable house, when they attract people by displaying lists of "pre-foreclosures".  Almost 100% of those homes displayed there will either be snatched-up by cash investors at auction, saved by their owners, or sold at normal market prices.  Unfortunately for many desperate young home-buyers, foreclosures haven't equated to good deals in Denver, for almost a decade.   

Posted in Home Buying
Jan. 2, 2018

The Rookie Agent’s Guide to Selling New Construction: Part 1 & 2

David Hakimi NAR Blogger

David Hakimi is a contributing blogger for The National Association of Realtor's YPN Lounge blog.   His recently published 2-part article on the learning curve new agent's face when selling new construction, can be seen here.  This was one of the most popular articles on any of the National Association of Realtors website for 2017.    This article was also featured on the home page of the Berkshire Hathaway HomeServices national resource center. 

The Rookie Agent’s Guide to Selling New Construction: Part 1

The Rookie Agent’s Guide to Selling New Construction: Part 2

 

 

Dec. 18, 2017

New-Construction or Resale? Understanding the Pros and Cons

 

New Construction vs Resale in Denver

When looking to purchase a new home, the question inevitably comes up: new construction or Resale? There are a lot of different things to think about: the appeal of a new, shiny home that’s never been lived in, or with the charm of a previously owned home in an established neighborhood with mature trees.   In Denver suburbs like ErieBroomfieldLafayette, and Thornton, you have plenty of options when deciding between new construction or used home.

 

Things to consider when deciding whether to buy New-Construction or a Re-Sale...

Deciding between a re-sale or New Construction in Denver

 

Pros of New Construction

 

Customization- You’re in total control of the layout and materials. You’ll get to choose the exact lay-out of the home, and the type of rooms.  Whether you want a traditional layout with a sitting room and a formal dining  room, or more contemporary home with seating around  a huge kitchen island and a modern “open floor plan”, you'll totally control the outcome.   You’ll also get to personalize every last finish in the home, to your personal taste. Flooring, counter-top material, plumbing an electrical fixtures, paint colors, cabinets and quality of the kitchen appliances, will all be exactly what you chose.  Even if you’re not building a full-custom home, most tract-builders will still give you a wide variety of floor-plans and materials choices.  

 

Architecture- Builders make notable advances every 5-Years!  Innovative new architectural features like “his and hers” closet and separated bathroom sinks, upstairs laundry rooms adjoining the master closet, and convenient bill-paying desks off the kitchen, have all become common in just the last 5 years.  Significant strides are made in home architecture, finishes, appliances, and energy efficiency, every few years.  Buying new, gets you the “state-of-the-art” on every aspect of the home.

 

Efficiency- Everything in a new home is built to current 2018 energy efficiency standards.  Modern insulation techniques, "Energy Star rated" appliances, triple-pane windows, high-efficiency furnaces, and high-SEER air-conditioners, now all contribute to the efficiency of a modern home.  Current homes are now meticulously sealed during the construction process with expanding-foam sealing every last gap during the framing stage, and some builders like Meritage Homes, even go so far as to spray foam insulation in the attic on the underside of the roof.  As a final step in the construction process, the homes are actually pressurized, and given a HERS rating, to score how air-tight they are.  In fact, most are now sealed so well, that the builders must install electric fans and special ducting just to ensure that enough fresh-air flows through the home!   These steps keep modern homes far more energy efficient than homes that were built just a decade ago.  Many tract-builders have also recently started including solar panels, ultra-efficient furnaces and tank-less water heaters, to ensure that the monthly energy bills are minuscule. 

 

Maintenance Since your home and everything in it is new, most major repairs are still comfortably in the distant future. Warranties on your roof and your appliances can protect you from unexpected costs.  A new home will typically give you close to a decade of worry-free living, before any major issues even begin to arise.

 

Amenities New developments often come as part of a “master planned community”. Parks, pools, and community spaces will all be built close to homes, schools, and transit. These “master planned communities” are built to accommodate the growth and influx of new residents in a way that is convenient and comfortable.  Many new communities have fitness centers and resort-style pools for the whole family to enjoy.  Some neighborhoods like Anthem Highlands in Broomfield, have incredible community centers, with world-class fitness centers, and pools with water-slides.  The community center in Anthem, was rumored to have cost the developer $18 million dollars to construct!

 

No Rush Because new builds take an average of 6-12 months, when ordered from a "dirt-start" so you'll have plenty of time to time to sell your existing home and prepare for your move. Packing can be done gradually over time, eliminating the stress of a fast move typical with a quicker  re-sale purchase. You can also take your time finding just the right furniture, window coverings, and artwork. All of these steps happen at a considerably more  relaxed pace, and will reduce your stress and afford you the luxury of holding out for the right offer on the home you're selling.

 

No bidding wars- Because new construction lots and homes are released on a “first come, first serve basis,” you won’t be subjected to the bidding wars, and appraisal issues that often plague the buyers of re-sale homes.  However, popular developments may have a waiting list for the most desirable lots, so there are still no guarantees that you’ll get your first pick of lot placement.  When premium lots are released, it can be the modern equivalent of the "land-rush" of the of the 1800's, as buyers race to reserve the limited handful of premium lots with rare mountain views, or open space behind them!

 

Reduced closing costs-  Builders routinely offer incentives that can be used to partially offset (or completely cover) the closing costs associated with the mortgage.   Many builders offer incentives between $3000-$15,000, that can be used towards closing costs or design center options.  This means that the buyer can purchase a home with far less cash required to close. 

 

*For example…  a Veteran using a VA loan, is technically required to bring $0 down payment to satisfy the VA underwriting guidelines.  However, the closing costs on a typical $450,000 home run around $10,000.  Normally (on a resale home) the veteran would have to bring $10,000 cash to pay those closing costs.  However, with a $10,000 builder-incentive in place, that veteran can use it to offset the lender’s closing costs, and truly close the VA loan with $0 down (or whatever minimum deposit the builder requires to hold the home).

 

 

Cons of New Construction

 

More Expensive- Just like buying a brand-new car, you will generally pay a premium to be the original owner.  Having the privilege picking the exact finishes you want, and enjoying a few years of worry-free living with a warranty in place, commands a premium.  For instance, new homes in Erie CO (the market I work in) typically go for 5%-10% more than the slightly older re-sale homes in the surrounding neighborhood.  So, if you’re willing to consider the slightly older homes for sale in Erie CO, you will typically pay less and often get more square footage.

 

Haggling over price- Dealing with the builder’s sales rep can be somewhat like buying a new car, with plenty of haggling over inclusions, incentives, and price.  The process of contracting a home can be even more grueling than buying a new-car, and sometimes takes up to 4 solid hours.  The process of analyzing soil surveys and engineering reports for the lot, deciding on structural upgrades, and carefully reading the builder’s 50-70 page contract, are all extremely taxing, especially if you opt not to bring an agent experienced with new construction.

 

Location Some new developments are on the edge of the metro area, where there is still plenty of open land to build on.   This can be temporarily inconvenient for your lifestyle, until shopping, gas stations, restaurants and amenities get built in the new area.  You may have to drive a little further to do your shopping, and your commute to work/school may increase.

 

Landscaping It will take some time for landscaping to mature, so shade trees and privacy may be harder to come by in your front and back yards.  Not to mention, some builders will not provide back-yard privacy fences, sprinkler systems, or even grass in the yard.  Furthermore, if the home is delivered during the winter months, it may be several months until grass can be planted in the spring.  For dog-owners, this can be especially rough if the dog tracks mud back into the home, every time you let it out to do its business!  Coordinating the sharing of costs to build a back fence with the 3 adjoining neighbors can often be a huge headache as well!  I’ve seen homes 2-4 years old, still missing fencing on one side, because a difficult neighbor refuses to cooperate and/or pitch-in their share. 

 

Window Coverings-  Most builders do not include blinds or drapes on new homes.  Therefore, you may be looking at $3000-$10,000 to cover the windows, depending upon the grade of blinds, drapes, or plantation shutters you choose.  This is usually crucial to take care of immediately, unless you want your new neighbors gazing into your bedrooms!

 

Time- New builds take time and if you’re in a hurry, that can be problematic. You can still choose a pre-built “spec home” in a new development, but your floor plan and upgrade options will have already been chosen for you by the builder.   If your lease is up soon, and you have to time a quick move, building new construction from dirt, probably isn’t your best option.

 

Interest Rate Lock Issues- The time needed to construct the home, can also have major implications for your mortgage loan as well.   Interest rates on mortgage loans, typically cannot be cost-effectively “locked-in” more than 60-90 days in advance of the closing date.  Therefore, if the interest rates start to make significant hikes, the payment may end up being substantially higher than what you initially planned for.   In the worst cases, a large enough rate hike may mean that you no-longer qualify for the payment on the loan.   Imagine waiting 11 months for the home, only to have the lender tell you that you no longer qualify to close on the home loan.  Fortunately, this isn’t a common occurrence, but nevertheless it is a very real possibility.  Ouch!

 

Peace and Quiet- New developments may still have a few years to go, before the neighborhood is fully completed.   Therefore, prepare yourself for life in a “construction-zone”.  Large trucks, heavy machinery, and the sounds of hammers and power-tools may be a daily fact of life, while the rest of the homes around you are finished up.  

 

Flat Tires-  Construction zones often have construction debris like metal strapping, nails, and screws, littering the roads.   Flat tires on your vehicles will occur more often than builders like to admit.

 

Potential for Foundation Settling- In places like Denver CO, expansive soils can sometimes lead to foundation heaving and settling.  This settling can potentially take up to 10 years to run its course.  Builders are required to conduct a soil survey and engineering report on each lot the build on, so that they can build the home with the proper precautions and foundation type to minimize this risk.  However, even the most diligently built homes can potentially suffer from settling issues if the landscaping grade, sump pump, and/or French drain system aren’t properly functioning for some reason.  Because of this, buying new can be slightly riskier than buying a 10yr old home, that has probably already settled all its going to.

 

Conclusion…

As with any real estate transaction, it’s critical have a knowledgeable, reputable agent in your corner.  Your agent can help you choose a reputable builder, and make sure you see past any “fluffy claims” the various builder’s salespeople make.   It’s been our experience, that if you talk with 10 different builders, all 10 will try to claim their homes are the best!   Out of those ten, a few of them are building much better homes than the others.   An experienced agent will make sure you know the difference between the truly good ones, and the wannabes simply making grand claims!   Some builders cut corners, and use cheaper materials or construction techniques.  Hakimi Team agents are well-trained on these things, and we can expertly guide you!  In fact, you can download our Ultimate Builder Questionnaire here for free! 

 

You should ALWAYS exercise your right to bring an agent to represent you!  Make no mistake… the builder’s sales reps are working in the builder’s best interests, not yours!    An experienced agent will almost always get you far better terms and pricing, than you would have gotten by approaching the builder on your own!   Out team negotiates and reads builder contracts every day for a living.  We understand how to push-back on the builder’s rep, and get our clients every penny of discounts, every upgrade, and all the hidden incentives the builder has at their disposal to offer. 

 

Contrary to popular misconception, having an agent represent you does not mean you will end up paying more for the home.  In fact, a community sales manager in Broomfield CO from the popular builder, Toll Brothers, recently informed us that their budget for paying agents, is not tied directly to the price of each home!   She explained that almost all tract builders allocate a separate yearly fund for compensating the agents.  She went on to emphasize, that because builders depend so heavily on agents to bring them buyers, it would be a HUGE conflict of interest, for them to offer lower pricing to the buyers who approach them without an agent.  She made it very clear, that the last thing any builder wants to do, is alienate all the agents that play such a crucial role in helping them sell out their communities! 

 

If you’re interested in buying a new home, or if you just have any questions, we’d love to talk with you!   Give us call at 720-370-3000!

 

 David Hakimi’s article “The Rookie Agent’s Guide to Selling NewConstruction” was recently published on the National Association of Realtors YP-Lounge blog, and was a featured article on Realtor.com.  David Hakimi literally “wrote the book” on helping clients buy new construction!

 

 

Nov. 21, 2017

Ultimate Builder Questionnaire for Buying New Construction

Ultimate Builder Questionnaire

Lot Selection:

1). ASK TO SEE THE SOIL SURVEY and/or THE ENGINEERING REPORT for the lot!

  • This is a test that the builders are required to conduct, to determine to what extent expansive soils (bentonite clay) are present on the lot.  The engineering report with rate the content of expansive soils on a scale ranging from: Minimal, Moderate, to Severe.  
  • Any lot rated as minimal, is suitable for a slab-on-grade foundation.  
  • However, any lot rated as “moderate” should have a raised/elevated slab system at the minimum, or preferably pier and beam. 
  • Any lot rated as “severe” should have a pier and beam foundation, without exception.   
  • If the builder is pouring a “slab on grade” foundation on a lot with moderate expansive soil content, the home could be at a greater risk of basement heaving and/or settling in the future. 
  • Because new homes can potentially settle for up to the first 10 years after completion, they buying one can be slightly riskier than purchasing an existing home that has already done its settling.  Knowing that the results of the soil survey can help you choose the most stable lot available, mitigating some of that risk.

Expansive soil damage

 

2). How much is the lot premium, on the lot selected?  Large lots, lots that can accommodate a walk-out/garden-level basement, and lots with a premium view, will always be the most expensive.  However, these lots will tend to appreciate the most rapidly, hold their value best in economic down-turns, and be the easiest to re-sell in the future. 

3). Is the lot slated to have a basement?  If so:

  • Is the topography of the lot suitable for a premium basement style such as a walk-out or garden level? 
  • Or will it only accommodate a standard, below-grade basement?

4). Which floorplans, elevations, and exterior paint colors are available for this lot?  *If an adjacent neighboring home has already chosen the same model, elevation, or color choice as yours, many builders will not allow another identical one to be built next to it.

Builder Elevation Choices

5). Is the lot on a street that serves as a main entrance or exit to the subdivision?  If so, there could be excessive traffic around the home, making it noisier and less suitable for children.

6). Which direction is the lot oriented?  *In colder climates, north facing driveways are less desirable because snow and ice may be extremely slow to melt, due to less direct sun exposure.  West facing rear patios and master bedrooms may have mountain and sunset views, but homes oriented with large windows on the west side of the home may be far costlier to cool in the Summer. The sunlight entering the home is at its most intense in the late afternoon as setting, and beaming into the home’s west-facing windows.  

7). Will the lot back to another house?  Or is it a premium lot that backs to open space, a green belt, park, golf course, mountain view, or waterfront?

8). How will the proposed homes around the lot, be positioned in relation to the lot? 

  • Will they block or affect any views the lot may have before the surrounding homes are built? 
  • If it backs up to another house, will that house sit on higher ground, looking down and jeopardizing the privacy of the back yard?   

9). Where is the lot located in the neighborhood?   Is it in the interior of the neighborhood, or on the perimeter of the neighborhood where it backs to potentially loud, busy streets? (Homes backing to noisy main roads are less desirable, appreciate slower, and can be harder to sell)

Lot map of Flatiron Meadows Erie CO

10). Is the lot near a railroad track?  (Homes backing to noisy train tracks are less desirable, appreciate slower, and can be harder to sell)

11). Will the lot have any oil derricks, fracking rigs, or Oil/Gas storage tanks near, or within its view?  (The can be an obvious detriment to resale value, and health and safety, due to the possible emission of volatile organic compounds into the soil, air, and water).

Fracking rig

 

12). Does the lot back to a stream, creek, river, drainage culvert, lake, or pond?  If so:

  • Does the FEMA map show the lot in a flood plain? 
  • If so, how does the FEMA map categorize the flood plain?  
  • Does the builder have a written estimate on the required flood insurance to get a mortgage there?

FEMA Flood Map Example

 

13). How is this lot’s topography, with regard to proper drainage?  Is there a hill, high ground, or a retaining wall behind it, that could cause water to drain towards the home’s foundation?  *Any of these could potentially create a situation that channels water towards the home’s foundation, causing settling, heaving, cracking, or wash-out of the home’s backfill dirt.

Foundation cracking

 

14). If the lot is on a golf course, where is it in relation to the tee box?   Homes backing to a golf course can potentially be pelted by golf balls, which damages roofs, siding and windows.  This is always worst for lots that are approximately 150 yards from the tee box, and located to the right of the fairway, because statistically this is where most golfers tend to “slice”.  The left side of the course at 150 yards from the tee box is almost as bad, because it will catch the drives that “hook”.    However, strong golfers can drive up to 300 yards or more, so no course lot along a fairway is completely immune to this.  Lots just behind the tee box are the safest. 

Gold ball damage to EIFS stucco siding

 

15). If the lot is on a golf course, where is it in relation to any man-made ponds?  There have been lawsuits against developers of golf-course communities, because the water table in those communities had been raised to a problematic level, by the constant watering of the course. There are also similar cases where the water also table rises, because the man-made ponds on the courses were inadequately lined.  Both issues can cause water intrusion issues in basements and crawlspaces, in these lots.  If you must live on a golf course, its best to choose a lot that sits on the highest ground possible.  

Elevated water table

Structural Upgrades: 

16). What optional structural features are shown in the model home, that will not be included in the base version of the home?   Model homes commonly showcase every structural option the builder offers. *Make sure to clarify exactly what structural features the base version of the home comes with, and what is optional!  Your finished home will most likely look FAR different from the model! 

Model homes are generally packed with every imaginable option, such as:

·         Kick-outs or Sun-rooms (room expansions on exterior walls, that increase room size)

·         Coffered ceilings or other ornate drywall features

·         Vaulted ceilings, that peak upwards following the angle of the roof trusses

·         Raised ceilings (9ft-13ft high vs. the standard 8ft ceilings)

·         Art niches, or In-wall recesses for televisions and A/V gear

·         Floor to ceiling fireplaces or upgraded fireplace mantles

·         Built-in shelving or additional cabinets

·         Covered exterior patios

·         Decks

·         Oversized concrete patios

·         Oversized garage bays, tandem garages, or 3-car and 4-Car garages   

17). Which elevation is included in the base price, and what are the cost increases for the premium elevations?  

  • Each model the builder offers, will usually be offered in 3-4 different exterior variations, referred to as “elevations”.  
  • Each elevation may be offered with a different siding material such as brick, stone, tile, stucco, or a lap-sided exterior.  
  • The different options often offer versions with or without a covered front porch. 
  • Variations can also include architectural touches like dormers, shutters, or additional decorative windows, etc. 

18). Clarify which elevation can still built on the lot you are interested in.   Do the available elevations for the lot you’ve chosen come at a premium cost, above the price of the standard elevation? 

19) What material is the home to be sided with?   Modern homes are typically sided with one (or a combination of) the following:

·         Brick or Brick facade

·         Stucco (concrete based texture that is either sprayed, or hand-troweled over a wire mesh base onto the home’s exterior)

·         Synthetic EIFS stucco (a Styrofoam sheet and moisture barriers, sprayed with thinner layer concrete based texture.  Looks great, but requires more maintenance than real stucco and diligent upkeep of the caulked perimeters, to prevent water from intruding behind it and causing mold growth)

·         Concrete lap siding (Often referred to as James Hardy siding, or Hardy Board).

·         Vinyl Siding (often used by entry-level builders, but less common in recent years.  Low maintenance and no painting required, but it becomes brittle and starts cracking and/or chipping apart usually around the 10yr mark)

·         Aluminum Siding (Also used by entry-level builders, but less common recently as well.  Tends to bend and dent as it ages, so it ages poorly.  However, it doesn’t require painting)

·         Masonite lap siding (steam-pressed wood fiber. Any builder still using Masonite siding should be avoided, as it decays rapidly if not painted regularly).

Rotting Masonite

·         T-111 Concrete fiber sheet siding (used most commonly on modular homes and storage sheds.  A tough and affordable material, but far less visually appealing than other options)

·         Quarter round log siding (typically only on mountain homes)

 

20) What roofing materials does the builder use? 

·         Spanish Tiles- Extremely durable, extremely attractive, but also very expensive to install and/or replace.   This style roof is normally found on only on custom homes and very upscale tract homes.  They are duty-rated for a 50yr-100yr life expectancy, and are very resistant to hail and high winds.   However, great care must be exercised when walking on the roof to perform repairs, maintenance, etc., because they can be easily cracked if improperly walked on.  *Homeowners with tiled roofs, should only hire bonded and insured contractors for any repairs requiring roof access, to make sure the contractor can (and will) pay to repair any damage they may do while walking on the tiled roof!

Spanish tiles on a roof

·         Steel Pro-Panel- Most common on mountain homes, barns, beach homes, and steel out-buildings.  Very resistant to high snow-load, and high winds.  Relatively inexpensive, easy to install, and durable.  However, they are considered by some to be “utilitarian.”  Meaning, they are very practical, but not as attractive to some people.  They are also noisy when hit with rain, sleet, etc.    Therefore rarely used by tract home builders in suburban neighborhoods.

Steel pro panel roof

·         Composition shingles- The most common type of roofing shingle used by tract builders.  The most affordable type of roof to install, and can be easily spot-repaired if needed.  However, they are the most susceptible to wind and hail damage.

Composite shingles

21). How many years of warranty coverage are on the composition roofing shingles or tiles? Standard asphalt shingles come in 3 main categories:

·         3-Tab Composition (20yr, 25yr, or 30yr Warranty),

·         Laminate/Dimensional Shingles (30yr, 40yr. or 50yr Warranty),

·         Premium Laminate (50yr to Lifetime warranty).   

·         *Worth noting, it has been our personal observation that most of these shingles have an actual useful life-span of only 1/2 to 2/3 of the manufacturers claimed service life.  Their warranty coverage are usually pro-rated, and only cover materials, but not the labor required to remove and re-install them.

22). If the builder includes solar energy panels, are those panels sold outright with the home, or are they leased to you? 

  • If leased, are they at a flat monthly rate, or charged by kilowatt hour of energy utilized? 
  • If the system produces more energy than the home uses, does the overage sold back to the grid go to the homeowner, or the company leasing you the panels? 
  • If leased, how many years is the lease? 
  • If you sell the home, what is required to transfer the lease to the new owner?   
  • Whose responsibility is it to remove and re-install the solar panels, in the event the roof needs a repair?

Solar Panels on a roof

23). To what extent will the garage interior be finished?  

  • Will it be fully insulated and dry-walled? 
  • Will in only be insulated and dry-walled on the interior walls that adjoin the inside of the home?   
  • If the it will be completely dry-walled, will it also be textured… or simply “taped and bedded”?

24). Will there be an access door on the side of the garage, to easily wheel out a lawn mower or trash cans?  

  • If so, will the builder provide a sidewalk leading from that side door, around to the front of the home? 
  • Or, will it be left as landscaping rock or grass?

25). Will the kitchen feature a “Gourmet Kitchen” with a wall oven and cooktop set-up, or a more basic freestanding (or slide-in) stove?  The base price of most tract homes revolves around the standard kitchen with a stove.  Make sure you are very clear on all the itemized charges required to upgrade to the “gourmet kitchen”.    Because wall ovens require a different cabinet configuration, and cooktops will require additional wiring and/or gas plumbing, there are often as many as 3 separate charges to upgrade to a kitchen with wall ovens.  A separate charge for the wiring and plumbing, a charge for the change to the cabinets, and a charge for the upgraded appliances themselves.   It is typical that the Gourmet Kitchen package can easily total $15,000 in additional charges, over the standard stove-based kitchen.

Basements:

26). Does the home come standard with a full basement, a ¾ basement, or a ½ Basement? (A full basement is excavated to mirror the shape and 100% of the square footage of the home’s ground floor.  A ¾ Basement has only 75% of the ground floor’s square footage, and a ½ Basement has 50% of the ground floor’s square footage).   *Homes with less than a full basement are less functional if finished, and can be harder to sell in the future, with lower resale value.

27). If the home will not come with a full basement, what is the builder’s upcharge for excavating a ¾, or full basement?

28). How deep will the basement be excavated?  Standard 8ft ceilings, or taller 9ft-12ft ceilings?   Basements with standard 8-foot ceilings are sufficient when finished, but they will only be 7ft tall in places where the HVAC ducting is routed.   Paying extra for the 9ft-12ft basement excavation, is money well-spent, if you intend to eventually finish the basement.  The deeper excavation will give the rooms in the finished basement higher ceilings, making it feel far more spacious, and more like the upstairs.

29). What is the builder’s upcharge to excavate the basement deeper to 9ft-12ft, if the standard basement is only an 8ft excavation?

30). Which of the following 3 types of basement will the home be built with?

·         Standard basement: 100% below-grade (below ground), with window wells that keep water and soil from entering the basement windows.   Egress ladders must be placed in these window wells, so that the basement is escapable in a fire.  *Once finished, below grade basements add value to a home, but typically only about ¼ the value of the price per square foot of the home’s above grade main living floors.

·         Garden Level basement: Partially below above-grade (above ground).  Excavated in such a manner that the basement windows are positioned to look out above ground level, but not quite enough to place a door in the basement that can be walked out of.  This type of basement typically places the home’s back door 2-3 feet above ground, therefore necessitating an elevated deck off the back door, and a short staircase leading down from the deck.   *Once finished, Garden level basements add greater value per square foot to the home, than a standard below-grade basement, but are still less valuable per square foot, than the above grade portion of the home. 

·         Walk-Out Basement:  Fully above-grade (above ground).  The home’s lot is typically dug into a hillside, so that the back of the home is completely above ground, and only the sides of the home are underground.  Therefore, the basement can have a rear door, that can be walked out of.  This type of basement typically places the home’s back door 8-10 feet above ground, therefore necessitating an elevated deck off the back door, and a full staircase leading down from the deck.   *Once finished, a walkout will add additional value to the home, that is almost on-par with the price per square foot of the home’s main living floors.

31). If the basement has window wells, are they corrugated steel, or concrete?  Window wells made of corrugated and steel, can eventually develop rust and require replacement.   Therefore, concrete window wells are considered far superior.  However, only high-end tract builders typically opt for concrete window wells.  *While concrete wells are certainly preferable, corrugated steel wells should not disqualify a home from consideration for purchase.  The going rate in 2017 to remove and replace a rusted steel window well is around $1,500, in the Denver market.

concrete wells

Rusty Steel Window well

 

33). Does the builder automatically install an active or passive Radon mitigation system?  If not, will the reimburse you after closing for the installation of a radon mitigation system if the home tests above 4.0pCi/L? *Most builders will reimburse 50%-100%of the cost of a system, if a radon test detects levels present above 4.0pCi/L. The average 2017 cost to install a radon mitigation system in Denver is currently averaging around $950. Places like Denver have high Uranium content in the soil and rocks, so high radon levels are found in approximately 50% of homes.  Fortunately, it is easy to mitigate it to 100% safe levels. *If the builder will not install a mitigation system, (and the home tests high), this should be done IMMEDIATELY after closing by the homeowner! (Radon gas in homes is the 2nd leading cause of lung cancer, in the U.S., behind tobacco.)

Radon in Erie CO Homes

 

34). Does the builder automatically install a sump-pump, into the home’s sump pit?  *If not, this should be done IMMEDIATELY after closing by the homeowner!   Failure to install a sump pump, leads to almost all the severe cases of basement floor/foundation damage, and basement flooding we see.  The sump pit and sump pump, function to evacuate ground water away from the home’s foundation and to minimize the swelling of expansive soils under the foundation.   It is typically no more than $600-$1000 to have a pump installed and properly plumbed.   This is the best $600-$1000 you will ever spend on the home!  We see countless homes yearly, with $50,000-$100,000 worth of foundation damage, that most likely could have been prevented with a properly installed sump pump. 

Sump pump in an Erie CO home

 

35). Does the builder automatically finish the basement, or leave it unfinished? 

  • If it isn't standard, is it an option to have the builder finish it?   
  • If the builder does have the ability to finish it, what is their charge to do so? 
  • *The going rate to have a basement finished after closing, is around $45-$50 per square foot, with basic builder-grade materials.   The builders can often offer it at a cost far below this, due to their economies of scale.  If the builder finishes it, you can also roll the cost into your mortgage payment for less money per month, that taking out a home equity loan to do it later.  Opting for the builder to finish the basement often makes good financial sense, if you can afford it.

36). If the builder leaves the basement unfinished, do they provide the following infrastructure to make it practical to finish it in the future: 

  • Adequate electrical service, or ideally a sub-panel in the basement with enough open breakers in the panel to wire the basement?
  • Rough-in plumbing drains for a bathroom, with a toilet and shower?
  • Rough-in plumbing drains for a wet-bar and/or a Mother-in-Law kitchen?
  • Are the water heater and furnace ("mechanicals") placed intelligently in a corner, or by a side wall?  Or does the builder plan to cut corners, and place them directly in the center of the basement? *If the builder indicates that the mechanicals will be placed in the center of the basement, contest this fiercely!  Basements with mechanicals in the center of the room, can never be finished with the desirable "open floor-plan" that most buyers want.  This will diminish the usefulness, and re-sale value of the home's basement!

37). Is the HVAC ducting sufficient to finish the basement, or will it need to be expanded on later to comply with building code?

 

38). Will the basement floor be constructed with an elevated wooden Sub-floor and crawl-space (pier and beam foundation), or a concrete slab (slab on grade foundation)?   A slab on grade foundation should only be utilized if the lot’s engineering soil-survey had results in the excellent to good range.   If the soil survey shows moderate to high content of expansive soils, then the builder should ideally be utilizing either a pier and beam foundation, or an elevated slab design such as the one shown at:  https://www.youtube.com/watch?time_continue=1&v=oPPSUm-PWX0

*Most builders will typically construct homes with a slab-on-grade foundation, even when the soil survey shows “Moderate” levels of expansive soils.   This is allowable per building code in most areas.  Great care should be taken to always make sure the sump pump in these homes is functioning properly, and that the soil around the homes perimeter has a sufficient slope, channeling water away from the home’s foundation!

Slab Foundation diagram

Pier and Beam Diagram

 

39). What is the builder’s warranty coverage on the concrete basement floor, and/or the garage floor, if heaving or settling occurs?  How many years is the coverage, and how many inches (or centimeters) of movement must occur before they will remedy it under warranty?

Electrical:

40). Do the bedrooms come standard with wiring for a ceiling fixture with a wall switch, or is this an option? 

  •  If it is included, is it rated to mount a ceiling fan?
  • Or is a fan-rated fixture mounting an additional cost? 
  • *Nothing in a home is more annoying than a bedroom without a light fixture on the ceiling.  Many builders will  "nickel and dime you" for even the most basic wiring.  If code doesn't require it, they usually don't include it as a standard option. 

41). Do the bedrooms include switched outlets, for conveniently switching off nightstand lamps, and oscillating fans, etc?

42). Will the laundry room be wired with a 30amp, 220v outlet to power an electric dryer? 

  • Or, is it only wired with a 120v outlet and a gas line for a gas dryer?
  • Does the builder include a Ground Fault Circuit Interrupt (GFCI) outlet in the laundry room?  (*Code requires it, but we see many builders get away with leaving one out.)

43). Will the garage have a 220v outlet, for running large tools such as welders?

44). Does the home have the proper 220v exterior wiring in place for a central A/C compressor?

  • Or, is the home only wired for a central A/C if you have the builder install central air? 
  • If you do not have the builder install central air, what is the charge to have them pre-wire for it, if you choose to install it at a later date?  
  • *Homes without central air-conditioning are at a serious disadvantage from a re-sale perspective. 

45). Which recessed can lights shown in the ceiling of the model home are standard, and which ones shown are optional?

46). Will the kitchen have a 50-Amp 220v outlet for a stove?  Or is it set up for a gas stove only, with a 120v outlet and a gas line instead?

  • If it only has a 120v outlet, what it the up-charge to install a 220v outlet, in case a future owner prefers an electric stove?
  • If the home is upgraded to a "Gourmet kitchen" with a wall oven and cook-top, what are the additional wiring charges?
  • Is the vent-hood, or microwave hood over the stove actually vented to the exterior, or simply set up to recirculate the heat and cooking odors back into the home?

Low Voltage: 

47). Does the builder pre-wire the home for internet access, in all of the rooms where you will want to place a wireless router, or have a computer plugged directly into a wired signal?

  • If so, do they wire the home with Cat5e, Cat6, or Cat6a Ethernet cable?  
  • While Cat5e cable will be sufficient for basic internet access, the advent of new streaming technologies means that Cat5 is rapidly becoming obsolete. Therefore, we always advise clients to opt for the highest capacity Cat6a cable available, to future-proof the home as much as possible. 
  • Read a technical article on the exact differences in Ethernet cables here.

48).  Does the builder wire the home for landline telephones, in all of the locations you will want a land-line?

  • If not, what is the charge per location to add additional phone jacks?

49). Does the builder wire the home with coaxial cable for Satellite and Cable TV service, in all of the locations you will want a television?

  • If not, what is the charge per location to add additional cable outlets?

50). Do the home-security providers in the area still require pre-wiring for their current security systems? 

  • *Many builders will encourage you to pay for the "Security Pre-wire" on their homes, even though most of the major home-security providers (such as ADP) have now gone to completely wireless systems. Many of their latest systems no longer require pre-wiring of the home!

51). Does the builder automatically install in-wall, or in-ceiling speakers for whole house music, or home-theater surround sound?

  • If the home will be wired for home theater surround sound, is it arranged in a 5-channel, 7-channel, 9-channel, or 11-channel configuration? 
  • Many of the newest AV Receivers are designed for surround sound formats such as 9 or 11-Channel Dolby Atmos, etc. 

In ceiling speakers

Flooring Materials:

52).  If the home includes wood flooring, is it solid ¾ inch solid hardwood flooring, engineered wood flooring, or a synthetic laminate flooring product?   

  • If engineered or laminate is the base material, how much of an up-charge is it to upgrade to genuine ¾ Hardwood?

Definitions of available commonly used wood flooring materials:

  • ¾ Inch Solid Hardwood Flooring- This is the most expensive, and the most desirable version of hardwood flooring.   Because it is solid hardwood all the way through, it can easily be sanded and re-finished in the future.  Solid hardwood can be re-finished several times, and should last the lifetime of the home.  * ¾ Hardwood is sold in two primary types.  “Finish in place” that is installed rough, then sanded and coated with a polyurethane or oil based finish after it is installed.  Finish in place is preferred by most tract builders, because it is less expensive than factory finished hardwoods.
  • Factory Finished hardwoods are the most modern, and desirable material available today. They have an aluminum oxide coating that is baked on at the factory. The factory applied aluminum oxide finish is far tougher, thicker, and more durable than the “applied in place” poly or oil finishes.   Expensive, high-end brands such as Bella, Bruce, and Armstrong, typically utilize a factory applied aluminum oxide finish.  All ¾ hardwood is typically nailed down during installation, providing the most “solid” feeling floor under-foot.

·        Engineered Hardwood Flooring- Engineered wood flooring is a mid-grade product, that has a thin 1/8th inch veneer of genuine wood that is factory adhered to a particle board (MDF) or plywood, tongue and groove backing.  It is designed to be quickly (and cheaply) installed, by “clicking” the planks together on top of a thin foam sheet applied between the planks, and the sub-floor.  It is typically referred to as a “floating floor,” and tends to feel slightly thin and hollow under-foot, compared to a solid hardwood floor.   Once installed, it looks like a genuine hardwood floor, and it is finished with a tough aluminum oxide finish, just like high-end hardwood.            *Some new-home sales people try to convince buyers that this type of floor is superior to genuine ¾ inch hardwood.  This couldn’t be farther from the truth!  Because engineered hardwood only has a thin 1/8th - 1/4 inch veneer of wood, it can never be sanded and re-finished!  Unlike a genuine ¾ inch hardwood floor, engineered flooring must be removed and completely replaced, once it becomes scratched up and/or worn.  Replacement is approximately 6x-10x the cost of refinishing!

Solid hardwood vs engineered

·        Laminate flooring- Constructed and installed just like engineered flooring, except that it has a fully synthetic (plastic or vinyl) surface material that is designed with faux wood grain texture and markings on its surface, instead of a real wood veneer.   The high-end versions of it (name-brand Pergo, etc.) are generally very tough, and often carry a long warranty from 15yrs up to Limited Lifetime.   This option is popular with owners of large-breed dogs, because it is less susceptible to scratching by their claws.  However, it is generally considered by most to be an inferior material to genuine hardwood, and will not provide the re-sale value of real ¾ inch hardwood floors. 

Laminate flooring illustration

53). If the home includes tiled flooring, is it ceramic, porcelain, natural stone, or linoleum?

·         Porcelain- Porcelain tile is a manmade tile, and is the highest grade of ceramic.   The kaolin clay it is fired from contains fewer impurities than the clay used to make less expensive ceramic tiles.  It is formed of quartz, clay, and feldspar that is fired at temperatures ranging from 2350°-2500° degrees F.    The primary difference is that porcelain has that 0.5% or less water absorption rate.  It is also denser, and harder, which make it the most durable of all tiles. 

·        Ceramic- Also a man-made tile, ceramic tiles fired from slightly less refined clays than porcelain tiles.  The are also fired at a slightly lower temperature range, averaging between 1832° - 2282° F.   They are very durable in general, but their slightly lower density means they may be somewhat easier to crack or chip than the costlier porcelain tiles

·         Natural Stone-  As the name implies, natural stone tiles are natural material that is quarried, and machined into tiles.   Natural stone is the most expensive material, and it is prized for its beauty and naturally occurring patterns.  However, it tends to be softer and more porous than manmade materials.  Therefore, it is much easier to crack and chip.  The porous nature also means that it must be chemically sealed periodically, or it can begin to appear “grungy” as foot traffic grinds dirt, etc., into the pores.

·         Linoleum- A synthetic man-made flooring material made of vinyl on a canvas backing.  It is either sold in rolls like carpet, or individual cut tiles that have an adhesive backing. If is the least expensive form of tile, but also the least attractive and least durable due to its soft consistency.  

Builder Incentives/Mortgage Lending:

54).  Are the builder's incentives contingent upon using their lender and/or title company?

  • Many builders will require you to use their "preferred lender" and/or title company in order to qualify for their advertised incentives.   *With a re-sale transaction this would violate "steering laws," but the laws in states such as Colorado, allow builders to tie incentives to the use of a particular lender or title company. 

55).  If the builder's lender cannot get you approved, will they still honor the incentives if another lender of your choosing can get you approved?

56).  If interest rates increase to a point that you no longer qualify to close, does the builder's contract define this as a situation were you would forfeit your deposit? Or does this situation qualify as a valid reason to have them refund it?

  • The Builder's contract should specify the latest date that you can terminate due to loan disqualification, without penalty. 
  • Interest rates on mortgage loans, typically cannot be cost-effectively “locked-in” more than 60-90 days in advance of the closing date.  Therefore, if the interest rates start to make substantial hikes during the year it takes them to build your home, the payment may end up being substantially higher than what you initially planned for.   In worst cases, a large enough rate-hike may alter your debt-to-income ratio to the point that you no longer qualify for the payment on the loan.   Imagine waiting 11 months for the home, only to have the lender tell you that you no longer qualify to close on the home loan.  Fortunately, this isn’t a common occurrence, but nevertheless it is a very real possibility.  

Property Taxes:

57). What is the mil-rate that property taxes will be calculated with, once the county re-assesses the property taxes to include the actual home structure?

  • Are there any similar completed homes in the neighborhood that have already had an assessment for the structure yet?
  •  This is a crucial question, because the initial assessed rate for property taxes typically only factors in the value of the vacant lot prior to the home being built.  The county will always re-assess the property taxes after the first year you live in the home, to include the newly completed home/structure.  
  • Understanding the amount, the taxes will increase after the first year, will prevent any nasty surprises when the final assessment increases your property taxes!   

 

Contractual Deadlines:

 58). What dates are all of the major contractual deadlines, outlining your opportunities to cancel the purchase contract without forfeiting your deposit money?

  • While the builder's sales rep may know these dates and be able to recite them, its always best to thoroughly read the contract in advance of the day you sit down to sign it.  Builder reps will often "gloss over" or "downplay" the importance of these deadlines. 
  • Don't take the salespersons word for anything that they cannot point out in writing!!!
  • If any of the contractual verbiage is unclear, or confusing, consult an attorney (or a Realtor experienced in builder contracts) to explain it to you! 

 

Warranty Coverage:

59). How long is the entire home covered with a full, comprehensive  warranty of all mechanical, structural, electrical, low-voltage, and exterior components ?

60). How long is the home's structural warranty that covers against settling or heaving in the foundation?  

  • How many inches or centimeters of foundation movement does the builder consider normal and within tolerance?  How bad does the movement need to be, to justify a warranty claim?
  • Does the structural warranty also cover the flat-work such as concrete  driveways, sidewalks, patios, porches, and garage floors?  Or are these excluded, or covered under separate terms?
  • Does the warranty cover poorly installed or diseased landscaping, tress, shrubs, lawns, and sprinklers?  

Basement Crack in a Thornton CO home

61).  If a mechanical component such as a furnace, water heater, or appliance fails, does the builder replace it themselves, or do they expect you to pursue the manufacturer's warranty?

Earnest Money/Deposit Policies:

62).  Does the builder's contract provide an initial rescission period, allowing the buyer to cancel the contract without penalty or loss of the deposit?

63). If there is no rescission period, what circumstances does the contract outline that do qualify you to terminate without forfeiture of the deposit?   The following items are common, but still vary from contract to contract:

  • The lender cannot get you approved for financing, or the underwriter declines your loan due to circumstances outside of your control. 
  • The builder fails to complete your home during the allowed time-frame.
  • The home is destroyed by fire or natural disaster, etc, before it is delivered.
 

 

 

 

 

 

 

Nov. 16, 2017

Lease with the option to buy program in Colorado

We're excited to introduce a new program now available in Denver, that allows you to lease with the option to buy almost ANY HOME YOU SEE FOR SALE!

Click HERE for full details!

Apply for the program HERE!

See all eligible HOMES here!

 

This is the first truly legitimate program of its kind in Denver. We are one of Denver's top rated, Berkshire Hathaway real estate teams, so you can rest-assured that we would not risk our stellar reputation (or Berkshire Hathaway's reputation) touting anything that was "gimmicky" or "too good to be true."

 

The process is simple. As with any rental or lease program, you pay a one-time application fee of $75, so that the program can pull your credit and background, and determine how much rent your income qualifies you for. Once they determine how much rent you can afford, they will tell us how expensive of a home we can start helping you find. We then take you to see all of the homes you like in that price range, until we find "the one."

 

Once we narrow it down to your favorite, the program places a cash offer on the home. If the offer is accepted, you are free to move into the home shortly after closing. After leasing it from them for one year, you will have the option to purchase it for only 5% more than they paid a year earlier. This is an amazing opportunity, considering that homes in Denver have been appreciating by closer to 10% per year. This program allows you to secure your dream home, and live in it, while fixing your credit, or satisfying other requirements for a mortgage that you might still need a little more time to work on.

After the first year's lease is up, you have the option to buy it from them for only 5% more than their original purchase price. If your circumstances have changed at that time and you no longer wish to purchase, you are free to re-sign a new lease or walk away.

 

You can have the best of both worlds.

 

Call us today at 720.370.3000 for more details or click this link. If you have any questions, we're always here to answer them.

Posted in Home Buying
Oct. 17, 2017

Are Homes for sale Erie CO, at a disadvantage during the Holidays?

Are Homes for in sale Erie CO, at a disadvantage during the Holidays?

Erie CO homes for sale

For many families the Holiday season is one of the busiest times of the year, filled with family gatherings, parties, travel, and visits from relatives.   It’s no wonder that most people view this as the absolute last time of the year, that they want to sell their home.   Very few people are willing to endure the stress of having to keep their home spotless for showings, and be prepared to vacate for showings at a moment’s notice, during the hustle and bustle of the holiday season.    It would only reason that home buyers suspend their house hunting efforts during the Holidays for the exact set same set of reasons, right?   If you make this assumption, you’re certainly not alone.  Most people would probably agree, however the MLS statistics clearly indicate that this simply isn’t the case.  

This doesn’t mean much, since no one is looking for homes during the holidays anyway… right?   Well, not exactly…   The number of families out house hunting during the holidays is much higher than most of us would assume.   The semester break at mid-term, makes the Holidays an attractive time for families with kids to move without disrupting their school schedule.  The fact that many workers and students have a few weeks off during this time, also makes the holidays a perfect time to schedule the daunting task of packing up and moving.   Additionally, the aggressive nature of the Peak Summer market, also means that many buyers can’t win bidding wars to buy a home in the Summer.  As a result, many of those buyers resume their home-search once the “back to school” market-lull passes, and their schedules return to normal.   These factors all combine, and lead to a tremendous amount of pent-up market demand around the holidays.   Problem is, there are 38% fewer homes for sale in Erie CO to choose from during the holidays than in the peak Summer months.  

Erie CO Realtors

How can sellers work the seasons to their advantage?

A seller sitting on a highly desirable home, will always be able to get a relatively fast sale, regardless of seasonal timing.   However, a bit more strategy is required if that same seller also wants to set a record high sales number.  Simply selling an unusually nice house fast is typically easy.  However, also commanding a record high price generally won’t happen without a bidding war.   When bidding wars break out, competing sellers are often forced to bid above the amount the home will likely appraise for.  They’re usually required to back those stratospheric bids with a guarantee of additional cash, to make up for any appraisal deficiency.   The key component required to maximize the odds of a bidding war, is an agent’s ability to drive lots of buyer’s through the home during the first weekend the home comes to market.  It’s obviously easiest to do this, during the Early Spring, or the peak Summer season when the absolute highest volume of buyers is active in the market.   Therefore, Summer is still the season of choice, for selling a truly incredible home.  If you have a house that’s capable of standing out in an inventory-rich market, it makes the most sense to offer it up when the absolute highest exposure to buyers is possible.

The strategy for selling a mediocre or distressed home, takes an entirely different approach.   When a home’s lack of upgrades, poor lot, or layout put it at a competitive disadvantage… the best strategy for getting it sold, is to avoid as much direct competition as possible.   The key to selling a lackluster home, lies in finding the point in the market with the best ratio of “high demand to low inventory”.   When inventory choices are limited and people need to move, they are the most likely to compromise their standards and take what’s available.  

 

I can personally attest to this, because it happened to my own family.  When we were moving to Erie CO, it was at the beginning of December and inventory was “slim pickings”.   In fact, there was only one home in our price range that met our minimum criteria.  I was a relatively new agent, with a little under 2 years in the business.  Therefore, the mortgage underwriting guidelines wouldn’t allow us to add my income to the qualifying ratios.  As a result, our home options were limited to the ones we could qualify for on my wife’s teacher salary.   The only home in our budget, had been used as a former rental.  It had broken down appliances, an ugly kitchen, and was full of cheap carpet and fixtures.  Unfortunately, we needed to move.   The low holiday inventory caused us to lower our standards substantially, and take it.  As Murphy’s Law would have it, 20 to 30 far superior homes came up for grabs (at the same price point) just a few months later in the Spring.  Had any of those choices been available to us, we never would have picked our present home.   We were proof of the concept that rougher homes sell better, when there isn’t as much competition.    For sellers of less than perfect homes, the Holidays may just be the perfect time to list them!

Posted in Home-tips
Oct. 12, 2017

What does the huge influx of New Construction in Erie Colorado, mean for Erie sellers of re-sale homes?

For the past 5 years, Erie has predominantly been a strong “seller’s market,” with sellers dictating the terms, and commanding increasingly higher prices with each subsequent sale.  Many homes were pulling in bidding wars, and often selling for well above asking price.   Sellers were also able to get away with bringing homes to market with lots of deferred maintenance like damaged roofs, aging appliances, rusty water heaters, and faded exterior paint jobs that were long overdue for a fresh coat.  However, none of that mattered when desperate buyers were taking properties “as-is,” or waiving their right to negotiate for repairs after the inspection. Some buyers even went so far as to waive their right to inspect the property at all.   Many buyers also resorted to desperate measures like over-bidding, then bringing in extra cash (over the appraised value), to ensure that the deal still closed.   People were basically conceding whatever it took, to get creative and beat out the other buyers competing for their dream home.   Savvy sellers responded accordingly, after hearing what their neighbors were getting.   Each new listing came onto the market a few thousand dollars higher than the one that sold before it.  With homes in short supply, they knew the buyers would pay it.

Homes for sale in Erie CO

The 2017 spring housing market market in Erie CO got off to a strong start, and we saw the median sale price in April 2017 come in almost $21,000 higher than the previous April of 2016.  It certainly looked like we were off to the start of another summer of double-digit appreciation.  However, by July a combination of market factors came together to bring strong signs of a market correction.  An abundance of new construction homes in Erie CO, a substantial hike to mortgage rates, both combined with a flood of negative press and social media chatter about Oil and Gas activity in Erie, finally applied the brakes to the momentum of our housing market.   In fact, the June 2017 housing market saw the largest negative market shift, in Erie in almost 5 years.  

DMAR statistics showed that June 2017 housing inventory in Erie was up a whopping 121.3%, over June 2016 levels.  In June of 2016 there were only 47 total homes for sale in Erie, compared to 104 available listings in June of 2017.   However, “Under-contract” numbers didn’t come close to keeping pace, and only increased by a modest 9.1%.   June 2016 saw 44 homes under-contract, while June 2017 only saw a handful more at 48 (despite having twice as many homes available on the market).   This means that in June of 2016 that 93.6% of listed homes sold, while only 46.1% of available homes went under contract in 2017.   In one year, we’ve seen the market go from almost all the available homes selling in June 2016, to slightly less than half of the inventory selling the following year.

 

Before anyone starts to panic, I should reiterate 2 key points… 

1). The housing market in Erie was moving at such a ridiculously fast pace for the past five years, that it bordered on insanity. Therefore, our market has plenty of room to slow down a bit, but remain extremely robust overall.  In fact, most of the major leading economic indicators (that predict major real estate crashes), are currently holding very steady at the desirable end of the spectrum.   Economists tracking the housing market pay close attention to indicators like, job growth, interest rates, availability of rentals, foreclosure filings, 90-day mortgage delinquencies, utilization of ARM vs 30yr Fixed loans, utilization of all other risky mortgage products (Interest-Only, Negative Amortization, Stated-Income). Fortunately, these indicators all still look quite good overall for the Colorado housing market. 

2). The market pace for the last few years was so fast, that it was quite stressful for most buyers and sellers.  The lack of inventory simultaneously made selling a dream, but buying a nightmare!  Any seller wishing to cash-in on their newly acquired equity to move-up or downsize, had to contend with a real danger of becoming “temporarily homeless” in the process.   In Colorado, once a seller’s home is under-contract, they are legally obligated to hand over their keys in just 3-4 weeks on the designated date of possession (assuming the buyer successfully closes).  Selling fast was almost always a given, but the lack of inventory meant that there were no guarantees that the seller could then find a suitable replacement home and put it under-contract in time.    In Colorado, our laws dictate that any seller attempting to back-out of a home sale, faces the very real threat of a “Specific Performance” lawsuit.  Meaning, a buyer can potentially sue the seller and force them to complete the sale transaction, whether they have found a replacement home yet or not.

Erie Colorado homes for sale   

So how will this affect those Selling a home in Erie CO?

The two major positive effects, are that this market correction will certainly remove most of the risk and apprehension that both buyers and sellers have been experiencing for the last 4-5 years.  No longer will sellers have to worry as much about the risk of having to make a “double-move” when they choose to move-up or down-size.  The more manageable market pace now means that the odds are much more favorable, that a seller will successfully secure a replacement home should they choose to move locally.   The risk to sellers of becoming “temporarily homeless” just decreased substantially.   

For buyers, the more relaxed pace means that they will no longer feel the pressure to instantly offer on a house, for fear of missing-out if they hesitate for more than a couple hours.   Also, the more balanced market means that buyers will less likely have to concede to ridiculous terms, like overbidding with extra cash, or waiving their rights to an inspection.  Of course, there will still be some truly exceptional homes that draw in competing offers, but it’s now far less likely to happen on a lackluster house devoid of upgrades, or lagging in upkeep.

Along with the positive benefits, there will certainly be a few negative repercussions for both buyers and sellers as well.   As more sellers gain enough confidence in successfully finding a replacement, and decide it’s now safe to sell, this could add even further inventory to the market.  If demand doesn’t increase again enough to keep pace, it could further increase average days on market, and possibly soften prices even more.   

Many buyers hearing this news may be “licking their chops”, thinking that falling prices mean they can wait a bit longer and finally get a more affordable deal on a house.  However, that is flawed-logic.   When home prices fall due to increasing mortgage rates, it simply means that those buyers will now be making the same high house payment for a less expensive house.  The only ones to benefit from the price drop, are those with the ability to pay all-cash, and avoid the new higher mortgage rates altogether.

 

Now that competition is stiff, what will it take to sell a home in Erie Colorado?

When the seller’s market was at its peak, even the most neglected homes sold with relative ease.   Unfortunately, those days appear to be ending quickly.  As pressure bears down from all the new construction on the sellers of existing     “re-sale homes.”   The flood of brand-new homes into the Erie market, has raised the bar on what is now considered acceptable condition.   Deferred maintenance such as worn roofs, faded exterior paintjobs, stained (or worn) carpets, pet odors, scratched-up hardwood floors, overgrown landscaping, dead or dying lawns, settling concrete porches or driveways, are all going to hurt a home’s competitiveness.   To get the top price, a seller’s home will now definitely need to be in top condition.

Dated finishes with now be scrutinized much harder as well too.  Competition between builders means that things like hardwood floors, bronze or nickel plumbing fixtures, slab granite or quartz countertops, stainless steel appliances, and high-end kitchen cabinets, are all standard features on the new homes popping up all around Erie.   Re-sale homes with dated finishes like oak cabinets, excessive carpet, brass fixtures/trim, Formica counters, linoleum, white walls, or dated appliances, aren’t going to compete well now.   Buyers will now expect homes to either be updated, or priced low enough that they still have room in their budget to add these things shortly after closing.

Consumers won’t be the only one feeling the pinch either.  Market transitions have historically affected real estate agents and entire brokerages as well.   When the number of transactions in a market goes down, the discount brokers and flat-fee agents typically die-off.   A boom market allows for plenty of fast sales, with reduced marketing time, and far less marketing effort on the part of the agents.  In that windfall environment, the discount model works well because homes sell so quickly with minimal marketing expense, skill or effort required.   However, slower markets require agents to majorly step-up their game to survive.  Discount agents, lazy agents, and part-time agents, usually lose the game of attrition, and end up going back to the jobs they had before entering Real Estate.   The discount firms tend to die off, because their lower-profit business models are no longer sustainable once their number of transactions shrinks.  Business models with low profit margins, require extremely high-volume to work (ie., the fast food businesses).   Once the market turns, and the volume of home sales diminishes, only the traditional firms with better profit margins (ie, more traditional listing fees), will weather the slowdown and survive the downturn.   Not to mention, the low cost, no-frills firms simply don’t charge enough to keep a home adequately marketed once the “average days on market” increases from one weekend, to 6 months or longer.

Talented, full-service realtors in Erie CO, with extensive experience will again become sought after, in a buyer’s market.  Only the most talented agents with top marketing, staging, and pricing skills, will survive.  Homes that are improperly priced, inadequately staged, poorly photographed, or have weak online presentation, will simply sit unsold once the market advantage shifts back in favor of the buyers.  

Sept. 28, 2017

Relocating to Boulder CO

As a top Berkshire Hathaway agent, specializing in the North Denver suburbs and Boulder County, I often work with professionals that are relocating to jobs in Boulder Colorado.  In recent years, Boulder has become a hotbed for job seekers in fields such as IT, Biotech, and Academia.    Along with its new reputation as one of the nation’s most coveted places for tech professionals to work and live, has also come skyrocketing home prices.   However, many of the newly transplanted professionals experience extreme sticker shock, when they realize just how pricey Boulder real estate is.   With the average price of a single-family home in Boulder hovering just north of a million dollars now, all but the highest paid professionals quickly realize that they may have to settle for a commute.  New transfers quickly find themselves researching which of the Boulder suburbs will offer the best compromise, on home prices, quality schools, and the shortest possible commute.

 

Most initially look at homes for sale in Louisville, or homes in Superior CO, but realize that those closest two suburbs don’t offer much pricing relief, with typical single-family homes still averaging close to $700,000 (and usually for an older home that still needs significant updating).  After that, they look a bit further out at Lafayette real estate or homes for sale in Longmont.  Longmont is a well-developed suburb northeast of Boulder, but most find that it’s quite far from Denver, and it can be a crapshoot when it comes to the quality of schools.  Lafayette lies just east of Louisville, and has plenty of charm, but it’s still quite expensive and composed of mostly older homes that often need lots of expensive TLC.  Homes in Lafayette are often smaller and lack the raw square footage that typical families expect from a home well over the half-million-dollar mark. 

 

However, just past Lafayette lie the communities of Erie and Broomfield.  For most candidates, one of these two suburbs end up as the best option for putting down roots.   Both suburbs have their own unique set of attributes, and tend to attract buyers with slightly different sets of priorities.   Overall, Broomfield is the slightly larger and more developed of the two, with more amenities like shopping, dining, and entertainment.  (Broomfield is roughly 3 times the size of Erie, with respective populations of 65,065 vs. 22,803) However, Erie offers a less crowded, and even slightly rural small-town feel.  Topographically Erie also gains a slight edge, with much of the town sitting on hilly terrain that gives it some of the best mountain views along Denver’s front range.  The fact that the two towns border each other, also means that residents in Erie usually aren’t much farther than 7-10 minutes away from most of Broomfield’s amenities.

 

With the median price of a detached home at $446,000 in Broomfield, it is slightly more affordable overall than Erie (with a median price of $459,017).   However, that statistic is slightly misleading, because Broomfield began development in the late 1950’s, but most of Erie didn’t start to fully develop until the late 1990’s.   As a result, Broomfield’s median home price is skewed downward by the presence of several more mature neighborhoods with lower home prices (that compose roughly 60% of the homes there).  Erie on the other hand, didn’t really start to grow until 2003 when the construction of the popular Colorado National Golf course, kicked off the current 13-year long development streak.   Therefore, you see that Broomfield is actually slightly pricier, only by comparing the median and average prices of newer homes built from 2001 to the present.  When the price comparison only factors in newer construction, Broomfield’s median price becomes $500,000 and its average price is $532,880.   Erie’s is slightly lower at the median remaining at of $482,017 and its average home priced at $482,017.   Broomfield can be the more affordable option for those willing to live in a slightly older neighborhood, but Erie is more affordable if your tastes favor newer construction.

 

Regarding commute times, homes for sale in Erie CO have a slight advantage over homes for sale in Broomfield when comparing the drive into Boulder.  The center of Erie is roughly 11.2 miles to Boulder, with the center of Broomfield sitting at 16.4 miles away.   Average commute time from Erie is 22 minutes, with Broomfield averaging 27 minutes by the I-36 tollway.   That advantage flips however, when considering the commute into Denver.   The center of Erie to downtown Denver is 24.7 miles, and a 34 minute commute in normal traffic.   The center of Broomfield to downtown Denver is slightly closer at 18.5 miles, and a 25 minute commute in normal traffic.   The trip to Denver International Airport is roughly a tie between the two, because the two border each other at the E470 tollway, which is the express route it DIA.

 

Erie CO real estate enjoys most of the benefits of being close to Boulder and the mountains, but without the astronomical home prices found in the rest of Boulder County.  The town of Erie is unique in the fact that it lies almost equally across two counties and two separate school districts.  Approximately half of the Erie subdivisions lie in Boulder county, and the other half of Erie is in Weld County.   All Erie subdivisions in Weld County side are in the St. Vrain Valley RE-1J School district, but that doesn't automatically mean that all the neighborhoods on the Boulder county side, are in the Boulder Valley School District.  Only a handful of subdivisions on the Boulder County side of Erie are in the Boulder Valley RE-2 School District, with most of the neighborhoods on the Boulder County side still falling into the St. Vrain Re-2 School District.

 

The Erie neighborhoods in the Boulder Valley School District are as follows: Baxter Farm, Candlelight EstatesCandlelight Ridge, Compass, Flatiron Meadows, Meadowsweet Farm, and Orchard Glen.  The Flatiron Meadows subdivision is actually home to the BVSD’s newest (and arguably nicest) K-8 school, Meadowlark School.  Meadowlark School is set to open Fall of 2017.  Consensus is that Boulder Valley Schools are among the best in the entire Denver/Boulder front range, competing neck and neck with Denver’s Cherry Creek Schools for the state’s top honors.  However, one shouldn’t get too concerned about which of the two school districts in Erie you’ll end up in. In fact, all of the Erie CO Elementary and Middle schools in the St Vrain District are rated at least an 8 out of 10, on the popular rating site www.GreatSchools.org.  

The overall statistics paint a clear picture of the quality of schools in Erie.  In 2016, Erie Schools ranked higher than approximately 77.5% of elementary schools in the entire state of Colorado. Erie Middle School’s students performed 64.2% better in 2016 as well. The district performed better than 64.2% of all other Colorado schools that same year. 

 

The David Hakimi Team at Berkshire Hathaway specializes in helping relocation clients moving to Boulder CO and its suburbs.    Feel free to call us, if you need assistance or questions about homes for sale in Boulder Colorado.  We are the area experts on helping relocation clients locate homes for sale in Erie CO, and homes for sale in Broomfield CO.

Posted in Neighborhoods
Sept. 28, 2017

Why Shouldn’t You Sell Your Own Home?

If you plan on selling your home, there are three honest reasons why you cannot sell your home on your own.

Buying a home? Click here to perform a full Home Search
Selling a home? Click here for a FREE Home Price Evaluation


If you are considering listing your home as For Sale By Owner, there are a few things you should know. Here are three honest reasons why you cannot afford to sell your house on your own:

 

1. You are not thinking with your head. Selling your home is very emotional. However, all of those memories and milestones you’ve accomplished while living in that home does not make it more expensive. You cannot justify the pricing with those memories; market value is market value.

 


Your memories do not affect the
market value of your home.

 

2. You don’t know thousands of people and you’re not connected to hundreds of agents. Your selling exposure only scratches the surface compared to our front-page Zillow advertising, networking across multiple platforms, and our status in multiple MLS databases.

 

3. You can be the top deterrent to getting your home sold. Trying to schedule showings can be a pain. Pestering buyers and agents during those showings can be awkward and uncomfortable.  

 

Instead, hire a professional real estate agent to get your home listed and sold. If you are interested in working with us, check out our online reviews.

 

If you have any other questions about selling your home or our current market, give me a call at (720-370-3000) or send me an email. I would be happy to help you.

 

 

 

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