SpringsHomes Blog

Until recently, insurance companies were okay writing policies for homes with T-Lock roofs. Over the past few years and due to wind and hail claims, insurance companies are no longer able to write coverage on these roof types due to the fact that if one single is damaged, the ENTIRE roof must be replaced!

The company who made the T-Lock roof shingles went out of business in 2003, so the shingles are no longer available, therefore insurance companies are forced to replace the entire roof if damage is found.

Only a few insurance companies still remain that will write these types of roofs but they will only cover them at depreciated value, and since most remaining T-Lock roofs are now close to 10 years old the amount of coverage that would be provided on an actual cash value basis is almost nothing.

What can a buyer do?  Ask your Realtor what kind of roof the house has.   Get a home inspection, to determine the condition of the roof you are buying.  If you find the home has T-Lock shingles in poor condition, ask the seller to replace them.  Let the burden of installing a new roof be his, BEFORE you buy the house. If the seller will not replace the roof, call your insurance agent and make sure that you can get a new policy with the existing roof.  If not, you may need to kill the deal.   Your lender will require homeowner's insurance as a condition of your new loan.

In 2005, 2006 and 2007 new home construction soared!  Home builders built at a record pace, especially in places like Las Vegas and Phoenix.  They flooded those markets with new inventory, overbuilding the areas.  As a result, home prices softened.  There was too much supply and not enough demand.

Fortunately, Colorado Springs was behind the curve back then.   And because we weren't as over-built, over-priced and over-sold, we are rebounding faster than those cities are.

Currently, the local housing market is off to a great start.  New home construction has picked up but at a reasonable pace.  Existing home sales are higher now than last year at this time.  Interest rates are still really low, and there appear to be more buyers out there.  Here's what the February Statistics looked like:

SINGLE FAMILY HOME SALES                              =   UP 29.2% FROM LAST YEAR

AVERAGE SALES PRICE                                      =   UP 4.6% FROM LAST YEAR

HOMES FOR SALE NOW (ACTIVE LISTINGS)          =   DOWN 5.9% FROM LAST YEAR

Although an improvement over last year, our housing market is seeing a reasonable recovery.  It's not record-breaking, and it probably won't make headlines around the country.  But I think we prefer our stable market.

FHA loans are often (not always) used by first time home buyers. More and more2nd or 3rd time buyers are using them as well. FHA is one of the few mortgage loans requiring just 3.5% down. Because FHA loans are backed by the government and have a small amount down, resulting in lower home equity from time of purchase, they add mortgage insurance onto the buyer's payment. Rates are going up soon. Here is a little information, from a local lender about mortgage insurance:

IN APRIL 2013, FHA MORTGAGE INSURANCE WILL BE INCREASING.

Annual Mortgage Insurance Premiums for FHA loans will increase by 0.10% in April 2013. Additionally, if the LTV (loan to value) is greater than 90%, FHA will no longer terminate the annual mortgage insurance premiums once the loan amount reaches 78% of the home's original appraised value

What this mean for buyers / borrowers...  If they don’t have a contract on a house prior to April 1, 2013 they will be stuck with a higher mortgage insurance premium and due to new guidelines, they may not be able to cancel the Mortgage Insurance for the life of the loan.

Instead of just writing about our real estate market, I thought it would be fun to do this video.  Enjoy!

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Well, it's that time of year again.  No, I don't mean time to go Christmas shopping.  I'm talking about the end of the year when our Pikes Peak Association of Realtors releases the year-to-date statistics for our local market.  With only one month to go in 2012, here's how we look so far:

• SALES OF SINGLE FAMILY HOMES                      UP 8.1% OVER LAST YEAR
• AVERAGE SALES PRICE OF S/F HOMES             UP 5% OVER LAST YEAR
• ACTIVE LISTINGS(HOMES FOR SALE NOW)      DOWN 9.4% FROM LAST YEAR

• SALES OF CONDOS/TOWNHOMES                     UP 9.7% OVER LAST YEAR
• AVERAGE SALES PRICE OF CONDOS/TH           UP 4.2% OVER LAST YEAR
• ACTIVE LISTINGS(CONDOS/TH FOR SALE)       DOWN 20.5% FROM LAST YEAR

2012 has been a great year for Colorado Springs real estate.  Prices have risen.  There are more buyers purchasing homes.  There is less inventory for sale.  I expect this trend to continue into 2013.  The one change I do expect to see next year is interest rates going up.  The FED usually raises rates after such a market recovery.  And it seems that the entire nation has had a pretty good real estate year!

Buyers often ask me, "what is the best school district in Colorado Springs?"  I always answer from the perspective of a mom, not only an agent.

As a mom I feel it's important to consider not just the district, but the schools in particular.  Example, I live in School District 11, the largest district in El Paso County.   Because of it's size, it encompasses many schools.  The schools are all different, some great and some marginal.  If I only went by the ratings of D-11, I wouldn't be so impressed, and I would overlook some really great schools.

I have been extremely happy with Martinez Elementary.  Their ratings are wonderful.  The faculty is superb.  I like the principal. The class sizes are just right. The curriculum is good.  The school grounds are impressive.  My only regret is that this is my daughter's last year there.  After this, we venture into middle school.  And right now I am doing my research to determine which middle school will be best for her.

Test scores, classroom sizes, parent reviews and other data all contribute to the rating of a school district.  Each school has it's own strengths and weaknesses, and I believe it is our responsibility as parents to research the school our child would attend, and not just go off pure data which can obviously be skewed.

The Thunderbirds put on an air show at each Air Force Academy football game which takes place at home.  It's pretty spectacular to see them perform.  And we can hear the jets soaring overhead from all around town...pretty cool!  Want to know what else is going up right now?

This year home sales and home prices are both UP!  According to our Pikes Peak Association of Realtors, here are the year-to-date statistics as of last month:

HOME SALES (single family homes)        =      up by 7.5% over last year

AVERAGE SALE PRICE (single family)      =      up by 4.9% over last year

INVENTORY (homes currently for sale)    =      down by 11.3% over last year

HOME SALES (condos/townhomes)         =      up by 7.4% over last year

AVERAGE SALE PRICE (condos/townhomes)     up by 4.3% over last year

INVENTORY (units currently for sale)      =      down by 19% over last year

Our market is strong this year.  There are more buyers, so the competition has increased.  There are less homes for sale, so buyers need to be ready to act fast when they find that perfect home.

On occasion we have a buyer that chooses to purchase a "FSBO" or For Sale By Owner property. Sometimes these sellers have hired a discount broker to enter their home in the MLS (multiple listing system); however many choose to give it a go with a sign in the yard like the one above. I think it's important to note that in many cases, we have no issue selling a FSBO property and most are willing to pay a 3% commission for the Buyer's agent. I have had a series of great transactions with FSBO sellers over the years; it is more work, but it is our job to serve our clients' needs!

My story today is not a pleasant story of a smooth transaction with a friendly For Sale By Owner.

We pulled into this neighborhood in southwest Colorado Springs after showing for several days all over the region... as we pulled by the local pond/lake, the buyer was sold on this neighborhood. This seller had a sign in the yard down the street from another house we were viewing. The house had been updated on the exterior with stucco and appeared to be in good shape overall. The front landscaping was all rock, a strong preference for my buyers. So we took a stroll down the street to ask if we could see their house. They were so kind to run around and straighten up, as they had a three year old boy and a newborn. I have no idea how long the sign had been in the yard, but they weren't show ready.. which is understandable with our no-notice showing.

The buyers of course liked the house. It was very clean, and the kitchen had a lot of updating. The master was large enough and the bathrooms included updated tile (a bonus in the 1973 home). So we embarked on the adventure that this transaction became. I had to discuss the commission with the seller, since they were not advertised anywhere, except maybe craigslist where they had no commission offering. A normal offer negotiation lasts about 24-48 hours (with the exception of bank properties), but this seller went back and forth with us (mostly ignoring emails) for about a week. This initial negotiation was stressful, but a sign of what was to come. We found out during the course of this process that the seller had purchased 2 homes, both of which they still owned, and were trying to sell their first home...having never done this before and not having a strong grasp of the English language. The 2nd house they own is in another state and nearing short sale or foreclosure. They are trying to use the proceeds of this property to recover that one from being distressed. Although I have sympathy for them and so many in this situation across the country, we couldn't let the situation on their other property affect this house and the market here.

We finally negotiated an acceptable counter-proposal. I should mention the sellers spoke primarily Spanish, which was not as much of an obstacle as I thought it might end up being. It presented its challenges. I offered for my somewhat Spanish-fluent managing broker to speak with them, but they ignored all communication from Jennifer Boylan.

The buyer proceeded with a home inspection, during which several large items were found. The beautiful stucco needed some serious repairs. The radon came in above the EPA recommended level. The roof needed repairs... plus a list of other things in and around the house. This of course was a challenge to negotiate. We were able to negotiate for the seller to repair a couple of the large items, in exchange for the seller to pay less of the buyer's closing costs. All parties seemed to be amiable to the results; although not perfect, most transactions are about the art of compromise.

As we approached closing, we started making requests for the receipts for the work completed. The stucco and roof work was done by one family, stucco contractor licensed and insured in Colorado... and their family from California that "helped" them with the roof repairs. The work was less than satisfactory, as was the roof certification that took pulling teeth. Sadly the seller took all of our contact very personally, when we were trying to complete a business transaction. The seller ignored emails, had two disconnected / changed cell phone numbers which they didn't answer and ignored. And they had moved out of the house. Communication was a struggle throughout, to say the least.

Fortunately the buyers powered through and closed as planned. Unfortunately there may be legal action after the fact regarding the roof, due to the lack of quality.  I left closing feeling I did everything I could to serve my clients and advise them to the best of my ability, with lots of consultation from Jennifer Boylan, managing broker. I think the buyers are pleased with our office. I am once again thankful to live in a military community and be able to help another member of our armed forces realize the dream of home ownership in the beautiful Colorado Springs area!

The lesson of the day - we can and will sell buyers a For Sale By Owner property. Some are simple and easy to work with.... some are not. I wish I had asked the seller for more commission, but glad I was able to serve my client and help them buy a home in the neighborhood they are so excited about!

In my business, we call a home which is in foreclosure or short-sale status, a DISTRESSED property.  In recent years, many of our home sales have been distressed properties.  But, that number is changing.  It's going down, which means that in the future there will be less distressed homes for sale.

Here is is what the National Association of Realtors is saying:

"What impact do falling distressed sales have on home values? The median price will be pushed up. As everyone knows, foreclosed properties sell for less. However since this negative impact will be less strong in the upcoming years, the median price of all transacted homes will be higher than when compared to the past few years. So aside from the normal supply-and-demand dynamics that have been pushing up repeat-price indices such as Case-Shiller and government price data, the median price will also be rising and probably faster because of the fewer distressed over the horizon."

In summary:  Less foreclosures are in our future.  Because of this, home prices are going up.

Today I am annoyed.  We Realtors have an obligation to know our market, to know about financing, to know what we are talking about.  If we don't have the answers, then we have an obligation to research and become informed.

Here are two examples of agents who did not do their research:

1. Last week an agent called me and insisted that lender non-allowables no longer exist.  What does that mean? Well, there are certain fees a buyer is not allowed to pay for themselves.  Those fees are called non-allowables.  While those fees no longer apply to FHA loans, they DO still apply to VA loans.  This agent insisted that his VA buyer will not have any non-allowables.   WRONG!

2. Yesterday I got a lowball offer on one of my listings...$44,000 low to be exact!  I should mention that the list price of this home is under $300,000 and that the typical window of negotiation in that neighborhood is 2-3%.   In this price range we don't typically negotiate that heavily, not even with distressed or foreclosed properties. A good agent does a market analysis of the area, checking to see what is a reasonable level of negotiation there.

In summary, we agents need to do our homework.  We need to research the market.  We need to research the rules and trends which apply to our client or transaction.  Blah!

Nationwide, home purchases have increased 2.3 percent to a 4.47 million annual rate, according to the National Association of Realtors today in Washington.  The median forecast of 73 economists surveyed by Bloomberg called for a rise to a 4.51 million rate.  All good news, right?

Then why is it so difficult to get a mortgage approved these days?  I have seen more scrutiny from lenders lately than ever before!  Solid buyers, I mean people with good credit, good employment history, low debt are getting questioned and even denied for financing.  I recently worked with a high ranking Air Force officer who should have had a slam-dunk loan.  He had excellent credit, money in savings, a good income, and he owned other properties, and the lender made him jump through so many hoops just to get approval.  Unbelievable!

One of my lender friends said it best. "The trouble with banks today is they would rather err on the side of caution and deny a loan than actually do their job of making it work."

I heard of one lender/underwriter who was actually told by his company that they would start docking his pay each time he approved a loan which came back as a foreclosure.

I think the foreclosure crisis from the last few years has taken a toll on the lenders.  They've been scared.  And you, the buyers of today, however credit-worthy and solid, are paying the price.

On the positive side, foreclosures are way down.  The foreclosure rate has dropped dramatically this year, not just in Colorado but nationwide.  I suspect that banks will relax a bit once they see that we are returning to a more normal and reliable housing market.

After the Waldo Canyon fire broke out, I called a local insurance agent to get his take on how this fire will affect homeowner's insurance for our area.  He said insurance companies are still issuing policies, even in the burn areas.  In fact, they are not allowed to discriminate against insuring those parts of town.  And, they cannot refuse to renew an existing policy for that area.  The only restriction they did have, prior to the fire being contained, was they could not insure a home in an area which was under evacuation or pre-evacuation.  Seems fair enough.

Here are a few more things I have learned:

1. If you have a mortgage on your home, and your home burns, you are still expected to continue making your house payments.  Although some lenders are allowing payments to be delayed for a short while.

2. If your home has burned down or suffered damage, you will receive a check from the insurance company to cover the cost of repair or rebuilding.  But, that check will be made out to both you AND your mortgage lender.  You have to get your lender's agreement as to how to use that money.  You can pay off your mortgage with it and not rebuild.  But that check will not include the value of your land.  So, if your intent is to move and not rebuild, you will still have to sell your land separately. And if the check doesn't cover your entire mortgage balance, you still have to pay the difference.  Or you can use the check to repair/rebuild.

3. Rumor has it that one large insurance company who is well-known for their military programs, is no longer issuing homeowner's insurance policies in Colorado Springs.  That will have a huge impact on military buyers looking to insure homes.

4. Although the burn areas don't look as attractive right now, some insurance companies are more inclined to offer insurance there now because much of the fire hazards (trees, brush, etc.) have been removed.

5. Flooding may be a future problem for the burn areas, now that there is less or no vegetation to control erosion.  Presently, they are not considered in a flood zone.  But if we get enough rain to cause heavy flooding, that zoning may change and flood insurance may become required.

Because of the Waldo Canyon fire (and others in Colorado), we want to know what is going to happen with real estate and how it will affect things. My opinion is that it will continue to be one of the greatest places to live, and values will remain stable. As families buckle down to re-build, the rental market will continue to see low inventory. Some loan underwriters may not provide loans in the area, insurance might be a challenge, etc. Well, I hope to answer a couple of those questions. As the fire is now 70% contained and expecting 100% containment by mid-July.... hopefully this is all good news. Most residents of unaffected homes have returned home; residents of fire damaged homes will be returning this Thursday with their insurance adjusters. As nice as it is that the air is returning to normal, life will not be "normal" along the west side of town for months and even years. Because Colorado Springs is one of the most beautiful places to live, I am fairly certain most residents will rebuild. But for those that want to buy homes in the area soon, what are they in for?

INSURANCE:

I received a message from my State Farm agent that they are operating business as usual, handling claims and State Farm planning to re-assess insurance policies in 2013 following a busy hail, and now fire, year in 2012 in Colorado.

I am awaiting a statement from another agent I work with at Farmer's As far as I know they are also business as usual with restricted policies in certain zip codes.

I understand USAA is not writing new insurance policies in Colorado at all at this time. This WILL affect us locally, with military presence, but we have great local agents and buyers can consider switching back to USAA sometime after their home purchase and after the dust settles.

There is a recommendation out there to possible invest in flood insurance in burn areas and potential high water run-off areas.

LOANS:

My understanding is that loan underwriters may see some red flags in evacuated zip codes, but I just had lunch with a lender-friend and they have 5 of 6 investors that are reviewing those areas and still offering loans. Restrictions will be lifted even more once the fire is 100% contained, obviously lenders & insurance agents don't want to provide a loan or insurance in areas still in the potential fire danger area.

Bottom line - check with your real estate professional, lender and insurance agent. Life is still happening in Colorado Springs and it is in my opinion still one of the greatest places in the world to live!!!

We received the following email statement from the Colorado Association of Realtors:

Insurance Binding Restricted Due to Colorado Wildfires

All insurance binding authority is automatically suspended by insurance companies during times of an impending disaster and during times of disaster.  The suspension occurs at the time an impending disaster warning for a geographical area is announced by local, state or federal government concerning any weather related event which is announced as a potential disaster. Binding Authority is also immediately suspended at the time of disaster, when disaster occurs without warning. Examples of disasters that cause automatic suspension are: wildfire, hail, tornado, hurricane, riot, civil commotion, or earthquake.

In this instance, the burning of wildfires located throughout Colorado has been determined as a cause to immediately suspend binding of insurance for the affected areas.

The suspension of binding authority applies to all real estate transactions, (new business, reinstatements, increased coverage and additional coverage). Insurance companies restrict this authority so that they do not bind a risk where insurance is being purchased through fear of loss, due to any increase in normal hazard from any source. Limitation is applied to help the insurance companies control their exposure to high-risk conditions and allow them to focus on the needs of, and obligations to, their existing customers during the time of disaster. No insurance coverage shall be bound, no applications accepted, or no coverage increased in any areas determined by the insurance company at risk for damage by fire or smoke.

After any other disaster event, binding authority is restored when notification is received from the Service Center. Zip codes are evaluated (both restricted and released) individually. Insurance companies will continue to evaluate the situation and once an area has been deemed safe from further damage from the specific fire (including potential smoke damage), authority will be reinstated and real estate transactions may resume.

This is expected any day now in Colorado Springs. (Source Colorado Association of Realtors)

Here are three scenarios which recently happened.  I hope they help you to see the reality of our current real estate market:

1. A home listed at $205,000 gets an offer of $190,000. The home is in great condition. Sellers are getting about 6 showings a week and are confident that they don't need to drop the price by $15,000 in order to sell.  Sellers counter back at $202,000.  In this market they don't have to negotiate very much.

2. A buyer falls in love with a house priced at $315,000.  It's a foreclosure, in need of some minor work.  Buyer offers full price and asks for $3,000 in concessions from the seller/bank.  The bank rejects the offer because they have two other offers on the table, one of which is ABOVE the asking price.

3. Another buyer finds a home he just has to have.  The asking price is $299,000, and the home is in good shape. Knowing that there is competition with other buyers who want that house, he offers $12,000 ABOVE asking price.  Seller accepts his offer.

Do you see the trend?  It's a seller's market.  Bidding wars are the new norm.  Here is some free and valuable advice for buyers:  Don't waste your time negotiating!  If you love the house, offer full price or even above that. Don't lose a home over a few thousand dollars.  These days you have to prove that you want the house MORE than everyone else.

It's a phrase we haven't heard here in years, and maybe didn't expect to hear when we are supposedly bracing to see the release of thousands of foreclosures nationwide. However, as a follow-up to Nicole's recent blog about competing offers, I wanted to talk a bit about the market for sellers in Colorado Springs.

Like Nicole said, she and I competed on a house near downtown... what are the odds?! I hope her buyers found something equally as perfect for their family!  This scenario is becoming almost the norm, not necessarily competing within our office, but competing... especially under $250,000. *I even wrote a competing offer in June on a $470,000 in which we wrote $4000 over the list price and did NOT get the house.*

Because of our awesome and resourceful web site, we get buyers coming to us from all over the world, some military, some not. Whichever the case may be sometimes it takes quite a bit of education. Because there are still articles, stories and stats out there that say nationwide sellers are having to take 5-15% off their prices, some buyers are banking on this "discount". However if you are shopping under $300,000, and especially under $200,000 anywhere in Colorado Springs... if you find a good one, you're going to have to write a full price offer or better, especially if you need to ask for closing costs. I have a buyer that flew through town last Thursday, when he returned to California on Saturday he contacted me to write an offer. I quickly wrote it up (10% off list price ) and sent it over to the listing broker when they notified me of the other 4 offers they'd already received. The buyer was only willing to come up a little and lost out. We plugged forward on choice number 2, and also lost this one to a competing offer. Sometimes buyers will listen to our advice, and sometimes they have to learn on their own by a trial and error of losing a couple homes that were good contenders.

One other misunderstanding that buyers think might make a difference is cash offers. The buyer I spoke of above is a cash buyer, which he believes is a strong selling point for the offers he makes. While it is nice, it is not enough to make up a $20,000 difference to a seller. With most GOOD agents pre-qualifying their buyers before getting in the car and writing offers; a financed offer looks just as good to a seller. The most important thing is the seller's bottom line in the end. Cash or financed offer, it is all about the money when somebody is trying to sell a home.

My advice would be to have us do a market analysis. As time permits we do a full market analysis for buyers as they prepare to write an offer. We do as close as we can to what an appraiser would do when valuing a home for a buyer through their financing institution. Appraisers use homes of similar age, style, size, area, etc to the home that is being sold and make value adjustments for upgrades. It take a little time, but it's all about education in the process.

I've said it several times in the past few months... this market is nuts! With low inventory, competition is almost the new normal in many areas and price ranges... make a wise decision with your offer. There are still deals to be had, but if you really want a place live in with your family and you find the one... make a reasonable offer, because you might otherwise lose it.

Happy house hunting!

Nick Timiraos at the Wall Street Journal has written a great distillation on a paper recently published by economists from Federal Reserve Banks of Atlanta and Boston. I am excited to finally see in writing what Realtors on the ground have known for a while. There are a lot of myths and misnomers in the media and the general public about the the housing bust and the subsequent mortgage meltdown. If you're interested in a realistic view of what happened to the housing market, please give this a read.

Twelve Facts That May Surprise You About the Housing Bust

I just finished my first instructional video for this website. I must say I was very nervous but am really happy with the results. In the video I give a general overview of how FHA loans work and why they might be a good choice. Please take a look.

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This is the National Association of Realtors “Nationwide Open House Weekend”. Boylan and Company is participating with two great properties.

I keep telling my buyers the market has changed.  Multiple offers on houses is the new norm, and the highest bidder gets the house.  Here is an example of what I mean:

The last two contracts I have written for buyers have both had competing offers coming in at the same time.  The first one went smashingly well.  I warned my clients "you have competition."  They offered $5,000 OVER asking price, and they got the house. The next one didn't go so well.

It was last Wednesday.  We knew we had competition going in. Another offer on the house had been submitted earlier that day.  But, according to the listing agent "the offer was low."  Based on that information, my buyers offered full price but asked for closing costs to be paid by the seller (a typical and reasonable request).

What I learned later was the listing agent called the other party, told them we were bringing in a competing offer, and they upped their price.  We got outbid.  And I had the sad task of calling my sweet, first time buyers and telling them that they didn't get the house, the one they were so excited about.

To make matters worse, I just learned that I know the competing agent quite well. Rats!  Couldn't it have been some random agent that I've never heard of?  That would make this pill so much easier to swallow.

My buyers are bummed, needless to say. And we are back on the road looking at many houses in hopes to find another one that is perfect for them!

Inventory is off by 27% this year as compared to last year at this time.  Translated: there are fewer homes today for buyers to choose from.  I remember back in the early 2000's when inventory was so slim that buyers were in bidding wars. At that time multiple offers were the norm, and the house went to the highest bidder.

I have to wonder if we are returning to that type of market.  I do know that right now under $200,000 is the hot price range locally, and buyers are already starting to outbid each other.  According to another agent I know, her buyers just lost out on their third property because they keep getting outbid.

Today, in the Pikes Peak region there are 3,128 single family homes for sale.  AND

There are 383 condominiums/townhomes for sale.

I wonder how many of these for-sale properties will receive multiple offers.