What exactly is title work?

title-work

Dear Dave,

We are in the process of selling our home and will be purchasing a new one. Right after we listed our property for sale, we received title work from our agent on our home. Can you explain what exactly title work is? We were told that we need to review it, but what should we be looking for on the property we are selling? When we purchase, what should we look for on the title work for the new property – anything different we should look for or the same stuff? Thank you for your help.

Dennis, Grand Junction


Dennis,

This really is a great question and a part of the buy/sell process that is far too often glossed over. It is glossed over, because most of the time people and agents do not know how to answer your question thoroughly and with command of the specifics of what you are looking for. I am very lucky to work closely with Bob Reece, President of Advanced Title, who is one of the very best real estate experts I know and knows title work inside and out! I have relayed your question to Bob, to ensure you get the best possible explanation!

"Title work" is really the title commitment and the documents that are referenced in the title commitment such as protective covenants. The commitment outlines the current status of title interests in the property such as the name of the owner(s), any lender and other interests such as easements holders, and the commitment gives sellers and buyers the opportunity to review the title to the property before the closing occurs. The seller should compare the deed with which they acquired ownership to the property with their name(s) as it appears on the title commitment to make sure it is the same. A similar comparison for the legal description is essential. The third area of the commitment are the Exceptions to Coverage that lists various protective covenants, easements, agreements, reservations, etc. that affect the property. These items should compare favorably to the exceptions that appeared in the title policy that was issued when the seller originally acquired the property. And, by example, any easements granted by the seller should also appear as an Exception to Coverage on the title commitment. Any discrepancies found by the seller should be disclosed to his real estate agent as soon as possible and prior to closing so a buyer becomes fully aware of the matters that affect the property being purchased.

A buyer would be wise to review a title commitment in similar fashion; to make sure their names properly appear on the title commitment as found under the real estate contract and on any lender application; that the legal description matches the one found on the seller's acquisition deed; and to review the documents referenced as Exceptions to Coverage to make sure they understand any obligations, restrictions to usage or third-party rights that affect the property about to be purchased.

Your rights and the rights of others should be spelled out in your title work and thus leave few things, hopefully, to chance.

As Bob intimates, your title review is a very important part of the process, as it lays out virtually everything you need to know about your property and the property you are going to purchase. Your rights and the rights of others should be spelled out in your title work and thus leave few things, hopefully, to chance.  It is always sound advice to ask questions about ANYTHING you do not understand.

I hope this helps and remember if there are any discrepancies make sure to bring them to the attention of your agent or the title company that has provided the title information so they can be addressed and remedied if need be. Best of luck selling and buying!

Dave Kimbrough
The Kimbrough Team

Home updates with the best resale value

FloorandPaint

Dave,

We are considering selling our house in a few months and have done some research online about what home updates will get you the best return when selling. There are mixed opinions in the articles we’ve read. We don’t want to pour money into updating a part of our house that will not increase our home’s value—especially since we won’t live here any longer to enjoy it.

What home updates do you suggest to your clients when they are getting ready to sell their house? Do we need to consider big projects or will small things—like painting—make a difference?

Becky, Fruita


Becky,

Super great question! It is one of the most frequent questions I get and the reason I spend at least one column per year addressing which home improvements provide the biggest bang for the buck. After all, who wants to do upgrades that don’t pay off? NOBODY, but you must remember that not all upgrades or home improvements are created equal! Listen, if you spend big money on a cigar room, wine tasting enclave, commercial kitchen or home dance studio you can’t blame anyone but yourself when your return on investment is non-existent. Spending too much on over personalized upgrades will never pay off a big return, if any at all. However there are home improvements that do provide a great return on investment.

The two home improvements that will generally create the largest bang for the buck return and are always the first two I discuss with people are flooring and paint!
Flooring

The two home improvements that will generally create the largest bang for the buck return and are always the first two I discuss with people are flooring and paint! In my experience, over 15 years and literally thousands of homes, buyers have the most positive reactions over flooring and paint and the reaction is universal to price range. It does not matter what price point you are talking about, buyers love the smell of new carpet and new paint and remember buying a home involves all the senses and smell is a very influential one. For example, and heaven forbid, you have blue, sage or mauve carpet your return on investment will be over 100%! If you have 4 bedrooms and each one has been painted a different color of the rainbow, your return on investment will be over 100%. These are easy improvements to make a decision on. Do not procrastinate that kind of improvement, just do it and you will be glad you did. 

kitchenupdate

There are also other easy and cost effective home improvements. Next to flooring and paint, new light fixtures, plumbing fixtures, doors, door knobs and hinges also provide a great return on investment. In the grand scheme of things all these improvements are also quite cost effective and will not break the bank, however they will provide great return on investment. If you have a 70/80’s vintage home and have the old dark stained wood doors, replace them with white 6 panel doors (around $100 each at Home Depot) and behold the transformation! Give that dark dingy hallway a bright and light feel! While you are at it, remove the brass door knobs and brass hinges and take it a step further. Same goes with light and plumbing fixtures, costs are not huge and the rewards are awesome.  Lastly, don’t neglect the outside of your home. Outside home improvements are also cost effective and provide a great return on investment.

If you want all the latest and greatest on home remodels and improvements go to Remodeling.com and their cost vs. value report for 2016 and get the skinny on all things home remodel and how much you can expect to get back on your investment. This is a great resource that also breaks things down regionally so you can see what is most important in our neck of the woods. Hope this helps and best of luck on your home's facelift.

Dave Kimbrough
The Kimbrough Team

Move the unpaid balance of one home loan over to the loan on a new home?

big-house

Dave,

When we moved here in 2007 and purchased our home for $243,000 and refinanced in 2008 for $276,000 and currently owe about $255,000. We think our home would sell in the neighborhood of $250,000, which leaves us with about a $20,000 short fall, when we factor in the costs to sell. We are not in financial distress, but would really like to move to a larger home that would better accommodate our family. 

We have saved up enough money for our down payment on the new home and were planning to have the amount we were short on the sale of our home transferred over to our new home. We have been told we can’t do that and must have the money to cover the amount we are short at the time of closing. We do not have the extra money available to cover the loss and would like to move that over to our new home, as we can afford the higher monthly payments. Is this possible? Or are we just stuck where we are? We do not want to wait to move into another home if there are any alternatives. 

Thanks.

Danny and Colleen, Grand Junction


Danny and Colleen,

It does appear that you may be stuck. It is true that you can’t just move the unpaid balance of one home loan over to the loan on a new home. Your loan needs be settled at close, so the lien can be released to allow transfer of title over to the new owner. It does seem that it would make sense, since you can afford the monthly payments, to allow a reasonable amount to transfer over, but that is just not the case, your current mortgage must be paid off in full and released at close.

There may be other options. If you have any other tangible assets that can be used to collateralize the short fall, that may be an option. If you have any other property that has an equity position, you may be able to look at refinancing and pulling some of that equity out to cover the short fall on your home and get your short fall covered. Another option is looking into your retirement portfolio. If you have a 401k, you may be able to borrow from yourself and then pay yourself back with interest. In this case you can borrow the funds from your retirement account, look out to see if there are any penalties, and then pay yourself back over time and give yourself an option to get out of your existing home and make some money for retirement at the same time. 

If you are stuck, then I make the suggestion to ride it out and work on paying down your principle debt and as the market continues to improve, meaning prices are moving up, you are working to reduce your debt basis down and hopefully speed up the time table for moving out.

If you are stuck, then I make the suggestion to ride it out and work on paying down your principle debt and as the market continues to improve, meaning prices are moving up, you are working to reduce your debt basis down and hopefully speed up the time table for moving out. You can also spend that time making some improvements that are cost effective and will result in added value in an attempt to speed up your homes appreciation as compared to the general market. The biggest mistake I see in cases like this are people just loose hope and let their property start to slide in appearance and upkeep and it has the opposite effect of what I am pointing out. Making modest and cost effective improvements can help bolster your eventual selling price and if you work on reducing your principle debt, you may be able to move faster than you thought possible. You just need to be determined and don’t get side tracked with what you can’t do and focus on what you can do and create a plan to get out of your current undesired situation.

Don’t get discouraged, get determined and make a plan to get your debt down and bolster your value and you might get in that new home sooner than you thought possible. Hope this helps, but sorry I did not have a more immediate and timely solution. Best of luck.

Dave Kimbrough
The Kimbrough Team

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Houses in our $225k price range are moving so fast! What can we do?

cute-house

Dave,

We are currently looking for a new house here in the Grand Valley. Our budget is around $225,000 and it seems like every time we find a house we want to see, it’s under contract before we can even schedule a showing! We just got our house under contract and are feeling the pressure to find something new pretty quickly. What’s the deal with houses in our price range moving so fast? Do you have any advice on what we can do to find something we like before it goes under contract?

Thank you so much for your help!!
Mackenzie & John, Grand Junction


Mackenzie & John,

Wow! Your observations are absolutely correct! The segment of the market that you are searching in is moving at a very brisk pace and the competition can be fierce! I had a property that I put on the market this week and had 3 offers on the first day and the winning bid was significantly over our asking price. I sure did not see that coming! However, situations like this are happening with more and more regularity so as a buyer, you must be ready and willing to put your best foot forward right out of the gate. Don’t be afraid to compete!

These are several techniques to help you up your game in this increasingly more competitive real estate market. 

There ARE some simple things that you can do to help move your offer up in the pecking order when the offers are presented to the seller!

  1. Be willing to offer more than asking price! I have seen many an offer lost over $500 or $1000. If you really want the property and there are multiple offers, go 1-2% over asking price and watch your chances soar! If the home is $225k, offer $229k and my bet is you get it.
     
  2. Offer more earnest money than what the seller is requesting. Earnest money is often times an overlooked negotiating tool that absolutely DOES mean something to a seller and can tip the scales if the offer prices are similar.
     
  3. Be flexible with the closing and possession date. This will show the seller that you are willing to work with them and make the transition fit their needs.
     
  4. Be willing to cover your own or at least part of your own closing costs. Over 80% of the offers we see contain seller paid closing costs. Eliminating these closing costs indicates to a seller that you are a stronger buyer. After 15 years and thousands of contracts negotiated, it is a fact that most sellers don’t like paying the buyers' closing costs.
     
  5. Do not ask for personal property or things that the seller is not offering as inclusions with the property. If they have not included the nice new looking refrigerator, don’t ask for it. If you find their lawn furniture comfy don’t try to throw it in, go buy your own. I have yet to find a seller who looks upon request for personal property with a favorable eye.
     
  6. Be willing to waive your inspection contingency! If you do this, it will be clear to the seller that you are making a serious offer and have serious intent to purchase the home. This is a last resort move, however, it is a doozy if you have confidence that the property is in good condition.

These are several techniques to help you up your game in this increasingly more competitive real estate market. Notice that none of these are high dollar techniques or anything really fancy, but I promise they will make a difference and if you combine 2 or 3 of these in the same offer you will probably have an unbeatable combination. 

Remember sometimes it takes a little courage, faith and risk to get what you want so don’t let fear or hesitation hold you back from making things happen. When you craft your offer with your agent, look at it through the eyes of a seller, be willing to think outside of the box and create a win/win for both parties and I bet you have a new home in no time at all. I’ll bet the next time you submit an offer, it will be FUN! Good luck.

Dave Kimbrough
The Kimbrough Team

 

Read more Ask Dave!

Do I really need a 20% down payment?

down-payment

Dear Dave,

We are looking to buy a home this year and have been saving our money so we can put as much down as we possibly can. We have great credit. We recently ran into some unexpected expenses and our savings account is down a bit more than we would like. My wife and I are not buying more than we can afford, but we may not have 20% to put down this year. What are your thoughts on how much is enough to put down to buy a home? We appreciate the help.

Joe and Rebecca
Grand Junction


Joe and Rebecca,

This is an awesome question and one that we deal with a great deal. The great news is, there are great options available to you at far less than 20% down, but I understand where you are coming from. When the real estate bubble burst several years ago and credit standards and requirements tightened, it became a widely held myth that you needed at least 20% down to purchase and although that would be best, there are wonderful alternatives that don’t require that much down and still allow you to remain fiscally responsible. For lending questions I often lean on a good friend, James Pulsipher who is Senior Vice President at Fidelity Mortgage here in Grand Junction. As James goes on to explain, he agrees there are options for less than 20% down.

“The place where the 20% idea comes from, involves mortgage insurance. If you put less than 20% down, then you have to purchase mortgage insurance as part of your mortgage. Mortgage insurance is an insurance that protects the lender in the event of default. In short, if the lender forecloses the property, sells it, and loses money when they do – this insurance covers part of that loss. Because of that mortgage insurance is good to avoid, if possible, because the buyer gets zero benefit from it. It only benefits the lender.”

“In the lending world today, you can put as little as 3% down for conventional financing. Conventional mortgage insurance can be paid in several ways. Monthly – a premium is added to your monthly payment. Up-front, you can pay a single premium up front, and then there is no mortgage insurance in the payment, and finally – through the rate. This is a lender paid, or NO mortgage insurance loan, where you pay a slightly higher rate, and don’t pay any mortgage insurance at all. The bottom line is that there are a lot of choices.”

“In the case that a buyer chooses the monthly mortgage insurance (which is the most common), then that insurance will terminate when the loan is paid down to 78% of the initial price of the home. After two years, if the home is worth more, you could also ask the lender to re-appraise the home and terminate the mortgage insurance sooner, based upon that new equity position.”

“So at the end of the day, not having 20% down is okay. There are a lot of purchasing options without it, you simply want to consult with your lender and determine what the best approach to mortgage insurance should be for you.”

As it is with everything, knowledge is power and teaming up with a good lending professional who can help you assess what is best for you and your individual situation is the key. Find someone you trust and whom you can communicate with and utilize their expertise to help you navigate your mortgage and down payment options. I bet you will be delightfully surprised at the plethora of options you have available! Happy house hunting.

Dave Kimbrough
The Kimbrough Team

Should I add to my current garage or build a detached shop?

shop-tools

Dear Dave,

I have been throwing around the idea of building a shop at my house. I live on about an acre lot and have a fairly new home, built in 2007. I have room to build a detached shop and also room to add onto my current 2 car garage.

My question for you is, what do you think would make the most sense when I go to sell the house someday? Do people appreciate a detached shop or would they like it connected to the house?

Thanks for the help-
Robert, Grand Junction


Robert,

I believe this is an idea that virtually every man throws around from time to time, where can I build a shop? Building a shop has almost become part of the American dream. Right behind the dream of a detached shop is a three car garage or three car garage with large storage shed! As you wander through life accumulating “things” that you probably no longer need, but can’t force yourself to part with the idea of more and more storage becomes increasingly important.

A detached shop can be a man’s private kingdom and it is hard to put a price on that.

In my opinion, build a detached shop. The nice thing about a detached shop, over one that is attached, is that what is in or what is happening at the detached shop is less likely to spill over to the main garage and house. This is a simple function of being “detached”. A detached shop can be a man’s private kingdom and it is hard to put a price on that. The fact that a garage or shop is detached from the rest of the house implies that not everyone is invited, there is limited access.  Having a shop that is detached also gives one the opportunity to separate his or herself from the chaos or activities of the main structure and provide a place of solace and privacy where anything goes and being clean are not words that need to be feared! Having a place that is a safe haven is valuable and for those who are used to having it, it is VERY valuable.  

Go detached and live longer and more prosperous and when you go to sell, enjoy the rewards of having a detached shop! I am kidding about the longer and more prosperous part, but the rewards will be no joke! It will, no doubt, be a big selling feature that will have you seeing more green! ($)

Dave Kimbrough
The Kimbrough Team

Spruce up your curb appeal this spring!

spring-spruce-up

Dave,

This spring like weather has me and my husband anxious to get into the yard and start doing some work! We will be selling in the next year or two, but in the meantime we and are looking to do some improvements to the outside of our house and yard.  First, the house really needs repainted.  Is this something we should do prior to selling?  And if we do, what is the color that would attract a potential buyer?

We also have some shrubbery and bushes in the front and back yard with some old bark around them?  What do you think is best to put in those areas if we replace the old bark- rock or wood?

Thanks for your help, we could use a little help and thought we should get an expert's opinion!

Thank you - Tracy, Grand Junction, CO


Tracy,

This “spring like” weather has us all ready to get out and get going in the yard.  This kind of weather typically does not come our way for another 60 days or so, but it’s a blessing to have it and taking advantage of it is a great idea. Getting the outside of your home in tip top condition is very important. As you know, your home's curb appeal is instrumental to getting potential buyers to want to go inside to see more. 

Buying a house is a little like dating…if you like what you see on the outside, you are much more likely to make an attempt to see what is on the inside and see if it is a fit! Dressing up for the date is important. If your home needs painting, paint it before putting it on the market. Many people put it off by saying that the buyer will want to choose their own colors etc. Honestly the majority of people will choose a palette neutral color that is consistent with our area and other homes in the neighborhood. You can’t go wrong by choosing a neutral color and putting a fresh coat of paint on your home to make it pop. Don’t forget to also paint the corresponding trim and door a complementary color to set it off and also look to see if shutters are appropriate or planter boxes can be added to really spice up the curb appeal and have people dying to get inside!

Taking some time to spruce up the house and at the same time whip your landscaping and beds into shape is a great idea. I love the use of bark or rock, depending on the look you are trying to achieve.
landscaped-house

Taking some time to spruce up the house and at the same time whip your landscaping and beds into shape is a great idea. I love the use of bark or rock, depending on the look you are trying to achieve. The bark will give it a more mountainous feel and the rock a bit more of a desert edge, go for the look that fits your neighborhood. Many times I find the bark appealing on older, more established neighborhoods with larger trees etc…  and the rock more fitting in the newer subdivisions. Keep in mind that both the bark and the rock will need to be refreshed every so often and bark is an easier task to refresh because you can buy it by the bag and is generally easy to carry and overall much lighter. Remember when you freshen up your old beds, make sure to trim back your old bushes and plants at the same time and that will help give the overall appearance of a total face lift.

Taking advantage of this wonderful weather and focusing on your exterior curb appeal is very smart and will pay you big dollar for dollar returns on your investment. You may not love the sweat you are putting into it now, but will love the equity it provides when you do decide to sell. Best of luck and maybe the fruit of your labor will make you happy enough to just stay put for a bit longer and enjoy!

Dave Kimbrough
The Kimbrough Team

Current Real Estate Market Update

Dave,

current-real-estate-market

What’s is the current state of the real estate market in Grand Junction? Is it a buyer’s or a seller’s market? I’m also curious how long it takes to sell a home in our neck of the woods compared to other places like Denver or Fort Collins. It always seems like I’m hearing how Denver is booming and has been for the last couple of years. How do we measure up over here on the Western Slope?

Thanks for the market update!

Steve, Grand Junction


Steve,

Great question! When I wake up in the middle of the night I am either thinking about ways to improve my marketing plans or pondering what is really going on with our real estate market?  How will this year be, compared to last year?  Will we finally see the job and wage growth start to flow or remain stagnant like a rivers eddy? Is there enough development being initiated to keep pace with present and future housing demands? I spend way more time than I should pondering questions just like this and will admit that I waft back and forth like a wind swept balloon, but will give you what I know as of now! Keeping track of what is happening is hard enough, however trying to predict what will happen typically proves a fools game. Today I am happy to report that the state of the Grand Junction real estate market is strong and holding steady. 

Steady is the new normal for us and has been for the past several years, as we have seen steady and sustainable growth year over year since 2012! 

Steady is the new normal for us and has been for the past several years, as we have seen steady and sustainable growth year over year since 2012! Having a real estate market that demonstrates sustainable growth is a real blessing, as that kind of market generally does not lead to a bubble and keeps affordability in reach for most of the residents. Our prices have not gotten too far out in front of our wages and income and that helps any market remain on the healthier side of things. The average days on market for a home in Grand Junction in 2016 was 103, down from 142 days in 2012. 103 is good. Not great, but a healthy good. In stark contrast the Metro Denver area has an average days on market of 27 and Ft. Collins you are looking at 59 days on average. 27 Days is really hard to believe, but Denver has been sustaining that kind of market for 3 years now. What seems like it has to end, has no end in sight. The average days on market for Ft Collins is impressive, however not when compared to Denver! The real test is median sales price and we will see that the prices on the Front Range are soaring!

Since 2012 the median home price in Denver has gone from $233,500 to $350,000, an increase of 50%! Ft Collins went from $228,000 to $344,000, an increase of 51%. WOW. Here in Grand Junction the median house price has gone from $175,000 to $211,000 in the same time span, an increase of 21%. Not as impressive as Denver, however very solid and most importantly very sustainable.  Being able to sustain the growth is very important to the long term viability of our local real estate market. Although the real estate numbers here are not as impressive as the Front Range, I personally believe it is to our benefit over the long haul. Having a real estate market that consistently shows sustainable growth and appreciation will lead to an overall healthy local economy and one where housing will remain affordable to the majority of our residents and that is a very important part of community.

I for one am thankful for where our valley is and where it is headed! As the author Robert Fulgham wrote, "The grass is not, in fact, always greener on the other side of the fence. No, not at all. Fences have nothing to do with it. The grass is greenest where it is watered. When crossing over fences, carry water with you and tend the grass wherever you are.” 

Dave Kimbrough
The Kimbrough Team