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Our Business Model and Our Heartfelt Appreciation
Our business model does not include handing out business cards at Christmas parties.
By Rocky Reynebeau

My father was a very simple man who was influenced by the depression and World War II.  As  a small-time businessman - he worked hard and put in long hours to scratch out a modest living for our family.  His businesses were beer and liquor, a soda fountain and  bakery products. 

I started to work for dad when I was 8 years old - he paid me 10 cents an hour - which is about what I was worth at the time.  But I earned so much more than 10 cents.  Working for dad created the foundation of how I would conduct myself in life and in my real estate business. 

While I was working for him he encouraged me to start my own business selling  ice water to a construction crew building a bridge near our home.  I had competitors - so I made sure my water had lots of ice plus I offered free refills.  That summer I made 10 cents a drink and  10 cents an hour working for dad - I made a killing that one year.  Dad never pontificated about business - he just lived it - his great joy was that people wanted to do business with him.  My dad had the biggest impact on our business model but other things had big influences also.

Building Trust and Caring for People 

When I got in the business - what Realtors did to get business was “work the floor” - they sat at a desk at a prescribed time and waited for someone to call.  Whew!  That was not for me.  I wanted to build my own business - so I hit the streets and talked with people who were working in their yards.  Almost every person I visited with would ask me “what did that home sell for” or something similar - they wanted information.  I would never ask for business as I felt it violated the spirit of why I stopped to visit with them.  But, I would always end up sending them information based on their inquires.  Very soon, people were calling me to do business specifically with me -  because I earned their trust.  Thirty seven years later we still do business with several of those families from my first weeks in the real estate business.  And,  like all of our clients, they became part of the fabric of our lives. 

Building our Value

Sandee and I have had a summer home on Legend Lake on the Menominee Indian Reservation in central Wisconsin since 1985.  Every spring we get mail from Realtors telling us how  we need to call them if we want to sell.  They never tell us anything we want to know - like what’s the condition of the market, what’s for sale, or what has sold that would help us determine the approximate value of our cottage.  Nothing!   Just - you should list with me!  To me that’s like Realtors handing out business cards in grocery stores or Christmas parties - that’s not our business model.  Our business model is simply living our business, promoting the properties that we have for sale and provide honest information that people can use to keep them up-to-speed on market conditions and values.  This is all backed up with great skill sets.    

Asking for Business is Not Enough! 

We believe that to have any sustainable business, you have to earn it with every call, every event and every interaction - then people want to do business with you.  Let me digress - witness the restaurant 240 Union - they succeed year after year by providing a great environment and great food at sensible prices.  And,  the owner says hello when you walk in the door.  Other restaurants like Cafe Jordano, Moose Hill Cantina, Bono’s Italian and Taste of Denmark earn your business with every bite.  Green Mountain Ace Hardware earns it with every nut and bolt and Dr. Roger Liehr of Foothills Animal Hospital earns it by caring for every pet.  None of these businesses put up balloons above their building, have a zillion signs trashing up neighborhoods inviting you inside, or offer specials to the lucky few who remember to bring their coupons.  They just offer great products at sensible prices and they do it over and over again.    

The Impact of My Dad

My dad and the events listed above had a big impact on me - I’ve always wanted to work hard to earn business and have heartfelt appreciation every step of the way.  I felt the same way when I sold water.   Real estate is more complicated than water.  So, to me, our business model is exceptional market knowledge and a great skill set.  Early in my career I decided that I did not want to be that Realtor handing out calling cards at Christmas parties or in grocery store parking lots.  I did not want to be a “Realtor”, I wanted to be a businessman in the business of real estate - that was my business model. 

Jason, Jeremy and I  live this business model everyday.  We will not provide information on how to lower heating bills, improve attic insulation, gardening advice or how to stay healthy in a stressful world.  And, we certainly will not provide recipes or pot holders with our names on it.  We do real estate and thus, we help  our clients navigate through the maze of  real estate decisions.  We talk about your goals and how that plugs into the current market  as related to pressures, meaningful comparable data,  timelines, risk management and the hundreds of variables that come into play.  Most importantly, when we say “we are always thankful, always appreciative and we never take your business for granted” we mean it. 

Our basic values are rooted in my father.   As a simple man, my dad wasn’t a great financial success but he was a great man who never deviated from his values and beliefs.   I am proud to have dropped from his tree.  I believe that I will see him again and when I do, I hope he will say, “I am proud of you Rocky.”  I would respond,  “I am proud of you too dad!”    

 

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Love it or Leave it!
Should you update your home or move?
By Rocky, Jason and Jeremy

We frequently get phone calls from owners querying us on how a particular improvement will impact on the value of their home.  For example:  If we put $40,000 in our kitchen, how much will our home go up in value?  That’s a tough question to answer because there are many variables involved.  But, let’s talk about some filters through which you can strain all these kinds of questions. 

Home Improvement Filters

Filter #1 - Love it or leave it!  This is really the operative question when it comes to major home improvements because no matter how much money you put into your home, it will not change the basics of the home.  So if you don’t love your home and its location, move.  If you do love your home and its location, then make sensible improvements and enjoy your lovely home.  The money issue?  It really doesn’t matter because in the end it’s more economical to change your existing space than to move.  It’s expensive to pay people like us, lenders, and movers.  Not only that but you’ll probably change the next house too - it’s part of the human condition.

Filter #2 - Don’t do it for the money!  It’s best not to do any kind of major home improvement for a nice rate-of-return on your money.  You must do it because you want a nicer living space, you need the third garage, finished basement, or more space.  However, there’s a good chance you’ll be saying goodbye to some of that money.

Filter #3 - Location determines value!  Further, location comes down to what part of town, what neighborhood, what street and which side of the street -  location determines value.  Condition is a huge factor in value and salability - but location will always be the number one duck in that formation.  So, rule #4 applies.

Filter #4 - The street test!  If you want to make major improvements and retention of capital is your principle consideration - go outside and look at your street.  Ask yourself - what will this street bring in the marketplace - be realistic!

Filter #5 - If you dislike it, delay it or move!  If you don’t like your home but you can’t move, then do cosmetic improvements like floor coverings, removing old wallpaper, window coverings and countertops.  You’ll almost always get your money back on those items.  Then move when it makes sense for you.   Call us -  we sell houses for a living.

Filter #6 - It never ends!  The problem with remodeling or updating a home is that one thing leads to another and it never really ends.  Example:  Say you want to replace countertops in a 30-year-old kitchen.  Countertops lead to sinks, then faucets which lead to cabinets, then appliances and then floors.  But now you have a new $30,000 kitchen with 30-year-old windows -- do you replace just the kitchen windows and doors?  Now your kitchen’s done but how does that impact the family room and the rest of the home?  It never really ends so you better really love your home and its location.

Filter #7 - Less is best!  It’s ironic that the least expensive items reap the biggest rewards.  Cheap things like paint, removing old wallpaper, new carpet and window coverings, redoing hardwood floors, painting paneling and updating countertops, sinks, light fixtures and stools pay huge dividends - more than cost.  Why?  Because of the street test.

Filter #8 - Most pays least! Again, it’s ironic that the most expensive and intensive efforts pay the worst returns.  Let’s be candid.  The singular improvement of adding a $30,000 third-car garage is not going to increase a home’s value by $30,000.  The operative word here is singular.

Filter #9 - Lots of dichotomies! There are a lot of dichotomies involved in the decision to remodel because we all look at and use our homes differently.  When Sandee and I decided to do our remodeling we knew that money-wise it wasn’t the smartest thing to do.  But we loved our home, its location and our neighbors.  Lots of family memories -  so for us it made sense to make major but sensible home improvements and we were willing to take the dollar hit.

Filter #10 - Beware!  Beware of people giving you advice.  There are dozens of variables involved in any decision.  The person giving you advice knows only 5% of those variables - you know them all.  Trust you instincts - people are so smart when it comes to parting with their money.  They think decisions through looking at all the variables and they always know what’s best for their situation.  You’re no different.

We do a lot of appointments to help folks figure out which improvements make the most sense. And, if that would help you also - just give us a call because we love doing it.  You can cal89-5462.  Reprinted from Homes on the Hill (1995).

 

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Does it Make Sense to Pay off a Mortgage
By Rocky Reynebeau

Being mortgage and debt free is a personal decision.  Most financial planners would say it does not make sense to pay off a mortgage.  A 4% mortgage is nearly free money!   There’s the favored tax treatment and growing money at a faster rate than 4% should be easy to do.  We agree with all of that but we also see a different side of mortgages and debt.

Financial planners say there are three legs to financial security - pensions, savings and social security.  The problem with that concept is that a three-legged stool will fall over when one leg is removed.  A fourth leg, a paid-for home, has a nice ring to it. 

This is all very personal - guaranteed pensions,  piles of money or future inheritances clearly impact life in meaningful ways.  Experience shows, however, that many do not have a three-legged stool and some only have one leg - social security.  How many legs will your stool have?  If you’re short on legs, then having a mortgage-free home at retirement is not a luxury - it is mandated. 

Time is both a friend or a foe when paying off a mortgage.  It’s quite easy to accomplish when the idea is an internalized part of a financial plan.  There are so many ways to do it that it does not require further discussion in this article.   But think about this, making one extra payment a year will knock years off a 30-year loan.  Refinancing a 30-year loan to a 15-year loan is almost magic.  This is easy and sensible stuff and it’s not a money thing - it is a head thing.  Wrap your mind around debt free and it will happen.  Easy!        

In an uncertain world, life is always about your personal economy.   Debt,  for many people, is not a friend - it is a foe!  Is paying off a home dumb - maybe!  Do you sleep good in a paid-for home?   Yes!      

 

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The A/B Move
How to coordinate the dreaded double move.
By Rocky, Jason & Jeremy

We call upsizing or downsizing moves - an A/B move.  Selling A and buying B is either very simple or very difficult.   The operative question is this - which is harder to accomplish - selling A or finding B?  Equity positions, market pressures, age, product options and the degree of difficulty in finding B are the issues at hand.  Examples:

An EASY A/B move.  Young couple living in a condo and needing more space.  This is simple because there would be so many B options that would fill the need. 

A DIFFICULT A/B move.  Older couple moving because they need a ranch with main floor utilities, no steps, in an empty nestor type neighborhood and absolutely needing to sell A before they can buy B.

Simply put:  It comes down to risk.  The young couple has a lot of flexibility and there’s a lot of B options.  Typically, the best approach is to sell A while looking for a B.

For the older couple, the most horrifying idea would be to have a SOLD sign in front of their home with no place to go - that is scary.  So, in that case it is important to find B first and then sell A.  That’s where a lot of catch-22’s come into play. 

There’s a higher level of skill necessary with doing an A/B move in a seamless fashion - but the risk is manageable.  We can help so much on these moves - especially with the second example - because we have the ability to facilitate the move by bridging from A to B.  We can take most of the stress and risk out of the deal by bridging.  This allows the older couple to find B, comfortably knowing that we can make it happen for them.  Easy stuff really and we do it often.

We can help you with your A/B move by taking much of the risk out of the equation.  Let us know if we can help you. 

 

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The Simple Process of Buying a home
Buying a home is a good financial decision - and, it has never been easier!
By Jason Reynebeau

The process of buying a home varies significantly - every buyer or Realtor tailors the process to meet their needs.  We feel there is definitely a  right way and a wrong way to do it - the process can be pleasant and fun or it can be stressful and hard.  A few steps in the wrong direction can lead you down the path of stress and problems.  Here’s how 38 years of real estate experience has molded our approach to be efficient and fun.  It seems logical but you’d be surprised how many don’t do it this way.

Step #1 - Getting acquainted

We think it is very important to have a get-together meeting in our office to see if we all connect.  It is important as we have to know if we are all on the same page with the same goals.  This is the time to lay out the plan, establish the goals, parameters and time-lines.  If we all feel good about the relationship then we need to move on to steps 2 & 3. 

Step #2 - Get pre-qualified

Speak with a reputable lender who knows their stuff.  Don’t pick someone out of a hat - the lender is a key ingredient to an easy transaction.  Choose a bad lender and you will almost certainly have problems and stress.  The goal is to  learn the maximum amount of money you qualify for and what issues we might have to deal with.  We suggest Tim Siebenthal because we trust him totally - he is at 909-929-2853.

Step #3 - Learn what your money will buy

Now that you know what you can qualify for we need to do “education day” where we go out and look at lots of options in various price ranges.  We need to work various price ranges, neighborhoods,  floorplans, product lines and age groups and all the other factors involved in the goals.  We need to have established clearly, in the end, what type product and what price range we need to focus on.  Each home we look at should advance our knowledge of what our money will buy and clarify what it is that knocks our lights out.   Just because you can afford 400k doesn’t mean that’s what you should spend - what’s the least amount of money you can spend and still be happy.  At the end of education day we typically have a very good handle on what the issues are going to be and what product we are looking for - plus, it’s fun.

Step #4 - Narrow your focus

Once you establish your price range and the product, then we need to narrow the focus down to the area and three or four absolute attributes.  Shop the market until you’ve exhausted your options.  If we still haven’t found the home that knocks your socks off then we have two options.  First, watch all the new listings as they come on the market or reassess the parameters, price range or the geography.  This can be a lot of fun because you’re making progress.

Step #5 - Buy the home that knocks your socks off

One of the great things about this process is that we never have to sell someone on a home.  Eventually they walk into a home and just know it’s the one.  It’s fun when we haven’t even seen the whole house but they know “this is it”.  Buyers know it because they arrived at this decision in a meaningful and logical way and there is typically very little doubt - they just know it. 

This process takes various amounts of time.  We all have different abilities to absorb information, process it and make decisions.  So the number of homes seen also varies - some need to see 15, others 50.  Regardless of how many you need to see, as long as the process stays the same, things always work out for the best.  If you have any further questions about buying a home or would like more information please contact Rocky, Jason or Jeremy at 303.989.5462 or visit our website at www.rockyjasonandjeremy.com.

 

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History of Real Estate Commissions
By Rocky Reynebeau

All real estate commissions are negotiable - there is no fixed and established fee that all companies or Realtors charge - that is the law.

Individual companies can, however, have a standard fee that their Realtors need to charge as a matter of course.  For example:  XYZ company can require all their associates to charge X% unless permission is received from the managing Broker. 

Prior to the 60’s the going fee, more or less, was 6%.  Sometime in the late 50’s or early 60’s two companies raised their fees to a standard 7% on the premise that their company’s services were worth more than the smaller companies doing business in the Denver Metroplex.  Those companies were Van Schaack and Company and Moore and Company - their respective market shares were 25% and 20% - so, they dominated the markets at the time.  From the 7% they “split” that fee 60% / 40% with 40% going to the selling company.  Forty percent of 7% is 2.8% - that fee is called the “co/op” fee. 

With the advent of the 100% split companies like Metro Brokers and Re/Max, 7% commissions began to die a natural death.  But, that 2.8% “co/op” fee has survived to this day.  For example:  If a listing was taken at 5.5% - the selling agent would get 2.8% and the listing agent’s company would get 2.7%. 

 

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Five Misconceptions about 1031 Exchanges:
By Jeremy Kendall

Over the past 20 years, tax-deferred exchanges have become an increasingly important part of real estate transactions. Surprisingly, there are still some deep-rooted misconceptions about Section 1031 of the Internal Revenue Code, even though tax-deferred exchanges are prevalent in the real estate community today.  Some of these misconceptions are so severe that real estate investors wind up losing their chance to take advantage of the tax savings afforded by structuring their transactions as an exchange. What follows are the five biggest misconceptions:

Misconception #1 - In order to complete a 1031 exchange, a taxpayer has to find someone to “swap” a property with.

While this is originally how exchanges were structured, taxpayers are now free to sell their property to anyone they wish, and to buy from anyone they wish. Although there are a few issues regarding sales and purchases between related parties, most exchanges are structured not unlike any other typical sale and subsequent purchase commonly found in the industry.

 

Misconception #2 - A taxpayer seeking to exchange property has to buy the exact same type of property he is selling in order for it to be considered a “like-kind” exchange.

As long as both the property to be sold and the property to be purchased are held for productive use in a trade or business, or for investment purposes, taxpayers are free to purchase whatever type of property they want.  For example, a taxpayer can sell an apartment building and exchange it for an industrial warehouse. 

 

Misconception #3 - Taxpayers must complete the 1031 exchange in one completely simultaneous transaction.

By virtue of a favorable ruling to the taxpayer in the now famous case of Starker vs. United States in 1979, taxpayers have the ability to complete an exchange on a delayed basis so long as they purchase replacement property within 180 days of selling their first relinquished property.  Other structures, including reverse exchanges and improvement exchanges, afford taxpayers other types of time-line flexibility.

 

Misconception #4 - Taxpayers must use all the proceeds from the sale of their relinquished property to purchase replacement property.

In order to have a completely tax-deferred exchange a taxpayer must follow three essential steps: (1) buy replacement property where the value is equal to or greater than the value of the original relinquished property; (2) use all of the original equity realized from the sale to purchase a replacement property; and (3) obtain equal or greater financing on the replacement property as was paid off on the relinquished property at the time of its sale.

However, while those are the rules for a complete deferral, a taxpayer may violate any one of them and complete a partial deferred exchange.  For example, a taxpayer who seeks to buy a replacement property of a lesser value, or with less financing, will recognize a capital gains tax on that amount not reinvested in the new property.  Simply put, taxpayers can buy replacement properties for a lesser amount and put cash in their pocket, so long as they don't mind paying some taxes.

 

Misconception #5 - I don't need a qualified intermediary. I can simply have my attorney or accountant hold the sale proceeds until the replacement property is purchased.

A qualified intermediary is essential to completing a valid delayed exchange. Basically, the IRS disqualifies any person or entity from acting as an intermediary, if that individual has had an existing business relationship with the taxpayer within the past two years.

Although that statement is somewhat broad, some parties who may be considered disqualified parties are the taxpayer's relatives, attorney, accountant and real estate broker. The IRS provides that neither the taxpayer, nor any disqualified person or entity, can come into receipt of the exchange funds during the exchange, or the exchange will be void.  Using a well-established qualified intermediary enables a taxpayer to avoid situations that might void an otherwise valid exchange. It is also a good practice to research the expertise and security of the qualified intermediary.

Note: We do a lot of 1031 exchanges and are proficient in the process - for council please give us a call at 303-989-5462.

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Ending A Co-Ownership With A Quitclaim Deed

When two or more co-owners want to end their ownership rights in a piece of property, this type of transfer of title can take place by means of a Quitclaim deed.  The co-owner will sign over his rights and title in the Quitclaim deed, and the deed should then be recorded in the County Recorder's office.  An exchange of money may or may not take place.  A Quitclaim deed gives no warranties as to the condition of title at the time of the transfer. 

Quitclaim deeds are often used between husband and wife or between relatives. Quitclaim deeds are also often used to cure technical defects in a title and to eliminate any potential claims against the property from persons with an uncertain or potential interest in the property. You can ask an escrow office or attorney to prepare the Quitclaim deed but it is easy enough to do it yourself.   Call us if you have questions.

 

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Checklist for Inspecting a Home

New home or not, it pays to know what to look for in its structure, equipment and surroundings.  Though a final assessment can and will be made by your inspector, this checklist can serve as a check list of items to observe during your inspection.  An extra set of eyes is always helpful on inspections.

  • Check the foundation, floors, walls and poured concrete.  Minor settling cracks are usually not structurally significant.  Make sure there's no evidence of water seepage or moisture problems.  If necessary, make sure there's a sump pump and be  sure there's excellent drainage. Check the crawl space.
     
  • Check the condition of flooring, whether plank or plywood and for solid construction of bridging and joists.  Make sure there are no water marks.
     
  • Make sure the attic is sufficiently insulated and ventilated.
     
  • Check that the fireplace damper is in working order, and flues to the chimney are clear.
     
  • Check out  heating and air-conditioning systems.    Also, check the hot water system -- type and gallon capacity. How long has the present unit been in service?
     
  • Check the electrical service to make sure that the standard house current, number of circuits, outlets and circuit breakers are sufficient for everyday needs.
     
  • If the home is older - have the sewer scoped.
     
  • Bathroom and kitchen fixtures should be in good shape.
     
  • Check exterior lot and landscaping. Is it properly graded or contoured?   Be sure to check that fences, walls, patio and driveway are in good condition.
     
  • Be sure exterior walls are suitable to weather conditions. Check doors and windows. Are they easy to open and close (or replace) for storm/screen removal or installation?
     
  • Are the roof, gutters and downspouts in good condition?
     
  • Is the garage door or opener in good working order? 
     
  • Check the sprinkler system - run the system to see if the coverage is adequate.

Be sensible in your inspection request.  The negotiated sales price typically reflects the noted condition of the property.  And, remember, it is not the job of the seller to bring a home up to your standards.  Use the inspection appropriately - to see if there are problems that you could not see to begin with.   

 

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Work with someone who knows what is going on!!! 
By Jeremy, Jason and Rocky

W e are coming into a market that is very risky in terms of making good strategic decisions.  You really need to be working with a Realtor who knows the market. Like never before.  Today, selling a home is not the problem - it is making sure you’re getting every buck that the market will bear - accomplishing that is not a given. 

In stable markets there is not much risk of making a mistake because there is lots of data available.  If you make a mistake you can always adjust.  And, in a declining market you can get a grip on market pressures fairly quickly.

But, in this market you need to know how to read the tea-leaves and you can’t do that by looking at a computer screen.  In stable or declining markets you might get away with using an uncle or aunt from Aurora who just got their real estate license.  At this time,  that is very risky because 32% of all Realtors get out of the business every year - this industry has nearly a complete Realtor turnover every 3 years.  Really, a Realtor has very little “experience” until they have sold 200-300 homes.  Understanding market pressures, working the intricacies of the deal and getting it appraised and to the closing is a very high skill.   

You know us well enough to know that in 25 years of publishing this paper we seldom talk about our skill levels.  Saying things like are not in our DNA.  But, this is different, because in an improving market sellers often unknowingly leave money on the table.  And, many buyers lose several homes before they finally figure out what’s happening.

I suppose we could be wrong but we don’t think so.  We think we are reading the market correctly.   So, we suggest to protect yourself, work with someone who knows what they are doing.  Call us - we know the Green Mountain markets very well.

 

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The Important Decision to “Age in Place”
An event triggers the question - Should I move to an assisted living facility?
By Rocky Reynebeau

A lot of our neighbors and clients are getting up there in age and it has been  our special pleasure to assist them in making some of the most emotional and important decisions in their lives - “how long should I stay in my home?” This question does not pop up unexpectedly - it typically simmers for years.  And, it should.  This is a big decision and you don’t want to make a mistake by staying too long nor moving too soon.

Most housing moves are triggered by things like a new job, a new baby, a better or worse financial status and so on.  But, for seniors, a decision to either “age in place” or move to an apartment type product is very different.  Seniors are dealing with a whole different set of issues - health, loneliness, mobility and physical safety and financial concerns top the list.  While this simmers for years there always seems to be a triggering event that brings it to a decision point.  The most frequent triggering event is the passing of a spouse or medical/aging issues.  

We have a lot of history on helping with these moves and maybe some of that history can be of help to people facing these decisions.  So, let me take a swing at this.  The variables are numerous so I need to talk in general terms but I think these baseline terms make sense and may be applied to nearly every triggering event.

Aging-in-Place

I am a huge fan of “aging-in-place” and almost always suggest staying in your home as long as you can.  I also believe that apartment/assisted living is a wonderful option at the right time.  My council is that we should “age in place” until one of these events happens. 

Event #1 - Stay in your home UNTIL you no longer feel physically safe.  This is not relative to crime but rather, whether you are worried about falling or have a medical condition that could render you helpless.  In my view, if you are having legitimate concerns about this then moving to a Meridian-type option makes sense.  I always say “stay in your home until one-week before it is too late!”

Event #2 - Stay in your home UNTIL you become lonely.  There is no reason to be lonely - life is about activity and being interactive with other people - family or friends.  There are both physical and emotional reasons why we become lonely.  Don’t be lonely.

Event #3 - Stay in your home UNTIL your intuitive self says that it is time to move.  Sometimes these are preemptive moves whereby it makes sense to move closer to family in a different location.  You and your family will know when that time comes - trust your intuitive self.

The decision to age in place needs to be a cognitive decision as opposed to simple inertia.  And, this decision needs to involve family members and/or very trusted friends/professionals.  You need to require honesty from all players - including yourself.  The root of the decision should be a function of what is best for you and the family.

How to Age in Place

Aging-in-place is not hard! There are numerous people who will help you.  The obvious are family and neighbors - they are typically great.  In addition there are many others that provide professional services - yard care, handy man, in-home physical therapy, Visiting Angels and local senior citizens centers just to name a few.  We help lots of folks, who have become friends, while they are “aging-in-place.”  They rely on us to keep them up-to-speed on the market or to point them in the right direction to have a tree trimmed or their sewer line cleaned out.  We love it.  Finances are part of every decision of life and it is no different now.  I have seen too many folks live on very limited incomes while sitting on a pile-of-equity in their homes.  The reverse mortgage or a line-of-credit are options but use those vehicles very carefully because it could be that equity that will allow for your comfortable living if you ever need to move to assisted living. 

STUFF!

Stuff is overwhelming - we collect a lifetime of things - many of which are part of the fabric of our lives.  Much of our stuff, however, is just stuff we have because of pure inertia. Stuff introduces  stress to all of us but especially so with seniors.  One of the biggest reasons why we stay in our homes too long is because we don’t want to have to deal with it.  You should filter the decision to age-in-place by running it past the three events listed above - not because of your stuff.  Dealing with stuff is a totally separate issue and we can deal with it while “aging-in-place”.  If you really want to feel good - throw out some of that stuff.

Honest Conversations

Jeremy, Jason and I believe seniors are special.   They are not children and want honest conversations about the matters of their lives.  Once a senior recognizes that they can trust you totally - they will nearly abdicate the process.  Often, that gets them in trouble - there is a lot of antidotal evidence on that.  For that reason, a family member or a truly reliable friend or professional needs to be involved in these decisions.

Allow it to be Easy

If you decide to age-in-place then allow that to become easy.  It is ok to hire out services.  I understand, we spend a lifetime being very frugal with our money and all-of-a-sudden we are hiring people to change out a light fixture or cut the lawn.  It is ok and think of it this way.  It’s a lot cheaper to hire this stuff out than to pay for real estate commissions and moving companies.  Enjoy your home and make it easy to stay there - the time to move to assisted living or an apartment will come soon enough.

If you are alone and need help with this process - give me a call.  I care deeply about this subject and will be able to help you in many ways and on so many different levels.  And, importantly, you can trust me as if I was your family.  I’ll take care of you – Rocky

 

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More Tar - Inspection Issues Now Part of the Loan Process
This is a very big deal - lender now may have to approve inspection resolutions!
By Jason Reynebeau

Within our real estate industry, each year brings something new.  New forms, provisions and processes are introduced into our world and we adapt.  In most cases, these changes have little impact on the seller or buyer.  Maybe a new line on the seller’s property disclosure, a new provision in the listing agreement or just some new language in the contract to buy and sell.  This year, however, there’s been a very big change that will impact the principals in a big way.  More tar!

Historically, the “Inspection Request” and the subsequent “Inspection Resolution” of the transaction have always been the sole providence of the buyer and the seller.  The buyers do their inspections and determine what condition issues are unacceptable.  When something is unacceptable, the buyer asks the seller to repair or make a concession.  Most of the time  an acceptable resolution is reached and the deal moves forward. 

Lenders were never involved and everything worked out fine - they have their own way of doing their due diligence  - the appraisal - which validates the value of the collateral.   No more!

In 2013 it’s been mandated that the “Inspection Resolution” be in the form of an “Amendment to the Contract” and thus introduces another level of drama into the deal.  Effectively, this allows another person, sitting behind a desk in some unknown location, to pass judgment on the “resolution.”  This opens up a potential can of worms  and this could become a  very big deal. 

This change has vested the lender beyond the realm of financing and into the realm of subjective physical inspections.  Think about this!  What if an inspector determines that the insulation is inadequate and the seller agrees to give a credit to offset this request.  Now, the lender could mandate that the insulation be brought up to speed and they may want need to APPROVE the work.  Think about the implications for furnaces, cracked driveways, fogged windows and a hundred different inspection issues.  Talk about TAR!    

Most inspection issues are very solvable but the actual solution is often subjective.  The principals might fix, credit or refuse, but now, the lender might  direct what happens - what used to involve logic and compromise may now become policy driven.  This will impact closing time-frames, solutions and will likely end up unnecessarily killing a lot of deals in spite of the fact that the players want to do the deal. 

How does this affect you as the consumer?  First, Be aware that this will impact your deal - in ways unknown at this point.  All parties will  need to be cognizant of this when dealing with inspections.  Second, depending how this plays out, we could begin suggesting doing an inspection before a home goes on the market, fix what we are willing to fix and then do contracts in an “as is” state.  Again, depending how this plays out.  Third, and perhaps most importantly, have a Realtor who is capable of  “doing no harm” while dealing with these issues. 

In this business there are always new challenges to address.  We’ll deal with this one just like all the others that we’ve come acrosss in the last 37+ years.  If you need help navigating the real estate process, we’re always around.  Call for a FREE consultation.

 

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Kiss Your Mortgage Payment Goodbye with a Reverse Mortgage
By Doni Dolfinger- Reverse Mortgage Specialist

Payments of any kind can be problematic, especially if you are on a fixed income or approaching retirement.  If you feel that relieving yourself of a monthly mortgage payment could change your financial destiny you might take a look at the Home Equity Conversion Mortgage (HECM) commonly known as the FHA Insured Reverse Mortgage. 

Although they are not for everyone, reverse mortgages have offered financial relief to many older homeowners.  Take Mr. and Mrs. Johnson (not their real names) for example.  They had been making monthly mortgage payments for years on their lovely remodeled home in Denver worth $265,000.  Now that both are retired and ready to travel and play, they feel strapped with a mortgage payment. Paying off their mortgage would free up their income by $539 a month. 

Based on their ages of 63 and 71, current interest rates and appraised value of $265,000,  they could easily qualify for enough from a reverse mortgage to pay off their $73,500 mortgage and have a nice nest egg of approximately $80,000 to use for trips, buying a car, paying off  charge cards or whatever they choose. They could even receive money monthly if they desired. 

Many people say reverses sound “too good to be true” and wonder about the downsides to this program. Speaking to an FHA approved counselor is a good place to start your reverse mortgage education process.  A reverse mortgage may not be the appropriate choice for someone who expects to leave their home free and clear to their heirs. Although the heirs receive the remaining equity if the homeowner dies, the reverse mortgage does have to be paid back either from the sale of the home or other funds. 

The Johnson’s children were very supportive. They want their parents to be able to enjoy retirement without financial worries.  Mr. and Mrs. Johnson look forward to staying in their home for years to come and can now kiss that mortgage payment goodbye!  

Doni Dolfinger, Reverse Mortgage Specialist of 22 years, may be reached at Universal Lending, 6775 E. Evans Ave., Denver, CO  80224 (303) 791-4786 or (303) 378-8905.  Email: ddolfinger@ulc.com.  License #100017629 NMLS #266569.  Regulated by the Division of Real Estate.

 

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