Should We Shop Around For A Lender?

Dave,

Simple question: should I shop around for a lender? I’ve heard it’s good to interview a few different real estate agents before starting the home buying process. Is it the same thought for lenders or are they all pretty much the same across the board because of regulations, etc.?

Thanks man!
Gregg, Fruita

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Gregg,

Clearly you have read my column and realize I can be pretty verbose, but in this instance I think I can keep it fairly short! It is really pretty simple, no two lenders are the same and it is in your best interest to shop around and I am not necessarily talking about shopping around for the best interest rate!

Just like in real estate or any other profession, you want to find someone who works in lending full time! They should have years of experience and knowledge. Most importantly he or she should be up on all the latest lending requirements and programs and know what it will take for you to get a loan approved. I know everyone is human and can make mistakes, however it still amazes me at the sloppiness/last minute rush that some mortgage lenders put their clients through when it comes down to crunch time. I understand there is a load of paperwork that is required from the buyer when obtaining a loan and getting all that paperwork processed is a time consuming process that requires systems and processes to ensure proper handling. As with anything you have to ask questions! 

Some simple questions to find out more about your prospective lender might be:

• 1. What kind of experience do you and your team have? If they don’t have a team working with them, move on….There are too many details that can get overlooked.

• 2. Can I get references? If they don’t readily hand them over, move on.

• 3.How much time do you need to fund? If they hesitate or say more than 45-60 days, move on (30 -45 days is typical).

• 4.Can you guarantee an on time close? Most should not hesitate to give you a firm closing date. Remember you MUST be timely in document submission. Many times, it is not the lender, it’s the buyer who is dragging their feet and that causes a loan to either not close or delay closing.

• 5.What are my estimated closing costs and are there any other fees or costs I should know about? They should be able to provide you a good faith estimate of all your costs right up front.

Clearly you should find out about the interest rate and the closing costs each lender will charge. However, I will drop this little nugget on you…you will not care or be worried about your interest rate and closing costs if your loan hits a major snag 4 days prior to closing and you lose your dream home. Imagine having to scurry about looking for a short term rental or ponder moving in with the in-laws for a few months while you sort out your homelessness. NO THANK YOU! Experience matters! I know cost is always part of the equation, however knowledge, experience, track record and reputation are more important. Trust me, when a deal starts to go bad, you will throw cost out the window in trade for someone who knows their way around a difficult deal and can find a way to get it closed. Even more important is to find a lender that never lets you get near a situation like I described above. 

Like everything else, do your homework on your lender. No two lenders are created equal and some are better than others. That being said, we have some wonderful lenders in this town who do an excellent job and are really quality people! Another good way to evaluate a lender is by reading online reviews. 

So much for keeping it short! I guess there’s always next time. I hope this helped.

Dave Kimbrough
The Kimbrough Team

What Is The Advantage Of Aluminium Deck vs Composite?

Dave,

What is advantage of aluminum deck vs composite?

Collette, Grand Junction

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Collette,

I can break this down pretty easily, I think.  Another question that requires a good bit of research, but here we go……Aluminum decking is the best for longevity and durability without question, but it is also MUCH more expensive (as much as 3X as expensive as composites) and can be slippery with winter/cold weather as it has the least amount of grip and appears to generally be more “slippery” when cold or subjected to freezing temperatures.  It is the best performer if you are going to have it subjected to water, like around a pool etc, and is quite popular in heavy rain climates because of its ability to stand up to moisture. It also does not expand or contract due to heat and cold which is nice, but color choices are quite limited and the sound under you feet appears to be something of and acquired taste. It appears to be the “Cadillac” of decking material.

Composite decking can vary significantly in pricing from quite expensive (within ballpark range of aluminum) to significantly less expensive.  It comes in a wide variety of colors and comes in capped and uncapped (the ends) versions that add to the life expectancy.  Capped vs. uncapped also has an impact on the pricing as capped is the more expensive route, but is the better product as the ends are protected from the elements.  Typical warranties will be 25-50 years for some of the top-performing brands, which is excellent.  It looks and feels more like wood than the aluminum and is generally weather-resistant with only mild concerns with mold and mildew of the uncapped versions.  In our climate, I would not think mold and mildew would be a significant concern unless you are using it as some sort of pool decking.  I have a composite decking material and have been VERY pleased with it thus far.   We installed it 5 years ago and it looks about like it did when we installed it and has proven very easy to clean and seems to hold up to the elements quite well.  I do shovel snow off of it, like my concrete, when it snows to prevent any freeze/thaw cycles that may negatively impact the condition over time, but other than that it has proven durable and aesthetically-pleasing thus far!    

It think ultimately it comes down to personal preference and budget!  It is rare, almost never, that I see some kind of aluminum decking here.  It appears that the big advantage is life expectancy and durability, but honestly who needs a deck that will last 50-75 years when the average time people live in a house before moving is 8 years!  The big question in my mind is, do I really need to spend the money for bombproof decking material when the odds are I will be moving in less than 10…. Maybe 15 years?  If you want the best material and money is not in the equation then go aluminum… if cost enters the equation I think you would likely be very happy with a composite material.  Best of luck and my bet is you will be happy with either product as I believe both are excellent!  Good luck and Happy Decking!!

Dave Kimbrough

The Kimbrough Team.

P.s.   Happy Fathers Day to all the Dads out there!  

How Long Do I Have To Keep My Closing Documents???

Hello Dave,

When can I shred the documents from homes I have bought and sold over the years? Is there ever a need to hang on to closing documents, etc, past 2 years or so?

I would like to shred them. Please tell me if there is anything I need to keep. Thanks!

Have a great day,
Diana, Grand Junction

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Diana,

What a great question!   Wow…. It amazes me how many great questions I get and how relevant they are to everyday life! I never really think about some of these things because I know my wife will! LOL! She is the paperwork person in our house and Lord knows I could not get along without her help on all the things she does behind the scenes that keeps the ball moving forward.  I joke all the time that her job is MUCH harder than mine, plus I would be horrible at it!  I would never want her job!!  Moving on to your question. 

From my research, it does not appear under any circumstances that 2 years is long enough!  , When you purchase a home you should hold all your purchase contracts, closing documents, and loan documents for as long as you own the property.  If you refinance and close out a loan It appears to be good practice to keep the records of your closed loan for at least 3 tax return years….assuming that you filed your tax returns each of the 3 years.  After year 3 you should be able to shred a closed loan.  As long as you have a loan that is open or “active” you should keep all documents and payment history on record.

When you sell a property, it is a good practice to keep your documentation for seven years after the home sale.  This appears to be based on the IRS’s timeline for audits.  Apparently, the IRS has 3 years to audit your tax returns if good-faith errors are in question and six years if they suspect you underreported income.  If you sold a home more than 7 years ago I would believe that you are safe to have a shredding party! 

I hope this helps you gain some clarity!  I very much appreciate the question as I had to do some research and thus learned a lot in the process.  Please keep in mind that I am not an attorney or an accountant and before you shred, you might consider asking one or both if the data here jives with their recommendation.  On questions like these, I always get follow up comments that are different than my recommendations so I will preface all this by saying that this is to be used as a guide.  With that disclaimer, thanks again and happy shredding!!

Dave Kimbrough

The Kimbrough Team

Help, A Home We Want To Purchase Smells Awful!

Dear Dave,

After months of house hunting,  we have found one that is within our budget and which perfectly suits our needs.  The problem is house odors.  The sellers are an older couple who both smoke and who have a dog and two cats that stay indoors most of the time.  We have mentioned our concern to the sellers, but they don't share our concern.  We assume that by replacing all the carpets and completely repainting, we could eliminate the odors. Two questions.  First, do you have any experience resolving odor problems and second, how could we include expenses like these in our mortgage that will be incurred after the closing? 

Julie, location withheld

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Julie,

It is exciting that you finally found the perfect house, but with less than perfect odors I am sure you are feeling a bit disappointed!  I will admit that odors, especially smoke and pet, are powerful value killers and there is little that saps the value right out of a property more than if a cat or dog have been acting as though the carpet was indoor grass or the home smells like an ashtray.  The purchase of a new home very much involves the senses and if the odor is offensive, it is an immediate turn off, but often times the people who live there have no idea how bad it really is.

The seller does not share your concern because, One, they are no longer going to live there and it really won’t be their problem, once the new buyer moves in.  Two, they do not have the funds to correct the problem and thus they deny there is a problem because they financially can’t admit to it or afford to correct it. Three, they really do not care if they sell or not, thus only taking an offer from someone who is willing to either fix the problem on their dime or learn to live with the odor!  Most of these are not options that buyers want to hear, but at times they are the reality.  Fortunately there are a couple of options.

First, the option of replacing all the carpet and having the interior completely repainted will typically do the trick, depending on how bad the odors are.  You must also consider if the pet odors are significant, you may have to paint the floors with Kilz or some kind of seal coat to cover up or seal any pet stains that have soaked into the sub floor underneath the carpet and pad, Yikes!!  It sounds worse than it is, but remember this may need to be done.  If you are dealing with primarily smoke odors (as they do not work well on pet odors), an ozonator air purifier may work.   I have seen it do wonders with odors caused by smoking.  Generally speaking, Ozone Ionizers work at a molecular level and can remove smoke odors from homes, cars, boats etc...  I will admit that I am no molecular scientist and thus have no “real” working knowledge of how they work, but I know from experience they can do an amazing job at removing smoke smells from a home or car.  You MUST remove all living organisms, i.e. people, cats, dogs, fish, plant etc..(anything you want to remain alive), while the unit is in use and then you can all return home after the treatment and the home has been opened back up.   I would highly recommend a professional be hired to help with their use but you can also pick one up online for a few hundred dollars.

Lastly you can do what is called a 203K loan which would allow you to escrow the funds for the needed repairs after closing.  These loans can be more difficult to manage, so finding a lender who has experience with them will make things run much smoother during the purchase process and after close you will have the funds to make the needed repairs to the property.  Keep in mind that the repair costs can’t push the loan value needed over the appraised value.  Ask your lending professional if they have experience working with 203k loans and their success rate.  This can be a very viable option for repairs needed, even if the repairs or changes are just for taste and by this I mean, the carpet does not have to be stained to qualify for a 203K loan, you may just want a different color.

I hope these suggestions help and I am hopeful that you will find a solution. 

Dave Kimbrough

The Kimbrough Team

Can You Go To An Open House Without Your Agent?

Hi Dave,

Just curious if this applies to Open Houses: if a couple has chosen a real estate agent, should we not go to open houses on our own? Do we need to announce who we're working with when we walk in? We had seen a particular house with our agent, and the next week it came up as an open house and we wanted to see it a second time, but didn't want to take up the agent’s time again.

Name withheld, Grand Junction

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Name withheld,

This is an easy question to answer…. Finally!  Just kidding, but the answer is easy!  An open house is held “open to the public” for anyone to come look at a home, regardless of their agent representation.  The scenario you described happens all the time and it is always best to just let the agent who is working the open house know that you had seen it with your agent and you are just coming back to take a casual second look.  Let them know who your agent is and leave it at that.  It was kind of you to be respectful of your agent’s time, but I am sure he/she would have been happy to go with you if you desired.

Dave Kimbrough

The Kimbrough Team

RE/MAX 4000, Inc. 

Help, All Of The Houses We Want Go Under Contract Before We Get A Chance To See Them!!

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! 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

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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!

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 

Can You Explain What Exactly Title Work Is?

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

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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 you 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.

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

I'm Scared My House Won't Close...

Hey Dave, I am purchasing my new house, we are under contract to close April 24th and my lease is up April 30th on my current place.  My agent keeps telling that everything is going to be ok, but not providing much in the way of specifics and it truthfully has me a bit anxious.  I am concerned that she may not be completely informed and with everything shutting down, I am afraid I will be homeless if I can’t close on my new home.  How worried should I be?  Liz, Fruita, CO

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Liz,

I am so sorry, as I know how stressful this is for you!   Honestly, everyone has so much on their plates right now that the “unknowns” are starting to just wear people down.  On our team, our attention the past couple of weeks has been to make sure that our under contract properties stay under contract and make it to the closing table!  If I told you not to worry, you still would and to be truthful you have some reasons for concern as things are not operating “business as usual” even though everyone tells you that it is “business as usual”.  Trust me, right now everyone in my line of work, Realtors, Appraisers, Lenders, Title Companies etc…. are all working double-time to try and make things as “business as usual” for all of their clients. 

My bet is, your agent is telling you that it's all going to be ok because she honestly believes it will be ok!  It is hard to get full control on everything right now, but all of the local title companies have been amazing at creating closing environments that are safe for both the buyers and the sellers and are bending over backward to make it as easy as possible for all parties!  The lenders have been amazing at answering calls and being very responsive to everybody’s concerns about funding because they know everyone is on edge, as are they.  Thankfully, for everyone, funding has not proven to be an issue with any of our residential properties and all the lenders are closing and funding like they always have in the past.  Appraisers are where part of the system bottleneck lies, but that is due to the number of refinances that were applied for when the mortgage rates shortly dropped a couple of weeks ago.  This spike in demand created even more of a log jam in an already narrow body of water, as we have too few appraisers for the demand in just a normal real estate landscape.  I would be willing to bet that all parties to your transaction are working as diligently as they can to ensure your closing goes off without a hitch, but ultimately no real estate transaction happens without some risk or inconvenience. 

I promise you that NOBODY wants you homeless as that word is taboo in my line of work.  At my office over the past two weeks, we have never worked harder to ensure our contracts are moving forward and we are proactive in making sure that we limit surprises.  I hate surprises, even on my birthday!  I would not worry, as you can not control anything that is going on right now and you have good people who are working hard to make sure your outcome is exactly what you expect.  Trust who you have hired, keep in contact with your agent and lender and get ready to move!

Dave Kimbrough

The Kimbrough Team