Buying a New Home In Colorado

Many new home buyers enter into contracts and buy new homes without a broker.
Let’s clear up some possible misconceptions.
"I don’t want to pay a buyer broker to represent me."  I will not charge you anything for my buyer broker services in which the home builder offers to pay a commission. This is almost always the case.
"The new home salesperson is so nice and will look after my interests." With new homes, it is almost always the case that the model home sales person is an employee or seller’s agent of the home builder company. Don’t you want a professional looking after your interest?
"The new home salesperson told me I didn’t need a buyer broker." Yes, maybe they will tell you that. Beware. Often, not always, a new home builder salesperson will earn more if you do not have a buyer broker.
"New home prices are firm and there is no room for negotiation; it’s a take it or leave it deal." Sometimes yes, sometimes no. There is no law in making an offer other than the builder’s terms. Having an experienced agent with negotiation skills and experience is to your benefit. An experienced and knowledgeable buyer broker should know who makes the final decision on behalf of the builder.
"The builder will give me a better price if I don’t have a buyer broker." This appears to be dangerous territory for a builder who does this and I have never seen it, when they have a current offer to pay buyer brokers a commission. (Almost all do.) Can you imagine a builder wanting to go to court saying they discouraged a buyer from being represented? I am not an attorney, and cannot give legal advice, but I can’t imagine a builder wanting to place themselves in that position.
"If I use the builder’s lender I will get the best deal." Maybe yes, maybe no. Often builders will offer you an incentive for using a preferred lender. It is to your benefit to compare loans, terms, costs. Sometimes the benefit of using an outside lender outweighs the benefit of the incentive. Ask for good faith estimates and compare costs v. incentives. I can refer you to a good loan officer that you can contact to compare.
If you have to sell your current home to buy your new home, I will give you a great discount on the commission on the sale of your current home if you utilize my services in purchasing your new home.

Roy Johnson
My Website, for more information

303-875-1986
myhomecolorado@gmail.com

Colorado First Time Buyer FAQ

First Time Home Buyer? How about some FAQ’s?

The first time home buyer may have many questions to get started.

Why should I work with you Roy to buy a home?

For numerous reasons. First, I am and experienced real estate broker who will work in your interest in helping you find and buy the home of your dreams, and not charge you anything for my services. I specialize in residential transactions. I will be personally available, responsive, and ethical and help you find the home of your dreams.

But I can find homes for sale myself on the internet. Why do I need you to assist me?

Yes, with the internet and IDX services tied to multiple listing services, you can find homes for sale very easily. (Such as on my site here.) That is just one part of the process and there is much more. I can show you new homes, and resale homes listed by any other company who places their listings in a MLS. Then, help you through the process of finding the right lender, negotiate the price, complete contract and other forms, facilitate the inspection, inspection resolution, facilitate the title work, facilitate the appraisal, and help guide you through the entire process through a successful closing.

Most sellers have a seller’s agent working solely to the benefit of the seller. You need a professional on your side to represent your interests.

It may appear complicated and stressful, but I will guide and assist you throughout the process to a successful closing.

Why don’t I have to pay you to be my buyer broker?

In Colorado, the listing broker almost always offers to pay the buyer broker a “co-op” or a portion of the commission the seller has agreed to pay. This is most often the case in Colorado. Once in awhile, a seller’s broker agrees to a “variable rate” commission which means if there is no buyer broker involved to share a commission, the commission rate is reduced. This is a small fraction of seller agreements. Short of this, the seller’s broker will make more money if you do not have a buyer broker. Most new home sellers offer to pay a buyer broker a commission for their assistance. Some real estate companies may charge you a transaction fee. I will not charge you this.

How much down payment do I need?

Depends on the type of loan and program you can use. In Colorado, it could be as little as about $1000 with the CHFA program.

You may also be able to qualify for a grant program which can cover your down payment and some of your closing costs.

I can refer you to a qualified lender or work with the one you have previously chosen.

What is a “pre-qualification” or “pre-approval” letter?

It is a letter from your lender that shows you are pre-qualified or pre-approved for a loan at a certain amount. Generally, a pre-qualification letter shows you can qualify for a loan on the surface, based on information provided to a lender along with a credit check. And, generally, a pre-approval letter says you are “pre-approved” for a loan based upon information you provided plus documentation requested. Both are generally qualified with terms such as “dependent upon verification and review.” It is to your benefit to have these prior to shopping to have available to your buyer broker to submit with your offer

How do I submit an offer?

Once I show you homes that meet your desires and you choose one you would like to make an offer on, I will provide you sold comparable information for the home. We will discuss and I will provide you my advice on what would be a good offer. I provide the information and advice and you make the decision. Remember, I work for you.

I will write up your desired terms in a Colorado state approved contract form. The offer may be accepted, rejected, or counter offered. In addition to the amount offered, the seller may consider the strength of your pre-qualification or pre-approval letter, the dates and terms, and the amount of your earnest money.

What is earnest money?

It is the money you offer to place in escrow to show “earnestness,” or seriousness if you will. It is placed into an escrow account upon acceptance of contract. In Colorado, on the state approved contract forms, your offer includes how much earnest money you are offering.

ARM, FHA, CMA, ETC. Confused By The Letters?

ARM? Adjustible rate mortgage. See below for general information.

http://en.wikipedia.org/wiki/Adjustable_rate_mortgage

CMA? Comparable market analysis. This is a tool to help estimate a home’s value based on recent sales (and sometimes those on market) based on similar (comparable) homes in the area of the target home. This is NOT an appraisal.

IDX? Internet Data Exchange. See MLS below. Often real estate brokers can allow visitors to their sites to search homes in their respective MLS via an IDX.search tool.

See my the search tools on this site..

FHA? Federal Housing Administration.

FHLMC?  Federal Home Loan Mortgage Corporation. Commonly referred to as Freddie Mac (buys mortgages on the secondary market, pools them, and sells them as a mortgage backed security to investors on the open market)

FNMA? Federal National Mortgage Association. Commonly referred to as Fannie Mae.

HOA? Home owner association. When considering purchasing a home in which there is an HOA, be sure to review all the applicable documentation which may include, by example, covenants, rules, restrictions, meeting minutes, financial statements, dues, and management.

HUD? U.S. Department of Housing and Urban Development.

LTV? Loan to value. For example, you put a down payment of 20% of a homes value (generally appraised value in this context) and borrow the remaining 80%. The LTV is 80%. Different loan programs may have different LTV requirements and terms of the loan may differ based on LTV (and many other factors.)

MLS? Multiple listing service. Generally, a database service in which brokers can place and access home listings. Many MLS’s also have other information such as sold homes information; sold prices, concession amounts, listing and selling broker, etc. Different MLS’s have differing rules on who can be a member or who can have comprehensive access to information. Often, there is limited public access through IDX sites.

PMI, MIP? Private mortgage insurance. Mortgage insurance premium. Often, when a borrower borrows more than 80% LTV, the lender requires mortgage insurance (an additional borrower cost) to help insure (the lender) against possible loss in case of loan default.

YOC? Year of construction of home.

Roy Johnson

Resident Realty

303-875-1986

myhomecolorado@gmail.com

www.mybrokercolorado.com