Advantages of Short Sales in Fort Collins, Colorado

If you have been threatened with foreclosure by your lender or received a Notice of Election and Demand for Sale that starts the foreclosure process, you may want to consider a pre-foreclosure Short Sale as an alternative to foreclosure.  This alternative is typically used when a property owner owes more on the house than its fair market value and has minimal or no cash flow or assets.

Here are 5 advantages of a Short Sale:

1. Waiver of any further liability on the debt owed to the foreclosing lender (cancelled debt will be treated as ordinary income).
2. Obtain a fresh financial start by stopping the foreclosure action.
3. Avoid potential bankruptcy.
4. Commission of Realtor & cost of sale to be paid from proceeds of the lender.
5. Lender gets fair market value sooner; less costly than foreclosure.

A short sale will cost you about 18-24 months before you would be able to receive another loan compared with the other alternatives:

Deed in lieu of foreclosure - 3 years

Foreclosure - 5 years and possibly more

Bankruptcy - 2 years but depending on the type of bankruptcy you may have to repay the debt (Chapter 13)

Contact me, Mike@MikeMalvey.com, if you would like more information about short sales or foreclosures especially in the Fort Collins and Northern Colorado area.

 

Title Insurance. What it is & Why you need it in Colorado!

You have a house under contract, now the title company you hired will provide you with title insurance.  Great!  Ah, what is title insurance?  Do I need to have it?  Who pays for it?  What does it cover?

Who Is Protected?

Title insurance is for the protection of three parties: the seller, the purchaser and the lender. By purchasing a policy for the benefit of the purchaser, the seller in effect transfers the risk of a defective title to the insurance company, at least to the extent of the policy limits. Of course, the title company does not insure the seller against any fraudulent acts by the seller, or against a misrepresentation or failure to reveal information the seller is obligated to reveal. The insurance also provides the purchaser with assurance that the title has been examined by professionals in the field and that the insurance issuer is willing to reimburse the purchaser if there is a title defect. Finally, the lender’s policy (which is separate from and in addition to the owner’s policy) assures the lender that the insurance company will either take action to cure any after-discovered title defects or will reimburse up to the limits of the policy–usually the outstanding loan balance.

What Is Covered?

1. Items of Record: The insurance policy covers various items that are of record and are indicated.
2. Other:
   1. The incapacity of the grantor
   2. Certain technical, minor, but not substantive defects in the execution formalities of the documents
   3. Fraudulently executed documents and forgeries
   4. Void judgments and court orders
   5. The bankruptcy of the grantor
   6. Confusion arising from identical names of different persons

The Standard Exceptions and Possible Remedies: There are several standard, preprinted areas that are not covered, and there are insurance and/or practical ways to resolve those concerns. They are:

1. Persons in possession: If someone other than the owner has actual possession of the property, the title policy does not insure against that person’s rights. The obvious solution: Inspect the property.
2. Easements not of record: The policy does not insure against an easement other than one acquired via a written, recorded document (see discussion of easements above). The solution: Again, inspect the property, but it is probably also wise to obtain a thorough survey that includes any recorded or apparent easement.
3. Encroachments and boundary conflicts: If there is a dispute as to a boundary, or if your neighbor’s garage extends across the property line, the title company wants no part of the dispute. The solution: Obtain a boundary survey based on the legal description and/or recorded plat of the property in question. It should reveal any problems of this sort. They may be simple enough to solve with quitclaim deeds. If not, it is better to know before the closing, while you still maintain some leverage.
4. Any shortage in area: If the actual land (for example, as fenced in by the current owner) contains less ground than in the legal description, the title company cannot solve the problem. The solution: Get that survey; inspect the property.
5. Known defects: If the seller, the purchaser or their agents (Realtor, attorneys and so on) are aware of a defect in title or boundary, the title company will not cover it. While the concealment may or may not rise to the level of fraud, the idea is that people cannot acquire insurance against a problem they do not reveal to the insurance carrier. This is similar to the “existing conditions” exclusion in a health insurance policy.
6. Post-closing problems: If a problem arises after the effective date of the commitment (such as the recording of a new lien or a mechanics’ lien), the title policy may not cover it. The solution: “Gap” coverage is the agreement by the title insurer to cover the period between the effective date of the commitment and the date the deed is recorded. If a title company handles the closing, it is required by state insurance regulation to provide this coverage. However, if a title company does not handle the closing, gap coverage must be requested and paid for by the purchaser.
7. Unrecorded mechanics’ liens: Because of the wording of the mechanics’ lien statute, it is possible for a lien to exist even though it has not been recorded. The solution: Inspect the property for recently completed work, check with any contractor of whom you are aware, obtain an affidavit from the seller, stating that no work has been done (or if it has, that it has been paid in full), obtain a lien release from any suspected lien claimant, or, if you are not aware of any liens or possible claims, save yourself some grief and require the seller to provide mechanics’ lien protection in the policy.

Supplementary Safeguards

1. CREC Contract paragraph 7 contains provisions that allow the parties to agree whether an abstract of title or title commitment will be provided, and if a commitment is provided, whether it will delete or insure over the standard exceptions listed in the foregoing section, as well as unpaid taxes, assessments and unredeemed tax sales prior to the year of closing. The applicability of this additional coverage is discussed above.
2. Endorsements: In addition to the foregoing, there are various endorsements available to insure concerns or other potential problems:
   1. Form 100: This endorsement is for the protection of the lender and removes the standard printed exceptions. It is typically the buyer’s expense.
   2. Form 130: Similar to Form 100, this endorsement deletes the mechanics’ lien (#4) and possessory (#1) exceptions and minimizes the easement (#2 and #3) exceptions. It doesn’t cost much, though the title company may require a survey, so it is wise to inquire in advance. The title company will require a lien affidavit from purchaser and seller.
   3. “Gap” coverage: As indicated above, this covers the date between the commitment or last endorsement date and the recording of the deed. The title company will usually require that the closing take place at their office, but it will probably be there anyway, and the cost is well worth it given the risks.
   4. Extended coverage: This is a sort of “package” coverage that provides the same coverage as Form 130 and gap protection, as well as some additional risks, which vary from company to company.

Special Assessments/Special Taxing Districts: Special assessments by special assessment districts are almost never covered. The county treasurer may have some record of these, and they may appear on the tax certificate. If the property is included in a special assessment district, the best practice is to obtain a written statement from each district specifying the outstanding assessments, if any, relative to your property.

Comments:

It is important to remember that endorsements do not remove the problem; they merely insure over the concern. For example, if the garage encroaches onto the neighbor’s property or the fence is built ten feet inside the actual property line, the problem still exists. The endorsement merely transfers the economic risk of the problem to the insurance company, to the extent the policy has assumed that risk. In platted subdivisions, this is usually not a huge concern. However, when dealing with larger tracts or with property that is to be redeveloped, it may make more sense to attempt to solve the problem prior to closing rather than fight a battle later.

As a buyer you should discuss the availability and cost of the various insurance options with your realtor prior to execution of the contract. You should also discuss and commit to writing who is expected to pay for what so that there is no dispute or confusion at the closing.

Please feel free to email me with any questions: Mike@MikeMalvey.com.  I work with a great title company in Fort Collins so if I can’t answer your question, I will seek the answer from them.

What type of deed should you get for your home purchase in Colorado?

You are ready to purchase your new home but need to know the best way to convey the title to provide you with the protection you need.  Here is a description of the different types of deeds.

Types of Deeds

General Warranty: This deed is the most commonly used in typical residential transactions. It warrants or guarantees to the person who acquires title (the grantee) that the title is good from the creation of the tract until the present. It passes after-acquired title (see below). The statute (Section 38-30-113(2) C.R.S.) provides:

1. That at the time of the making of such instrument he was lawfully seized of an indefeasible estate in fee simple in and to the property therein described and has good right and full power to convey the same;
2. That the same was free and clear from all encumbrances, except as stated in the instrument; and
3. That he warrants to the grantee and his heirs and assigns the quiet and peaceable possession of such property and will defend the title thereto against all persons who may lawfully claim the same.

Special Warranty Deed: This deed also passes after-acquired title but warrants the title only since the grantor acquired title; that is, only for the period of time the title was held by the grantor. Section 38-30-115 C.R.S. provides:

A deed executed according to the form in section 38-30-113 with the words “and warrant the title to the same” omitted therefrom shall have the same force and effect as a bargain and sale deed, without covenants of warranty, at common law and will pass the after-acquired title of the grantor; and the words “and warrant the title against all persons claiming under me” when included in such deed shall be a covenant that the grantor will warrant and defend the title to the grantee and his heirs and assigns against all persons claiming to hold title by, through, or under the grantor.

An example of a special warranty deed is a personal representative’s deed, used to transfer title from an estate to a buyer. The personal representative desires to warrant only the title he acquired from the deceased person.

Bargain and Sale Deed: This is in some respects the same as a special warranty deed and is described in Section 38-30-115 C.R.S., above. However, there are no warranties of title. This deed is rarely used. It is a compromise between a warrant and a quitclaim deed, and there is not much reason to use one in private transactions. However, examples of this type of deed would be a public trustee’s deed (by which the purchaser acquires title after a public trustee’s foreclosure sale), a sheriff’s deed (by which the purchaser acquires title after a sheriff’s foreclosure sale), and a court-ordered deed (a deed signed by the clerk of the court pursuant to the court’s order). This last will often occur when a party has refused to sign a deed, and the clerk’s deed operates in place of the reluctant grantor’s deed.

Quitclaim Deed: This type of deed is the ultimate in the no-liability document of conveyance. Section 38-30-116 C.R.S. defines a quitclaim deed as follows:

A deed executed according to the form in section 38-30-113 with the word “quitclaim” substituted for “convey” and the words “and warrant the title to the same” omitted therefrom shall be a deed of quitclaim and shall have the same effect as a conveyance as quitclaim deeds now in use.

A quitclaim deed does not pass after-acquired title and makes no warranties of any nature. A quitclaim is often used to clear up small discrepancies in legal descriptions, to remove or add someone’s name to the title to property, and so on. Another way of describing the effect of a quitclaim deed is: “I have no idea whether I have any interest in this property or not. I make no warranties of any nature that I do or do not have title, but if I do have any interest, whatever it is, I am conveying it to you.”

As always, it is best to ask your attorney for the deed that provides you the most protection.  Best of luck with your new home purchase.

 

Prevent a Foreclosure in the Fort Collins and Northern Colorado Region

If you or someone you know has received letters from their lender threatening foreclosure, there are alternatives that could stop foreclosure.  Depending on your financial condition and equity position, there are options available based on your personal situation.  You should always consult with a Realtor, Lender, Attorney and Accountant.  I am a licensed realtor in Colorado and practice in the Fort Collins, Loveland, Windsor, Wellington, Greeley and neighboring towns.  But I am NOT an attorney so I am not providing advice, only possible options but your situation is unique so you need to consult your mortgage company and an attorney.

These 3 options are if you have positive equity in your home.

A) If your monthly income exceeds your monthly expenses with some savings.

• Refinance
• Sale

B) If you are meeting your monthly expenses with little or no savings or assets.

• Refinance
• Sale
• Restructure (Work with lender to keep loan in place under new repayment terms)

C) If your monthly expenses exceed your monthly income with no savings or assets.

• Refinance
• Sale
• Bankruptcy (Consult an attorney)

These 3 options are if your home’s value equals the amount owed in loans - No equity.

D) If your monthly income exceeds your monthly expenses with some savings.

• Refinance
• Sale
• Restructure (Work with lender to keep loan in place under new repayment terms)

E) If you are meeting your monthly expenses with little or no savings or assets.

• Short sale (Negotiate with foreclosing lender to take less than owed through sale of house)
• Sale
• Refinance
• Restructure (Work with lender to keep loan in place under new repayment terms)
• Bankruptcy (Consult an attorney)
• Deed in Lieu (Deed property back to foreclosing lender if all junior liens release)

F) If your monthly expenses exceed your monthly income with no savings or assets.

• Short sale
• Deed in Lieu (Deed property back to foreclosing lender if all junior liens release)
• Restructure (Work with lender to keep loan in place under new repayment terms)
• Bankruptcy (Consult an attorney)

These 3 options are if your home’s value is less than the amount owed in loans - Negative equity.

G) If your monthly income exceeds your monthly expenses with some savings.

• Refinance
• Sale
• Restructure (Work with lender to keep loan in place under new repayment terms)

H) If you are meeting your monthly expenses with little or no savings or assets.

• Short sale (Negotiate with foreclosing lender to take less than owed through sale of house)
• Restructure (Work with lender to keep loan in place under new repayment terms)
• Bankruptcy (Consult an attorney)
• Deed in Lieu (Deed property back to foreclosing lender if all junior liens release)

I) If your monthly expenses exceed your monthly income with no savings or assets.

• Short sale
• Deed in Lieu (Deed property back to foreclosing lender if all junior liens release)
• Bankruptcy (Consult an attorney)

 

Those are some various options available depending on your unique financial situation.  If you live in the Fort Collins, Loveland, Windsor areas of Northern Colorado then I would be happy to talk with you further about your personal options.  I highly recommend contacting your mortgage company as soon as you think you might be heading towards trouble.  It is never too early to call them but you can be too late.

Email me your questions: Mike@MikeMalvey.com or visit www.SearchFortCollinsMLS.com for my website.

Rent vs. Buying a Home Scenario for Fort Collins, Colorado

I have put together a realistic analysis comparing a typical rental of a nice 2 bedroom, 2 bathroom condo vs. purchasing the same 2 bedroom, 2 bathroom condo.  For this example, I am using a real life example of one of my investment properties at the Saddle Ridge Condominiums that I rent for $900 and the market value for them is $150,000.

I will assume a 3% down payment using an FHA loan product with the interest rate of 6.5% amortized over 30 years.  Let’s assume 1% property taxes and appreciation of only 2% (which is low relative to our Fort Collins average) and let’s compare this initially for only a 2 year period.  Also factored into this calculation include: private mortgage insurance, homeowner’s insurance cost, loan closing cost, cost of selling a home, property tax, homeowner’s tax saving and rent increases.  These results are estimates only.  

So for a 2 year period, it would still net the buyer more money to buy this home than to rent it.

Current Rent:		$900
	Purchase Price of Home:		$150,000
	Percentage of Down Payment:		3%
	Length of Loan Term (years):		30
	Interest Rate:		6.5%
	Years You Plan to Stay in This Home:		2
	Yearly Property Tax Rate:		1%
	Yearly Home Value Increase Rate:		2%
	Result Returned: Rent Buy Price of Home After Appreciation:   $156,060 Remaining Balance After Years:2   $142,155 Equity Earned:   $13,905 Tax Savings (at 28%):   $6,136 Avg. Monthly Payment Over Time: $910 $898 Total Payment: $21,840 $21,568 Total Savings On: Buying=$272 savings

 

Now, I’ll show the total savings to the buyer as the number of years of occupancy increase.

3 years = total savings of $5,923 for the buyers.

4 years = total savings of $12,019 for the buyer.

5 years = total savings of $18,572 for the buyer.

7 years = total savings of $33,085 for the buyer.

10 years = total savings of $58,902 for the buyer.

As the numbers show, a renter thinking about buying a home has a chance of earning money even if living in a house for only 2 years compared to renting for that time period.  These numbers could increase for the buyer if the home values increase greater than the assumed 2%.  If the renter knows they will be in the area for 3 or more years then it could be in their best interest to purchase a home as their total savings increases significantly…again based on a low appreciation rate of only 2%.

If you are interested in evaluating other scenarios then email me: Mike@MikeMalvey.com.  If you would like to see available homes in the Fort Collins, Loveland, Windsor and surrounding areas then visit: www.SearchFortCollinsMLS.com. 

Please feel free to leave your comments about this post or if you have any suggestions for another blog post.

And let me add a great big THANK YOU to all my readers as I just went over the 6,000 views mark!!

Real Estate Activity for the Stetson Creek Subdivision of Fort Collins, Colorado

I evaluated the single family detached real estate sales activity in 2007 for the Stetson Creek Subdivision located in southeast Fort Collins near Harmony & Timberline.

Here is the sales activity for 2007:

Homes Sold = 15

High = $397,500

Low = $260,000

Avg = $322,640

Median = $332,000

These homes sold on average for 99% of the listing price with an average number of days on the market of 64.

There were 3 withdrawn listings and 1 expired listings.

This is a very solid amount of activity with 79% of listed homes selling.  In 2007, the percentage of single family detached homes sold compared to listed homes in Fort Collins was 62%.

For more information about home sales in your subdivision or to find your home’s value in today’s real estate market, please contact me at my email: Mike@MikeMalvey.com or visit my website.

Real Estate Activity for the Observatory Village Subdivision of Fort Collins, Colorado

I evaluated the single family detached real estate sales activity in 2007 for the Observatory Village Subdivision located in southeast Fort Collins near Kechter & Cinquefoil.

Here is the sales activity for 2007:

Homes Sold = 25

High = $415,000

Low = $275,000

Avg = $325,392

Median = $322,000

These homes sold on average for 97% of the listing price with an average number of days on the market of 147.

There were 25 withdrawn listings and 1 expired listings.

This is a lot of activity but with only 49% of listed homes selling.  In 2007, the percentage of single family detached homes sold compared to listed homes in Fort Collins was 62%.

For more information about home sales in your subdivision or to find your home’s value in today’s real estate market, please contact me at my email: Mike@MikeMalvey.com or visit my website.

Real Estate Activity for the Willow Springs Subdivision of Fort Collins, Colorado

I evaluated the single family detached real estate sales activity in 2007 for the Willow Springs Subdivision located in southeast Fort Collins near Kechter & Timberline.

Here is the sales activity for 2007:

Homes Sold = 11

High = $455,000

Low = $280,500

Avg = $377,177

Median = $394,650

These homes sold on average for 99% of the listing price with an average number of days on the market of 70.

There were 2 withdrawn listings and 1 expired listings.

This is a solid amount of activity with 79% of listed homes selling.  In 2007, the percentage of single family detached homes sold compared to listed homes in Fort Collins was 62%.

For more information about home sales in your subdivision or to find your home’s value in today’s real estate market, please contact me at my email: Mike@MikeMalvey.com or visit my website.

Instant Home Valuation Estimate for Fort Collins, Loveland, Windsor & all of Northern Colorado

Wow!  I am really excited to present this unbelievably powerful home valuation estimate for any home in my working area of Fort Collins, Loveland, Windsor, Greeley, Longmont, Wellington and all the surrounding Northern Colorado areas.  But it will work actually for anywhere in the United States so it is useful for people who may be moving away from Colorado or thinking about relocating to our great state.  The home valuation estimate along with my free Market Snapshot are two very valuable tools in preparing to buy or sell a home in Northern Colorado so please sign up for the Market Snapshot and add the home valuation page to your “favorites” site for easy reference.

This home value estimate combines public records AND Multiple List Service (MLS) property information producing greater accuracy.  Other online websites do NOT have access to the MLS therefore they produce more inaccurate and dated information.

My home valuation allows clients and you (hopefully a future client!) the ability to:

• Search by address & choose aerial, road & bird’s-eye views, plus parcel layers on the map.
• Look at Market Trends for the past year.
• View comparable active and sold properties.
• Receive email notifications when nearby homes sell (from your email address).
• Change the value of the home by adjusting square footage, bedrooms, and bathrooms.
• Keep track of favorite homes and rank them.

If you are interested in finding the value of your home or another home you are considering purchasing then click here and simply enter the address…it’s that easy…and you will immediately receive an aerial view with an estimate of that particular home’s value.

This is not meant to take the place of a more detailed comparable market analysis (CMA) that I provide for free without any obligation so if you would like a CMA then please email me, Mike@MikeMalvey.com, with the property address or enter the information at the bottom of the home valuation page.

This is FREE information so please take advantage of this opportunity to gain more insight into your local Northern Colorado real estate market and consider me as your local expert when you need more assistance. 

If you know someone that might find this information valuable, would you please email them the link?  I’d greatly appreciate it if you could.  Thanks!

Real Estate Activity for the Timber Creek Subdivision in Fort Collins, Colorado

I evaluated the single family detached real estate sales activity in 2007 for the Timber Creek Subdivision located in southeast Fort Collins near Harmony & Timberline.

Here is the sales activity for 2007:

Homes Sold = 14

High = $387,400

Low = $249,900

Avg = $309,370

Median = $290,000

These homes sold on average for 99% of the listing price with an average number of days on the market of 44.

There were 2 withdrawn listings and zero expired listings.

This is a very healthy amount of activity with 88% of listed homes selling.  In 2007, the percentage of single family detached homes sold compared to listed homes in Fort Collins was 62%.

For more information about home sales in your subdivision or to find your home’s value in today’s real estate market, please contact me at my email: Mike@MikeMalvey.com or visit my website.