Information about buying a home, condominium or townhome.
Information about buying a home, condominium or townhome.
Almost 2 years ago now we were hit by a bad wind & hail storm, here in Englewood, where I live. After the storm passed we inspected our roof and realized we were going to have to have it replaced. The good news for us? Our homeowner’s insurance covered the replacement cost of our roof. The bad new for our next door neighbor? His insurance only covered the actual cash value. Our neighbor ended up having to come up with almost 50% of his cost to replace his roof, boy was he mad!
This article was generously provided by Taylor Bigandt of American Family Insurance. Taylor is a local Insurance Producer in the Englewood area. The agency that Taylor works for has two locations, one in Lakewood and the other in Englewood. Taylor is the Sales Lead Manager at the Englewood office. You can reach Taylor by phone or email at 303-462-2100 or email@example.com.
Summer is fast approaching, and you know what that means? Afternoon thunderstorms. These storms place Colorado in the middle of “Hail Alley”. Hail season starts in mid-April and goes through mid-August. The damage can be catastrophic and may leave you wondering what to do next. If you have the correct coverage on your Homeowners Insurance when that next storm hits, you will not have to worry about what to do next. Many people are not educated by their agents on the coverage that will help them save money when a hailstorm or windstorm destroys their roof. When your roof is destroyed by wind or hail, there will be two different coverages that you can be covered under. The first coverage that I personally recommend having on your Homeowners Insurance is Roof Replacement Cost Coverage. The definition of replacement cost is “the current cost of replacing an existing asset or property with the same quality of construction”. The second coverage is Actual Cash Value. The definition of actual cash value is “the current cost of replacing an asset less the depreciated value”.
Roof Replacement Cost Coverage means that your insurance company will cover your roof at a replacement cost value, less your deductible, without taking into consideration the depreciated value. This means that if your roof costs $20,000 to replace with a $1,000 deductible, the insurance company will pay $19,000. If your policy does not include Roof Replacement Cost Coverage then your roof will be covered at Actual Cash Value. Actual cash value means that your insurer will pay to replace your roof, less the deductible and depreciation for the age of the roof. For example, your roof costs $20,000 to replace and it is 10 years old with a depreciating value of $500 per year along with a $1,000 deductible. The insurance company will then pay out $14,000 ($20,000-$1000=$19,000-$5,000(depreciation) =$14,000) leaving you to pay $6,000 to get your roof replaced.
When shopping for a policy it is important to understand what your wind and hail deductible will be. Some insurance companies are starting to go to a percentage deductible. Having a percentage deductible will help you save at the time of purchase on your homeowners insurance but most people don’t understand the consequences financially by selecting this deductible. A percentage wind/hail deductible will be based on your dwelling coverage. If you own a home that costs $400,000 to replace and you have a 1% deductible for wind and hail then your deductible will be $4,000. If you do not have $4,000 to spend then the policy you purchased will be of no use and your roof will not be replaced.
At American Family Insurance where I am currently employed we still offer a $1,000 wind/hail deductible. In addition, we offer Roof Replacement Cost Coverage on roofs up to 15 years old. This is longer than the industry average which is about 10 years. Our homeowner’s product will be able to properly protect your home during hail season in Colorado.
Again, if you have any questions or would like to inquire about a quote from American Family Insurance please give Taylor a call at 303-462-2100 or email Taylor at firstname.lastname@example.org
If you live in Colorado, you should be receiving your new property assessment and tax rate notification by May 1, 2017. Below you will find definitions and information that I have summarized from the Arapahoe County Assessors website for your review. It is extremely likely that your tax rate will have increased significantly as property values continue to increase at an extraordinary rate.
If you disagree with the property valuation you can make an appeal with your county assessor. The deadline is likely June 1, 2017 to file an appeal. You cannot appeal the mill levy as that is determined by the individual taxing authorities.
If you disagree with the property value the assessor has determined, and are considering making an appeal, feel free to contact me and I will gladly provide you with comparable property sales for documentation to use in your appeal.
Property Value – In Colorado the county Assessor, for the county in which your property is located, is required to reappraise (determine the market value) all real property (land and improvements) every 2 years in the odd numbered years.
Property Assessment – Every 2 years the assessor determines the actual (market) value for all real and personal property. Then a percentage (assessment rate) is multiplied by the actual value to determine the assessed value. In Colorado the residential assessment rate is currently 7.96%.
Mill Levy – Is the tax rate applied to real property. The mill levy is set by individual taxing authorities in your area, these might include schools, county, fire, water, sanitation, library, recreation districts and metropolitan districts. Mill levies within a county can vary widely.
Property Taxes – The final property taxes for your home and/or land are calculated using this information. The actual value is multiplied by the assessment rate which is then multiplied by the mill levy. The residential rate in Colorado currently is 7.96%. The assessment rate for all other property, including vacant land, is 29%.
Example: A home which has a market value of $300,000 (actual value) x 7.96% (residential assessment rate) x .081265 (mill levy) = $ 1,940.61 (annual tax dollars). Please note this is only an example. Your value and mill levy maybe different. (300,000 x .0796 = 23,880 then 23,880 x .081265 = 1,940.60)
If you’re thinking about buying and/or selling a home in the near future, now is the time to sign up for one of my upcoming classes at Arapahoe Community College. Both of these classes are designed to give you the information you need to be prepared to buy or sell a home, here in Colorado.
My expertise is helping my clients make great decisions with great information when buying, selling or investing in real estate.
My extensive skills, experience and knowledge are unmatched in the real estate industry. I have experience in building, inspecting, fixing, investing and of course buying and selling. I have the information you need to move forward in the home buying and selling process and I’m happy to share it with you.
Learn about the home buying process from start to finish. Start with a review of the current Colorado real estate market and cover a variety of topics, such as: describing your new home, choosing a real estate broker, what to look for when viewing homes, negotiating with sellers, understanding the home inspection process, understanding real estate contracts and forms, and knowing what to expect throughout the process. Leave the class with the information you need to be an informed home buyer!
Sat, Apr 8, 10 a.m.-noon Littleton Campus
INDS 1001S01-82438 $25
Thu, May 4, 6-8 p.m. Littleton Campus
INDS 1001S02-82439 $25
Learn the step by step process to follow when selling your home. Review pricing strategies, what it costs to sell a home, recommendations for getting your home ready to sell, how to work with buyers and negotiating techniques. We will also review Colorado Real Estate Contracts and forms. Each student will be offered a free comparative market analysis of their home at the conclusion of the class.
Sat, Apr 22, 10 a.m.-noon Littleton Campus
INDS 1002S01-82440 $25
Thu, May 18, 6-8 p.m. Littleton Campus
INDS 1002S02-82441 $25
If you’re interested in the Denver Metro Real Estate Market below is a quick summary of what happened in 2016. Below there are two full reports with much more detail. Both the December 2016 statistics and the 2016 annual report.
Here is a quick summary of 2016:
2016 Total Days on Market = 27 (same as 2015)
2016 New Listings = 70,219 (-0.5% from 2015)
Top 5 Areas (increase in new listings)
2016 Sold Listings = 60,031 (+ 0.3% from 2015)
Top 5 Areas (increase in sold listings)
2016 Median Sold Price = $345,000 (+11% from 2015)
Top 5 Areas (Increase in Median Sold Price)
2016 Average Sold Price = $394,919 (+9.5% from 2015)
Top 5 Areas (Increase in Average Sold Price)
Buying New Construction – Final Sales Price
You see the signs everywhere “NEW HOMES STARTING IN THE LOW $XXX’s”. In the Denver Metro area any sign that says “starting in the low $300’s” will likely get a lot of attention. It’s tough to find a nice house, let alone a brand new house, under $350,000 anywhere along the front range of Colorado. The price listed on the signs are the ‘base price’ of the home. Unlike purchasing an existing home the ‘base price’ on the marketing materials is merely a starting point. Before you start packing up your belongings to move, you’ll want to ask the sales person specific questions about any additional costs.
Below is a list of items to take into account when calculating the actual sales price of a new home.
The cost of the interior upgrades I wanted was about $30,000 (pretty close to 10%). (granite counter-tops, wood flooring throughout the main level, tile floors in the bathrooms, a gas range in the kitchen, an additional bedroom & bathroom and a covered patio). It can add up very quickly. Every lot had a lot premium associated with it. Lot Premiums ranged from $4000 to $10,000 depending on the lot and location. The total of my additional costs was $34,000 or 11 %.
Base Price $311,000
Interior Upgrades $30,000
Lot Premium $4,000
Total Purchase Price $345,000
Please Note: If you are just starting out on the home buying process and aren’t even sure if new construction is what you want to buy, please download my Home Buyer Questionnaire, to get you started.
Buying a New Home in Colorado
This past weekend I stopped in to see some model homes in a new home development. While talking with the saleswoman I realized that many home buyers might not know what questions to ask to be sure new construction is right for them. Buying a new construction home can have different challenges compared to purchasing an existing home.
Please Note: If you are just starting out on the home buying process, and aren’t even sure if new construction is what you want to buy, download my Home Buyer Questionnaire to get started.
Here are a few things to consider asking about when speaking with a salesperson at a new development.
Sales Price – Unlike purchasing an existing home, the base price provided for each ‘model’ is a starting point. There are additional costs to be considered which will vary depending on the builder and the buyer’s choices. These costs may include: lot premiums, interior upgrades, landscaping, exterior finishes and more. For a longer discussion on base price and sales price click here.
Build Schedule and Lot Releases – Large developments will typically be built in phases. If there is a high demand for homes the builder may choose to release lots in groups as construction progresses. You may need to wait to purchase a home on the lot you prefer.
Property Taxes – Property taxes in Colorado vary widely throughout the Metro Denver Area. For new construction you can’t just rely on county records for property tax values. Vacant land is taxed differently than a lot with a completed home. Be sure you get a good estimate on what the property tax rate will be on your finished home from the salesperson.
Financing & Contracts – Builders may encourage you to use their finance partners through incentives which not necessarily a bad thing, saving money is always good. Be cautious when using your own lender and be sure you are clearly communicating the important dates & deadlines or you could be in breach of your purchase contract. Builders DO NOT use the same contracts as those used when purchasing a pre-existing home.
Home Owner’s Association (HOA) vs Metro District – Most, not all, new developments will have either a Home Owner’s Association or a Metro District. These are governing entities that will provide guidelines for the community in which you will be living. There may or may not be a fee associated with belonging to the HOA or Metro District and the cost and amenities may vary widely between builders and communities.
Feel free to reach out to me for more information on purchasing a new or existing home. I am happy to help in whatever way I can.
If you are just starting out on the home buying process and aren’t even sure if new construction is what you want to buy, download my Home Buyer Questionnaire, to get started.
I was listening to the news this morning and heard about an article, in the Denver Post, that stated that homes in the Denver Metro area were OVERVALUED by 20%. That got my attention! The report then proceeded to give information about AFFORDABILITY. Of course, since this kind of misinformation directly affects my clients, who may have just purchased or are considering purchasing a home, it is important for me to clarify. (No wonder we don’t trust the media any longer)
Market value and affordability are two distinctly different things. Real estate can be unaffordable without being overvalued.
Let’s start out with some basic definitions of the terms being used.
Market Value of a home – Market value is simply the price at which something will sell within a reasonable period of time. In a normal or average real estate market, “reasonable”, in the current market, means one to three months.
Affordable Housing –Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. An estimated 12 million renter and homeowner households now pay more than 50 percent of their annual incomes for housing. https://www.hud.gov/offices/cpd/affordablehousing/
As you can see, understanding the different terms is critical to accurately evaluating the real estate market in Colorado and the Denver Metro Area.
Let’s look at the city of Denver over the last 3 years (see the graphs below). The average sales price of a home (this includes all residential real estate) has risen 9.1% to $426,328.00 and the median sales price has risen 9.8% to $354,000. These two graphs show the increase in MARKET VALUE.
The median income increase in Denver has risen 8.86% to $70,283 according to, The Department of Numbers website. ( I don’t have a nice graph to show you but here is the table from the website I linked to here). The fact that income increases are lagging behind home prices is an indication of AFFORDABILITY.
Addressing the issues of affordable housing or the potential of another housing bubble require completely different solutions.
Affordability, in my opinion, is a much greater concern and can be addressed by reducing government regulations on builders and developers, providing tax credits to builders and developers, where needed, and convincing local governments to allow these types of developments in their cities (I am talking to you BOULDER).
The worry of another housing bubble is a completely different concern. As mortgage interest rates rise the cost of housing will likely level out but as long as the Denver Metro area has a robust economy with high job growth, people will want to move here and likely will be willing to pay the high cost of housing. The need to get rid of the ridiculous Construction Litigation Laws on condominiums is a topic for another post.