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Buying a Luxury Mountain Home – 11 Important Questions to Ask

buying a luxury mountain home

Buying a luxury mountain home in Summit County can mean not only quick convenience to five world-class ski resorts but also a legacy home for generations to enjoy.

Of course, you’ll want to locate your luxury mountain home in an area that is most appealing to you, whether that’s a ski in, ski out Breckenridge home or a luxury equestrian property north of Silverthorne. But there are a number of additional considerations – and important questions to ask – before you make an offer on a luxury mountain home.

I am a Summit County Realtor, certified Resort & Second Home Property Specialist (RSPS), and a long-time Breckenridge local. Additionally, I work alongside my husband, Ty Cortright, who has been involved in the construction of fine luxury Breckenridge homes since 1997.

Today I want to share with you some questions to ask before buying a luxury home in a mountain community, whether you plan to make it your primary residence or to occupy it as a second home or a rental/investment property.

Question 1: What is the real estate market outlook for luxury homes in this particular area/subdivision?

Generally speaking, luxury homes in resort communities, such as Summit County, are poised for long-term appreciation. After all, they are located in areas that are consistently popular among visitors and other second homeowners, so there’s consistently high demand.

In addition, the supply of homes in resort areas like ours is limited. Of the 619 square miles that make up Summit County, about 80% is public land – managed by either the Forest Service or the Bureau of Land Management. That leaves just 20% of land in Summit County to be privately owned and managed.

So, when you own a piece of property in Summit County, you buy something with great appeal and strong potential for resale value. You can realize strong appreciation over the long term. And, in the meantime, you get to enjoy the property, the vacations, and the tax advantages.

Of course, no one can predict the future and what the real estate market will do, but we can have a good understanding of the past. As of this writing, prices are trending upward. See today’s market stats.

Of course, all of our luxury properties and luxury subdivisions have statistics individual to them. Please know that you can always request the latest Market Report for the subdivisions you are most interested in. I personally create these reports, which feature properties currently for sale, properties under contract and sold properties, along with year-to-date and historic sales and trends. (Simply email me to request these.)

Specifically, you’ll want to understand the absorption rate for the luxury home market in the area you’re looking. Many times, the absorption rate for luxury homes is different from the market as a whole simply because you are among a smaller pool of buyers. It’s very possible for there to be a seller’s market for homes under $1M, while homes of $2M are experiencing a buyer’s market. A buyer’s market means a greater likelihood that you can negotiate on price and inspection items. You may even have more say over contract dates and deadlines.

Question 2: Have you considered all of the neighborhoods and areas that might appeal to you?

A good Realtor will be able to provide information and guidance about additional communities and subdivisions that may fit your criteria, simply by learning about your lifestyle and the type of homes you are looking for.

Here in Summit County, we have impressive luxury homes in Breckenridge, Keystone, Copper Mountain, Dillon, Frisco, and Silverthorne, as well as north of Silverthorne and south of Breckenridge. Each of these subdivisions and communities has a different feel.

When we first start talking, expect to have a long conversation about exactly what you are looking for. Are you interested in a historic property? New construction? In town or on a larger land parcel? Are gravel roads okay? I have a series of about 20 questions to get us started. We’ll talk about the real estate market trends in each of these various subdivisions as well as any new development and revitalization projects that may be on the horizon so you can get a sense for not only the current value but the future value, as well.

You’ll also want to make sure that you are considering the needs of everyone who will be using the home. Especially if you have in mind that the home will be in your family for generations, it’s important to consider the needs of all. If you have a number of older people in your party with any health concerns, you might want to choose a home at a slightly lower elevation, for example, or you might wish to look at properties with at least one bedroom on the main floor – or perhaps an elevator.

Question 3: Who designed the home, and who built the home?

Ideally, you’ll be working with a luxury agent who is familiar with the work and the reputation of the area’s custom home builders and architects. When I preview new luxury homes that come on the market, it’s the first question I ask, if I don’t know already – because it’s important.

Even if the home is not new construction and is outside the warranty, a luxury builder with a stellar reputation will do what’s necessary to keep that reputation and will often, at the very least, help you troubleshoot and solve problems. If you ever want to add on to the home, or do a remodel, it’s nice to have this information, as well.

Question 4: What community amenities/features are most important to you?

Just as with any property, when shopping for luxury, the “bones” of the home are going to be of utmost importance. You want solid, quality construction on a parcel of land that offers good exposure. You want a good floor plan, perhaps a timeless design.

Beyond these basics, there are bound to be particulars that the home does not have, but if these are easy to integrate, it doesn’t have to be dealbreaker. A home can often be retrofitted with modern technology (see below.)

It’s common in our luxury market to have stellar views and premiere locations, along with home theater, fitness room, wine room, gourmet chef’s kitchens with top of the line appliances (Viking, Subzero, Wolf), private hot tubs and outdoor seating areas with gas firepits. Expect to see outdoor kitchens, spa baths and steam showers.

Heating on luxury homes in Summit County is nearly always in-floor radiant and the building process here so prizes environmental building standards that you can expect to see a number of ecological considerations and features, especially in newer construction. These include passive and active solar, as well as “smart” features that allow owners to control lighting and window shades, temperature and humidity, electronics and entertainment, security systems and more either remotely or via an ipad on site (or both).

Again, some older luxury homes can be retrofitted with this technology fairly reasonably, but this might be something you want to get an opinion on before you purchase. One thing that can be difficult to retrofit: an antiquated heating system. If the luxury home has older heating systems or even certain in-floor heat tubing (a couple have had class action lawsuits), you might want to opt for a home that’s newer and potentially more efficient.

New construction is very popular in our luxury market, in part because it provides the latest in trends and technology, which can be particularly useful if you are not occupying the home full time.
A good luxury agent will help you understand what to look for in a luxury custom home, from the mechanical room to the roof design, and what problems you could potentially run into down the line.

And that leads us to another question: Nearly all luxury buyers have grappled with whether they would be better off buying land and building a custom home themselves. Your luxury realtor will be able to give you an idea of the current building costs and timelines as well as the general procedures you can expect in your area.

More Great Resources on Buying a Luxury Home:
Tips for Buying a Luxury Home, by Ryan Fitzgerald in Raleigh, North Carolina
8 Things That Must be Considered When Selling a Luxury Home, by Kyle Hiscock in Rochester, New York
Ten Tips for Buying Luxury Homes, by Debbie Drummond in Las Vegas, Nevada

Question 5: What are your likely costs for home care?

The HOA fees for single family homes will likely be fairly minimal, as there is often little in terms of common amenities and services. There are luxury subdivisions in our Colorado resort market with higher HOA fees, charged monthly (Cottages at Shock Hill, Columbia Lode, Angler Mountain Ranch cabins, Peak Ten Bluffs, and Muggins Gulch, for example) because they provide true lock-and-leave convenience and some even provide an on-site property manager. Services vary for each of these communities but they can be a nice option for luxury homeowners who come and go frequently throughout the year.

Keep in mind that, with so many second homes in our area, property management and home care is big business, so it’s fairly easy to make any property into one you can easily lock-and-leave – as long as you have a contract with a good caretaker who can make sure to take care of heat tape, snow removal, roof inspections and basic maintenance on your home. You can even have someone stock the fridge before you get here. I’ll help you with recommendations on professionals like this when the time comes.

Question 6: Do you wish to rent the home when you aren’t here, and, if so, what is the potential for rental income?

Luxury mountain homes in Colorado make for popular short-term rentals, and this rental income can help to offset the expenses of your mountain home. Among luxury homes in our community, it’s not unusual to see gross rental incomes in the six figures, and there are a great variety of vacation rental management companies and home care companies that can help you maintain and easily facilitate your mountain rentals, for a fee.

If you think you might want to rent your luxury home on a short-term basis, make sure you talk to your Realtor about this before the search begins. Some of the exclusive luxury subdivisions in our market restrict short term rentals, per the HOA.

In a resort market like ours, rental income can vary greatly, across the seasons and across the years. When we start looking at luxury mountain homes together, I can provide you with historic or projected rental income and we can talk about the outlook for the future in a particular subdivision. Read more about potential rental income or download my Summit County Buyer’s Handbook to learn more.

Question 7: What are the potential tax advantages of owning a luxury home?

I’m careful not to give tax advice, but it’s important to discuss your plans for buying a luxury mountain home with both your financial advisor and your tax professional. Purchasing a luxury home in Colorado may allow you to take advantage of certain tax deductions, and – if you rent the home, you’ll be able to take advantage of even more. (Read my explanation of potential tax deductions for your mountain property.)

Question 8: Has the home been tested for radon?

Radon is an odorless and colorless gas from granite deposits in the earth that contain uranium. This radon gas can move into your home, causing potentially serious health effects, including cancer. Many homes in Summit County already have a system installed to mitigate this problem (read more about radon from Colorado Department of Public Health & the Environment), but if the home you’re looking at does not, it’s important to make a note of that ahead of time and to understand the likely costs and strategy for mitigation. Radon mitigation is routinely done on new construction, and there is generally a way to mitigate on existing homes, but costs and effectiveness will vary, depending on the way the home was constructed. Summit County has free radon test kits, and you can have a radon inspection as part of your inspection process before closing. We can talk about that more as the time comes, as well.

Question 9: Is the luxury home located in a Wildland Urban Interface (WUI)?

A number of luxury homes in Summit County are in the Wildland Urban Interface: that zone that exists between unoccupied land and developed land where there is an increased risk of wildfires. If your home is located here, you could be subject to higher insurance premiums or even non-renewals or cancellation of homeowner’s insurance policies. We will make sure that your purchase offer includes a property insurance contingency, so you can verify that you will be able to find affordable insurance on the home.

As we look at homes, we will be looking at certain items to evaluate the home’s potential wildfire risk. The state of Colorado has published a comprehensive document with details on exactly how individual homeowners can reduce their risk, and we’ll talk about these details more as we start looking at prospective properties, but – among the considerations:

1. Roofing material. Wood and shake shingle roofs can be highly flammable. Instead, you’ll want asphalt shingles, metal sheets and metal shingles or tile, clay, concrete or slate shingles. Da Vinci and CeDUR are two companies that make synthetic shingles that closely resemble cedar shakes, and we are increasingly seeing these on new construction – and on roof replacements of high end luxury homes.

2. Defensible space. This is the area around the home that has been changed or modified to reduce the fire hazard. Wildfire experts set recommendations for tasks a homeowners should complete in Zone 1 (from 0 to 30 feet from the home); Zone 2 (from 30 to 50 feet), and Zone 3 (100 feet from the home.) See the publication noted above for specific recommendations in these areas in regard to tree spacing, pruning of tree branches, etc.

If you see that the home will require some fire mitigation after you take possession, it doesn’t have to be a dealbreaker (provided you can get reasonably priced property insurance on the home), but it’s a good idea for you to know what tasks may lie ahead. These tasks can range from simple and free to complex and costly – especially considering the cost of cutting and removing a single tree on your property can exceed $100.

Read more about purchasing property in Summit County’s Wildland Urban Interface.

Question 10: Are you planning to pay cash or finance?

Approximately 43% of the transactions in our market are paid in cash, but with interest rates low, many people choose to leverage their investment and finance. As a luxury buyer, you likely have existing relationships with loan professionals, but if you need a recommendation to a few good local lenders, just say the word.

With luxury condos, a local lender can help make for a smoother transaction in part because the underwriter will need to approve the complex and a local lender will already know which buildings are approved. Luxury single family homes in our market do not tend to have the same hurdles. Still our market does have its idiosyncrasies when it comes to financing. For example, right now, appraisals are taking an unusually long time so you want to make sure your lender is aware (and that your Realtor and lender are communicating), so everyone can understand what is realistic in terms of appraisal dates and closing dates.

It’s important to talk with your lender early in the process – even before you start looking for your second home – because a pre-approval letter will strengthen any offer you write. It’s highly likely that you will need to furnish some kind of letter from a lender early in the process of buying a luxury mountain home, or a proof of funds if you are paying cash.

As you know, with loans on a luxury property, even a fraction of a point can cost you or save you thousands over the life of the loan, so it’s nice to have some time to shop around, and perhaps get a recommendation on a lender who is based locally.

Question 11: Who will you be using as your Realtor?

Ideally, you will work with someone who understands the unique trends in the luxury home market. A realtor with contacts and experience in the luxury homebuilding industry can help you after the sale, as well, in case you’d like to do some future updates. A Realtor who is constantly showing and previewing luxury homes will help you to know where the best homes are for your unique situation and needs.

Again, I work alongside my husband, Ty Cortright, a great deal. He has 20 years of experience with some of the finest luxury homes in Summit County and, as we narrow down the choices on a custom home, it’s nice to call him in to walk through the homes with us. He lends a very valuable perspective on everything from the mechanical room to the roof design and everything in between. He can help point out the advantages and disadvantages of various features and is a great resource for my clients, from that initial walkthrough to long after the sale.

Please feel free to reach out to me anytime and we can discuss the possibilities for you in Summit County.

Here’s a little more information on how I work with buyers:

 

You might also like:

Breckenridge Luxury Homes Explore the luxury and ultra-luxury communities of Breckenridge.

Breckenridge Luxury Condos Learn more about the most luxurious buildings in Breck and see today’s listings. (Many of these units deliver exceptional rental income).

Tips for Buying a Second Home in Colorado

How to Buy a House

how to buy a house

An in-depth, start to finish guide for homebuyers — from the first online search to the closing table.

[Editor’s note: At 5000 words, this is a comprehensive and lengthy post. I’ve done my best to make it scannable with subheadings and bold fonts, but you might want to treat yourself to a cup of tea or coffee before you dive in…]

One important note before we get started:
The transaction described below assumes a Colorado real estate transaction. In Colorado, our contracts are handled via forms approved by the Colorado Real Estate Commission. If you are purchasing property in another state, the process and paperwork will be different. Specifically, the options and requirements for terminating the contract will be different. If you are not buying a home in Colorado, you’ll want to talk with a knowledgeable Realtor who understands the process particular to your state.  If you need a referral to a Realtor in your area, please don’t hesitate to contact me. I’m happy to help you in any way that I can.

How to Buy a House

Buying a house can be one of the most exciting things you’ll ever do. It can also be among the scariest.

But it doesn’t have to be. Get prepared, and choose the right people to help you, and buying a home can be emotionally and financially rewarding.

How to Buy a House, Step One: Select Your Team

Now is the time to have experts in your corner. Find both a Realtor® and a lender you trust and there will always be someone there for you — someone to answer your questions and to let you know what’s next on the agenda. These professionals have made it their career to listen to people just like you as you get ready to make this major life decision.

It’s worth taking the time to make sure you choose the right professionals

Good Realtors do more than write contracts and show houses. They also preview homes, learn the intricacies of their market, dive in to data and statistics, and stay educated on the very latest in community issues that can potentially affect their clients. Good Realtors also spend time learning from and meeting with various service providers in the community so they can provide good, honest recommendations for other professionals you may need on your team.

At the start of this process, you will be choosing a Realtor and a lender (and a good Realtor will be able to give you recommendations on lenders.) Later in the process, a good Realtor will be able to recommend a good home inspector and other service professionals, including – if your situation warrants it — a good contractor, architect, interior designer, home warranty company, etc.

Choosing a Realtor

The real estate professional you choose to represent you makes a huge difference. You want an agent who is accessible, an agent who listens to you, and an agent who knows your local real estate market, inside and out.

If you are looking for a home in Summit or Park County, Colorado, I’m happy to help you find the just right property for you (Read more about how I work with buyers.) If you are outside Summit or Park County Colorado, you’ll want to ask your friends for names of Realtors who have gone above and beyond for them. You can also look online for someone who demonstrates knowledge and expertise in your area. If you’d like a referral to a good agent in your area, please don’t hesitate to contact me, and I’ll refer you to a Realtor who will take care good care of you.

Choosing a Lender

If you don’t already have someone in mind for your loan, once you have chosen a Realtor, you can ask for a list of good lenders in the area. In many areas, Realtors recommend working with a local lender. This is particularly true in my marketplace, as we have many vacation homes and investment properties, and local lenders understand the intricacies of our unique resort market.

Why work with a local lender? Good local lenders know our local HOAs. They are familiar with the HOA documents as well as the strength of the HOA’s finances. They know about special assessments that may apply to a property. They know how to deal with second homeowner situations, short term rentals, well and septic systems, and the list goes on.

A local lender will also be in tune with special financing options for special situations that are common in your area. In Summit County, Colorado, for example, we have a number of condos on the market that can require special financing due to the fact that the building has a front desk and operates much like a hotel with short-term rental management. Local lenders will also be up to date on all of the different programs available to you in your financial situation, and whether you might qualify.

Lenders who do not have a local presence may attract you with a nationally advertised (and very low) teaser rate. But, especially if the lender doesn’t have a presence in your local area, this rate can change. What’s more, if the online or nationally-based mortgage company uses an in-house appraiser who isn’t familiar with your local area, the entire deal could fall apart. (If the home doesn’t appraise for the loan amount or more, you’ll need to renegotiate, find funds to make up the difference, or walk away from the deal.)

When I give you my list of recommended local lenders, please know that I am not compensated for these lender referrals. These are simply professionals that I know are great to work with – and/or they offer a program that might be right for you.

The USDA loan might be one such program. This type of loan, available in rural areas (including the Summit County, Colorado marketplace), allows qualified buyers to finance up to 100% of the home’s appraised value or sales price, whichever is lower. And a USDA loan allows your closing costs to either be paid by the seller or rolled right into the loan. (Read my guide to USDA and FHA loans for more details.)

Even before you begin house-hunting, you can talk with your lender about the kind of loan that makes the most sense for you and for your financial situation. Whether that’s a fixed rate, an ARM, a 15-year term, or a 30-year term, a good local lender will be able to help you navigate through this decision by examining your credit, your income, your living expenses, your debt, and asking questions specific to your situation, such as how long you plan to live in the new home. (Read more in my article Summit County Mortgages: Tips for Getting the Right Home Loan.)

How to Buy a House, Step Two: Determine What You Can Afford

Your Realtor and your lender can help you determine just how much home you can afford. And it’s better for all if you figure out this dollar figure before you go looking.

Why is it important to talk to a lender before you go home shopping?

  • It helps you to know exactly what kind of home you can afford. Talking to a lender first gives you a grasp on your price range that will help you save all kinds of time.
  • It strengthens your offer when you find the home you want to make an offer on.

A pre-approval letter from a lender is going to strengthen any offer you write. If the seller has reasonable assurance that you qualify for this loan, they have reasonable assurance that the deal is going to close in a timely fashion.

And it’s best to get a pre-approval letter, when the time comes to write an offer, over a pre-qualification letter.

What’s the difference between a pre-approval letter and a pre-qualification letter?
A lender may write a pre-qualification letter based on the financial picture you paint, without checking into anything. It is simply the lender’s estimate of how much you would be able to borrow if the information you gave is correct.

A pre-approval letter, on the other hand, is usually something that has been verified by a third party. The lender generally issues this after you’ve applied for the loan and the bank has verified that the information you gave is correct. A pre-approval letter says that the bank is ready to loan you a particular amount at a particular interest rate (as long as your financial picture doesn’t change before closing.)

Getting pre-approved and using a local lender is the best way to help ensure a smooth transaction, all the way to closing day.

How much debt do you feel comfortable with?
Throughout this process, it’s important to keep in mind that a bank may give you approval for a loan that is larger than you might actually want. Just because the bank says you would be eligible to borrow a certain amount doesn’t always mean it’s best to do so. Only you know what kind of debt you’ll feel comfortable with, and how much of your income you want to have going toward your mortgage payment. (Use my Mortgage Calculator for ballpark figures.)

How Much House Can You Afford?

To begin determining how much house you can comfortably afford, you can use my Affordability Calculator. Know that lenders often will cap monthly housing allowance (including taxes and insurance) by the lesser of two ratios: 28% (from your gross income) and 36% (from your gross income including other monthly debt and payment obligations).Other factors are considered here, of course, but the highest debt-to-income ratio you can have and still be eligible for a Qualified Mortgage is generally 43%.  

To determine affordability according to these guidelines, simply enter the following values in the affordability calculator.

  • Monthly Gross Income
  • Monthly Debt Expenses
    Include:
    * Monthly Credit Card Payments
    * Monthly Auto Payments
    * Monthly Child Support
    * Monthly Association Fees
    * Other Monthly Obligations, but NOT utility bills.
  • Down Payment
  • Interest Rate

As another rule of thumb for setting your initial budget, lenders often recommend sticking to homes that are two to three times your annual income. Again, lenders don’t like your monthly mortgage payment to be more than 28% of your monthly gross income.

Generally speaking, you can avoid the cost of Private Mortgage Insurance (PMI) by having 20% as a down payment. If your down payment is less than 20%, this PMI will allow you to put down a lesser amount and pay a monthly premium, along with your mortgage payment, until you reach that 20% loan to value ratio. This can take years, depending on the size of your down payment. (Also note that, with FHA loans, this premium does not go away after a certain loan-to-value ratio is met and is with you for the life of the loan.)

Of course, owning a home comes with certain expenses you may not be accustomed to paying, including home improvement and maintenance costs, as well as property taxes, homeowner insurance premiums, and HOA fees, so make sure you aren’t draining your savings or your emergency fund to make your down payment.

You will also need some cash on hand just to cover the expenses of moving. As a homeowner, it’s always wise to have a cash reserve for unexpected home expenses, such as appliance or plumbing repairs.

How to Buy a House, Step Three: Tell your Realtor What You Want and Need

Note the process is explained below through the lens of how I personally work with my clients. If you are not in my area, and you need a referral to a good, accessible agent who communicates well and will work with you closely throughout the entire process, please don’t hesitate to reach out to me. I’ll do some digging so I can refer you to a good agent in your area.

When I start working with a new buyer, I start with a set of detailed interview questions to determine what you absolutely must have in your new home, what would be nice to have, and what you absolutely do not want to have.

We will talk about general items, such as property type, price range, square footage, number of bedrooms and bathrooms, of course, but we’ll also talk about features such as fireplaces, main floor master bedrooms, garage and parking options, storage areas, heating systems and their corresponding costs, as well as lot size, home office suitability, fixer-upper vs. move-in ready, area amenities, neighborhoods/communities, and proximity to local recreational amenities.

I will also ask you about your intentions for the property: whether it’s for full time personal use, a vacation home, short term rental, or investment purposes. We’ll talk about how long you plan to live in the property, which will help guide your choice of loan as well as the areas we focus our search on, as some areas may be easier than others to sell in the short term market.

It’s possible, of course, to begin your home search online, and I encourage you to do so. But talking with a Realtor who really knows an area can save you a great deal of time.  Make sure the Realtor you choose spends time asking you what you really want and what is really important to you – and listens carefully to your answers.  And make sure the Realtor has been in a number of the homes you are looking at. I spend a good deal of time previewing homes as they come on the market, so that I know firsthand what a home looks and feels like inside.

Also keep in mind that information you find online can be deceiving. Technology allows us to see numerous photographs and virtual tours of property, but these depictions aren’t always entirely representative. A wide angle lens can make rooms and even lot sizes appear larger than they really are. Don’t make the mistake of falling in love with a property online, and then have your hopes dashed when you see it in person. It’s best to get in there and get a feel for the place (or send your Realtor to preview it for you). Andrew Fortune’s post Looking at Homes Versus In Person addresses this issue well.

After our initial interview, and after I know what kind of property you’re looking for, I will set you up for automatic email notifications so you can be alerted as soon as a home that fits your criteria comes on the market. That way, you stay ahead of the market. When you see a property you like, just say the word, and I’ll make the necessary arrangements for us to visit it together.

I will also enter your search criteria into our Multiple Listing Service (MLS) database and prepare detailed reports of any properties you are interested in. (You can also search the Summit County MLS anytime for yourself here: http://www.susiecortright.com/homes-for-sale-search/ ).

I can also research all For Sale by Owner properties (FSBOs), as well as expired listings, withdrawn and cancelled listings for additional potential matches. If we still aren’t finding the just right home, I can broadcast your needs and wants to other real estate professionals, in the hopes that someone has a pocket listing or knows about a property that is soon to come on the market.

(Read the other things I do for buyers to help them find the perfect home).

Together, we will look at and investigate the properties you’ve chosen until you find one you love.

How to Buy a House, Step Four: Make an Offer

Once you’ve found the just right home, in your predetermined price range, it’s time to write it up. Once again, I’ll as you a series of questions…

Deciding What to Offer

Now it’s time to make an educated and informed decision about the dollar amount you wish to offer for the property, and your agent can help you with this.

If your Realtor is working as your Buyer’s Agent, she’ll be able to offer you advice here.(Read my “Insider’s Guide” PDF  – or contact me – for a detailed description of the difference between a Buyer’s Agent and a Transaction Broker).

When acting as your agent, I will tell you as many details as I can about the individual property as well as the pertinent details about the real estate market in your area.

Some of the things I’ll do:

  • Present you with comparable properties in a Comparative Market Analysis (CMA) that I create for the home. This will tell you what comparable homes have recently sold in the area, and for how much. It will also tell you what houses are stuck on the market.
  • Discuss the home’s history in the marketplace. Together, we’ll look at the length of time the home has been on the market. Many times, we don’t know anything about a seller’s situation, but sometimes you’ll have indications, even in the MLS, that the seller is motivated.
  • Discuss the list-price to sales-price ratio for recent sales in the area.
  • Calculate average sold prices and absorption rates. We want to know what home prices are doing and what kind of market we’re looking it. We do this, in part, by figuring the absorption rates for the area and price range you are looking at. (See my article “Absorption Rate in Real Estate: What it is and Why It Matters.”) If we are in a seller’s market, it’s often best to submit a strong offer right off the bat, with fewer contingencies. If you are in a buyer’s market, you can be a little more aggressive with your initial offer. Again, we’ll use data to help guide your decisions.

These statistics and your Realtor’s insight can help guide you toward an offering price.

Of course, YOU always choose the offering price and conditions.  The agent can offer data, guidance, and market analyses – and your agent will write and present the offer, but as the buyer you will ultimately choose the offer itself.

Next, your agent will offer guidance in respect to earnest money. She will likely give you guidance on how much earnest money would be appropriate.  A higher dollar amount will strengthen your offer, of course, but it’s also money that’s at risk if anything goes wrong. Again, this is a decision you can make, based on your unique situation and the offer you wish to present.

Your Realtor will then discuss the contingencies you will need in the offer. These are particularly important because they represent events that will allow you to back out of the sale in order to protect yourself (and your earnest money) in case something in the deal turns out to be unsuitable. For example, you will likely have a contingency for your financing (so, you can terminate the contract if you are not able to find a suitable loan). You will also likely have an inspection contingency, in which you can terminate the contract if you find that a condition of the home is not suitable.

It’s vitally important that the deadlines of all contingencies are met – otherwise you can be in breach of contract and your earnest money will be at risk. A good Realtor will help you keep all these on track.

Your Realtor will ask you if you would like to request any seller concessions. And then she will go over the Dates and Deadlines portion of the offer.

Your agent should go over the fine print of the offer with you until you have a firm understanding of what you are signing. At this point, you can sign the paperwork in person or you can do so electronically. This is how most of our transactions are handled and it makes everything secure while also making it quick and convenient for all.

The agent will then submit your offer to the listing agent, after which she will represent you in any corresponding negotiations.

Once an agreement is reached and the offer is signed by both parties, the offer becomes a contract. You are now Under Contract. The listing goes to “Pending” and you and your agent begin the work that is required to make this pending sale your home.

How to Buy a House, Step Five: Call in the Team

Now it’s time to work through the contract, step by step, in preparation for closing day.

I always start by giving the buyer a calendar of Dates and Deadlines to be aware of as we progress through the contract. I also check in at least every few days with status updates as well as reminders of deadlines that need to be met from the buyer’s end.

I will then turn in the earnest money to the party designated in the contract. The receipt is recorded and a copy sent to the buyer. I will then have more paperwork for you to sign, such as the Seller’s Property Disclosure, and Square Footage Disclosure Form. I will share with you the HOA documents, including bylaws and financials provided by the listing agent and seller. And we will go over the title commitment when it comes in, as well as any information about easements or liens that is discovered in the process.

I will provide you with a list of recommended professional home inspectors. A home inspection is not required for the transaction but most Realtors highly recommend it. (I always do.) Inspections are designed to protect you. The cost of these will vary with the area and the home but typically run between $300 and $600.

If you find an issue, you have until your Inspection Objection deadline to make an objection. Your Realtor will draft your objections in an Inspection Objection document, and present it to the sellers via the listing agent, at which point negotiations begin again.

Sometimes, a reduction in the price is awarded so you can fix the items yourself. Sometimes the seller offers to fix certain items (and sometimes asks you to live with others.) If the inspection reveals something that makes you want to terminate the contract altogether, you must do so by the Inspection Objection deadline, or your earnest money will be at risk.

Note that you do not need a professional inspection to make an inspection objection. An objection can be made via your own personal inspection. The professional home inspectors I can refer you to are very thorough and can give you good, detailed reports of everything, including, if you request it, infrared thermography, which can detect such ordinarily hidden problems as plumbing leaks, broken window seals, and problems with heating and cooling systems. Depending on the property and the area, you may want to request radon testing, a well and septic inspection, and a mold inspection, in addition to the general property inspection. Typically, these are paid for at the time of the inspection.

Keep in mind that the seller does not have to remedy these inspection objections and, if both parties can not come to an agreement by the Inspection Resolution deadline stated in your contract, then you would then have the opportunity to terminate the contract, get your earnest money back and continue your home search.

Get Homeowner’s Insurance

You will also need to select a provider for your homeowner’s insurance. Your lender and Realtor can help give you some guidance in this area, as well. All policies are different, but basic homeowner’s insurance typically covers things like fire, theft, storms, vandalism and liability if an injury occurs on your property. Look closely at all inclusions and exclusions of your particular policy, as floods and earthquakes are often excluded from general coverage. You can get quotes by looking online or by calling a homeowner’s insurance agent, who can give you quotes on a variety of plans.

In very broad terms, and just for estimating purposes, multiply the value of the home by .0025 to get a ballpark estimate of annual insurance cost.  This assumes a deductible of $1000 and that the insured value of the home is the same as the list price.

Call Your Lender

Unless you are paying cash, you will need to apply for your loan by the Loan Application deadline stated in the contract.

Within 3 business days of applying for your loan (and often sooner), you will receive a Loan Estimate,a three-page document which will help you understand the costs and risks of the loan you are applying for.

If you are financing the home, your lender will order an appraisal to be completed before the appraisal deadline in your contract. If you are paying cash and you wish to have an appraisal completed, your agent will be able to help you find an appraiser.

If you are getting a loan, experts say, you should budget between 2% and 5% of the purchase price in closing costs. Closing costs will vary depending on your loan and the terms of your contract, so ask your agent to go over possible costs inherent to your transaction. Closing costs may include such items as title insurance, real estate transfer tax, prorated interest on your loan, an annual premium for homeowner’s insurance, plus two months of premiums to be put into escrow.

The biggest expense will likely by your lender fees. Expect to see appraisal fees. There may also be HOA escrow fees, depending on the HOA bylaws. Every loan and real estate contract is different, and you and your agent can sit down together and discuss the expenses you will incur.  Here’s a Closing Cost Estimator to help you get a general idea.

Getting It All Done (On Time)

The agenda and timeline for the tasks above will vary depending on the contract, and there may be other dates, deadlines and responsibilities, also depending on the contingencies of your individual contract.

Through it all, your agent will maintain contact and communication with the other parties to the transaction through the listing agent.

A few mistakes to avoid: if you are purchasing with a home loan, know that the approval was given to you based on a particular financial picture. Whatever you do, don’t change this picture. In other words, don’t close out accounts. Don’t give away large sums of money. Don’t incur new debt or take on new loans. Many real estate deals have fallen apart because a buyer decides to finance a new car just before closing, for example. Don’t let this be you.

Another important piece of advice: Make sure you ask ANY and ALL questions you have along the way. There is no such thing as a dumb question to a real estate agent. We fully understand that, while we do this all the time, most people do it only a few times in the course of their lifetimes. So ask away!

A Few Days Before Closing

Shortly before closing day, you and your agent will meet at the property once again for a final walk-through. Here, you will make sure everything is in order and that all fixtures and other items are still in place and operational, according to the terms of the contract.

Around this time you’ll also receive information on the amount, in certified funds, that you’ll need to bring to closing. Your broker will share a Buyer’s Settlement Sheet with you, which will give you all of your costs and fees broken down, line by line, and will tell you how much you’ll need to bring to closing.

Before closing, you will receive a Closing Disclosure, a 5-page document designed to help you understand all the costs inherent to your transaction. This Closing Disclosure form will need to be provided to you at least three business days before the date on which you become contractually obligated for the loan (the “consummation of the loan.”)

At this point, you’ll want to make sure to have “good funds” for the amount due at closing. Goods funds are those that will be immediately available to the title company upon deposit, so you’ll need a Cashier’s Check or you’ll need to have made a wire transfer to the title company, so the transaction will fund on your closing date and time.

How to Buy a House, Step Six: Sign the Papers & Get the Keys

Closing Day

When closing day comes, you’ll need your photo ID, your “good funds,” and any paperwork requested by the title company. This may include certification of your homeowner’s insurance. Your agent will tell you what else you will need to be fully prepared.

Once you are sitting at the closing table, all dates and deadlines should be met and the loan should be ready to fund. (Section 4.4.2 of the Colorado Contract to Buy and Sell states:All funds, including the Purchase Price to be paid by Buyer, must be paid before or at Closing or as otherwise agreed in writing between the parties to allow disbursement by Closing Company at Closing OR SUCH NONPAYING PARTY WILL BE IN DEFAULT.”) In other words, you and your broker will need to make sure that everything is on track and all funds are paid on time, according to the terms of the contract.

At closing, you will have a stack of papers to sign, most of which will have to do with your loan. Once all of the papers are signed, the title company will pass them along to the mortgage company, and the transaction will be funded. If you are using a local lender, the transaction may be funded before closing, and you’ll get the keys. In some cases, you might get the keys a few hours later, or even the next day. Again, every transaction and closing is different, but once your agent hands you the keys, it’s a done deal.

Congratulations! You own a home!

Get Help Anytime

There are many moving parts to a real estate transaction. If you have any questions or need any help, please don’t hesitate to reach out to me and/or check out the following related resources:

Related Articles from the World Wide Web:
Financial Mistakes of First Time Home Buyers, by Bill Gassett
How to Avoid Home Buyer’s Remorse in Real Estate, from the Rochester Real Estate Blog, powered by Keith Hiscock & Kyle Hiscock

Summit County Real Estate MLS: Is There a Way to Search the MLS Directly?

Licensed Realtors have full access to the Summit County Real Estate MLS, so I can easily conduct searches for you anytime. This access also allows me to procure a wealth of additional property information, statistics, and data on your behalf.

Additionally, I have arranged for you to search active properties from the Summit County Real Estate MLS directly through my website, so you can search on your own anytime.

There are a variety of ways to search:

1. Go directly to my main page and type in your search criteria: http://www.susiecortright.com (Or simply scroll down. There’s a search box at the bottom of this page.)

2. To find a property geographically, by town or zip code, use the Map Search function: http://www.susiecortright.com/homes-for-sale-map-search/

3. To search by a must-have feature, or to search only new properties (those added within the last 7 days), use my Advanced Search page: http://www.susiecortright.com/homes-for-sale-search-advanced/

4. Browse my write-ups of different neighborhoods on my blog. This allows you to learn more about each individual community and then to see all active listings in that community. To access these write-ups, scroll my Most Popular Post page for “Susie’s Neighborhood Spotlights”: http://www.susiecortright.com/most-popular-posts/

Once you’ve found a home you’d like to see, contact me or simply click the “Schedule a Showing” link on the property’s detail page on my website. I’ll make the necessary arrangements.

Be Notified Automatically When New Properties Come on the Market

There are two ways you can be notified automatically about new listings that fit your search criteria.

1. Let me know what you’re looking for, via phone, text, or email, and I’ll do everything in my power to locate the just-right property for you. That includes researching all For Sale by Owners (FSBOs), expired listings, and withdrawn and cancelled listings for potential matches beyond what you see on the Summit County MLS.

2. You can also sign yourself up for my free email alert servicewhich provides automatic email notification of new listings that meet your unique and specific criteria.

Whichever method you choose, this notification system is nice because it puts you in control, and it can save you a lot of time.

You’ll receive information on only those homes that match your unique criteria. You can choose the homes you like and even drive by them if you wish.  If you’d like to see inside, you just let me know and I’ll arrange the showings. There’s never any pressure to buy. The goal is simply to find you the right property.

Search the Summit County Real Estate MLS

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Summit County Transfer Tax: What You Need to Know

Summit County Transfer Tax FAQs
What is a Summit County Real Estate Transfer Tax and When Does It Apply?

Here’s a guide.

What is a Real Estate Transfer Tax?

A real estate transfer tax is a one-time payment, made at the time of closing. In Summit County, Colorado, these funds help to pay for a variety of the things that enhance the community – everything from sidewalk and road improvements to special events. In Breckenridge, the funds go into a general fund that also helps pay for our impressive amenities, including our recreation center, golf club and ice arena.

The amount of real estate transfer tax in Summit County varies according to the location of the property purchased but will be either 0%, 1%, 1.5% or 2% of the total purchase price (the “Gross Consideration”).

Transfer tax is traditionally paid by the buyer, though this is negotiable. When we draw up a purchase agreement, I will explain these terms in the Colorado residential Contract to Buy and Sell (Section 15.4), and we can talk about whether it makes sense to ask the seller to pay the transfer tax. Keep in mind that it’s likely the sellers paid the transfer tax when they bought the property.

In a normal closing, the title company will take care of the transfer tax paperwork and the remitting of the transfer tax funds.

How much is Real Estate Transfer Tax in Summit County?

When we begin looking at homes, I’ll be sure to tell you the transfer tax rate of each property.

To give you a general idea: if you are purchasing property within the boundaries of these towns, the following transfer tax applies:

  • Breckenridge transfer tax: 1% (except for some of the newer developments on Peaks 7 and 8, including Crystal Peak Lodge and One Ski Hill Place, which have a transfer tax of 2%. That’s because the development company also requires a transfer tax in these developments.)
  • Blue River Transfer Tax: 0%
  • Frisco Transfer Tax: 1%
  • Keystone Transfer Tax: Areawide, 0%, except for certain subdivisions (such as Settlers’ Creek) and condo developments (such as the condos in River Run Village), where there is a resort transfer fee of 2%.
  • Copper Mountain Transfer Tax: Areawide, 0%, except for select, newer condos, such as Lewis Ranch, Cirque Condos, and Union Creek Townhomes, where the resort transfer fee is 1.5%.
  • Dillon Transfer Tax: 0%
  • Silverthorne/Wildernest Transfer Tax: 0%

The information above is meant to just give you a general idea of the range of transfer tax in Summit County. There are exceptions and exemptions. For example, certain affordable housing and deed restricted developments may have the transfer tax waived.

Again, we’ll make sure to look at the transfer tax requirements on a property-by-property basis.

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