Home Buyer Information | Real Estate in Colorado
Buyer Information | Real Estate in Colorado
As a Realtor® serving Fort Collins and Northern Colorado, I meet with buyers all the time. You may be experienced with real estate in Colorado, or you may be a new buyer. “New buyers” can be people who are renting and want to own, people who are moving here from out of state and aren’t familiar with Colorado’s real estate systems, or anyone who needs a refresher on what the home buying process in Colorado is like.
This post will give some details on what to expect when purchasing a home or buying other real estate in Colorado.
DISCLAIMER – Rules, regulations, processes and markets change. Note the publication date of this blog post, as the information contained refers to processes, rules and regulations that were in place at the time of publication.
This post is not in any way an exhaustive accounting of everything that could happen during your real estate transaction.
The descriptions in this blog post are for those who are being represented by a licensed real estate agent in Colorado, or even better, a Realtor®. This post is intended for those who will be using the state approved real estate contracts, and who will be working with other associated vendors during the transaction, like a mortgage company, title company, property insurance company, etc. The descriptions herein are for those who will be taking advantage of the systems, rules and processes created or approved of by the state of Colorado and the real estate entities (Division of Real Estate and the Department of Regulatory Agencies) whose function and purpose is to “protect the public” and make it possible for people to buy and sell real estate in Colorado.
Colorado Real Estate – The Process
Find a Realtor®
A Realtor® is a guide. We are state licensed professionals, whose function is to help you buy and sell real estate. Realtors® should answer your questions and create clarity through the whole process.
As a Realtor®, I help my clients find and choose properties, select services, schedule important moments, and of course, create and execute contracts. Finding your Realtor® is the first thing you should do, in my opinion.
Note – Some, but not all, agents are Realtors®.
So what is a Realtor®? Here’s what the National Association of Realtors® has to say about it.
Decide to Buy
The first step is making up your mind.
Now, why find a Realtor® and then decide to buy? Simple. You might not be aware of everything that buying property entails. A meeting with a Realtor® with some questions will start to paint the picture for you.
Need question ideas? How about this. “I am thinking of buying real estate. Can you let me know what the process is like, the typical costs associated, and what I will have to do/have to make this happen?”
A good Realtor® (like me) will inform you of what you’ll generally need to know in order to do some soul searching. Crunch some numbers. Do a bit of an accounting and inventory of your life. Can you afford it? Is it really feasible? Is it what you want?
It is a big committment not to be entered into lightly.
So, how are you going to pay for this dream?
This is the time to really look at what your financial situation can support. For some, they just call the bank to see if they have the cash. Others work with a mortgage lender to secure funding.
Your lender will be another key player in this process, almost as important as the Realtor® (perhaps I’m biased :)).
Not only will your lender make a plan with you for how much you’ll spend, they will also provide you with a “Lender Letter.” Most listing agents won’t accept a contract without a solid lender letter. For more on the Lender Letter, click here.
This is a good time to plan how much money you’ll put down, and what that will do to your interest rate and monthly payment.
I recommend my clients look at all the costs they’ll face during the transaction at this point, so no surprises that they can’t afford pop up on them all of a sudden.
Start the Search!
I hope your home search is a joyous process! I have so much fun assisting the people I work for in finding homes and properties.
With my clients, I follow a process that saves us time and energy while still finding a property that suits their needs and fits their budget. The property search takes place across mediums; through email, text, phone calls, video chats, and in person.
My favorite way to connect with my clients, and to connect them to the Northern Coloarado real estate market is through an app called Homesnap.
The information on Homesnap is generated by the local multiple listing service (MLS) known as IRES, which serves Northern Colorado specifically.
Beware websites that aren’t firmly connected to the real estate community!
The preferred way to search reliably for Colorado real estate is through the actual MLS and agents and Realtors® who are connected to it.
Some Costs to the Buyer
Processes and services during a real estate transaction have costs. Some of those costs are taken at closing. Others are paid for ‘on the spot’.
When it comes to who pays for what, it is viewed from the perspective that whoever the service or process is benefitting, that is often (not always) who pays for it. In the case of a home inspection, it helps the buyer decide that they want the property in the condition it is in, so the buyer generally pays. Title insurance confirms that the seller owns the property and therefore has the right to sell it. That benefits the seller, and the seller pays for the title insurance.
Earnest money is like a deposit. The amount varies per home, and is included in the listing information we have through our Multiple Listing Service.
The buyer gives Earnest Money as a way of saying, “Hey, I’m serious about wanting to buy this home.”
The Earnest Money is held by a third party (not the buyer or seller), and in situations where one party is in breach of contract, the other party may be entitled to keep the Earnest Money.
Earnest Money, in short, keeps people honest.
The appraisal of the home is an important aspect. If the home doesn’t appraise to a certain value, some lenders won’t provide funding for it. Appraisers are licensed and regulated by the State of Colorado. For more on that, click here.
Very briefly, appraisers look at the property specifically. They also look at the current real estate market. I’m not an appraiser, but I know that they are going to look at the best comparable homes (lot size, structure size, condition, age, etc.) that have recently sold. They use this and other appraiser processes and techniques to assign a value to the property.
The appraisal of the value of the home benefits the buyer because it shows them whether or not the price they’ll pay for the home is consistent with recent market activity. Also, the lender generally requires it. In order to secure funding for the home, the buyer pays for the services of the appraiser.
Inspection of the Home
The inspection of the home is optional, as is the choice of who conducts it. If the home is being inspected as a part of the process, the buyer generally pays the home inspector directly.
Home inspectors often have a background in construction, home building, plumbing, electrical work, or other fields that have given them a handle on what to look concerning the quality, or lack thereof, of the entire home.
Home inspection is not a state licensed occupation in Colorado. However, many inspectors pursue certifications in order to sharpen their skills and show that they are qualified to do the job. A common certification we see around here is from the International Association of Certified Home Inspectors (InterNACHI). Their certification requires something like 120 hours online course work and a three day field test.
The choice of inspector matters! Pick a reputable one. I know quite a few, so let me know if I can connect you.
During the inspection, they will run tests and check almost every system in the house.
Some people also employ additional services and test for things like asbestos, radon, and have the sewer scoped to make sure the property is satisfactory.
Note – I consider it best practice to understand the condition of the property when making the offer, and make the offer accordingly. I don’t like to treat the inspection as a time to make a list of things we’d have changed about the home. If the inspection turns up bona fide and/or previously unknown problems, we’ll address them. However, if you think something looks sketchy before you make an offer, address it along with the offer.
I am not a lender. So, for details on what it costs to acquire a loan to buy a home, consult a reputable lender. Suffice to say that getting a loan will cost money, and millions of people find it to be worth the cost. Whether or not you think it is worth it is entirely up to you.
Title/Other Closing Costs
The title companies provide staff and services to close real estate transactions. HOA (Home Owners Associations) often have a fee to change the status of who owns the property.
These costs, regardless of who pays them, are often are taken out of closing and should be well defined and understood by everyone before closing.
How Long Will It Take?
It varies, of course. In general, if you were to find a home that you are qualified to buy and made an offer that was accepted by the seller today, we would probably schedule closing for about 30-40 days from now. It can be much faster than that, but generally isn’t too much slower. Sellers generally like it fast and easy, and dislike long drawn out transactions.
Some of the elements mentioned above are a part of the “Due Diligence” period. This is the time taken to inspect the home, appraise it, allow the buyers to secure funding, and do what needs to be done in order to complete a solid, trackable, closable real estate transaction.
This is a big transaction and the time taken in due diligence is for the protection of all parties involved.
Where Do I Sign?
Umm, in short? Everywhere. 🙂
Excuse me while I remove my tongue from my cheek. There are no two ways about it, buying a home in Colorado is a signature heavy process. What you sign, or don’t sign, should always be up to you. Best practice is to read the document you are about to sign. If you have questions, ask them.
When it comes to the documents I have to have you sign, I can explain them all. If/When we deal with a document I cannot explain, I will advise you that the scope is outside my area, and that you should consult a professional who can ably advise you on the contents.
For more on the basics of the documents we use for buyers, click here.
My Part as Your Realtor®
As your Realtor® it is my duty to explain the state approved contracts and forms that enable real estate transactions to take place. That is what I am licensed to do.
What I also do is…well…a little bit of everything. I advise you according to my experiences in the past in order to help you make decisions for the future. I’ll connect you with people and vendors that will help the transaction along. I’ll communicate with an negotiate with the sellers through their agent.
The Realtors® figurative tool kit needs to be expansive, because no two transactions are the same.
When it comes down to it, my main job is COMMUNICATION. I communicate with everyone. I take communications from you and pass them along. I communicate answers to questions you and others may have. I aid others in communicating with each other.
Another role I take on, when acting as a Buyer’s Agent, is that of advisor. Is this property worth what they are asking? What shall we offer or accept in the various negotiations we’ll face? The way I like to advise is by keeping you informed, knowing all that I can about the market and the property, and laying out potential scenarios so that you can make the decisions and I can help them take affect.
It’s a special role and a sacred duty to me, and I would love to be your Realtor®!
Realtor® Paul Wozniak
Realtor® | Associate Broker | RE/MAX Alliance Fort Collins
Realtor® Paul Wozniak serves in Colorado, helping people buy and sell residential real estate, land and commercial property.
Paul specializes in communication and helping his clients make sound decisions with regards to real estate.