|
The Top 25 Dangerous Situations in Buying Denver Real Estate
Hello and Welcome to Colorado!
You couldn’t have picked a more beautiful state to move to, especially if you enjoy outdoor activities like skiing/snowboarding, hiking, biking, camping, fishing and hunting, and photography – to name a few. We have more 14,000 foot mountains than any other state and yet the Denver metro area lies in the flat prairie.
Here, dangers lurk for unsuspecting home buyers...
As nice as the Denver real estate market appears, buying Denver homes for sale may be far more risky for you…than you might have ever imagined! We have some very unique situations in our Denver metro real estate areas, which are very unlike many other states and cities that are NOT one mile above sea level. Here are the Top 25 Dangerous Situations Buying Denver Real Estate and my personal recommendations for helping you AVOID making some catastrophic financial and emotional buying mistakes when buying in the Denver metro area. Please read ever word of this article so you don't miss anything, as it's critical you truly understand the dangers in our Denver real estate market.
First though, let me do a quick commercial, so you'll have a better understanding on where and why these critical mistakes came from.
My name is Jeff Boyce – and I moved to Denver in 1979 from Ohio. Since then, I’ve probably lived in about every suburb in the Denver metro real estate area and know Denver like the back of my hand…as the saying goes. I’ve owned numerous homes and condominiums – and bought 6 investment homes a few years ago (and still own 2 of those.) After speaking to me about, you might discover I'm probably one of the smartest Realtors you’ll ever talk to in Colorado – and I'm proud of that fact. I'm also the Owner and the Managing Broker at Colorado Homes & Mortgage Specialists LLC, and the Owner of Mortgage Specialists LLC. Being a lender and mortgage broker since 1998, I get see the ‘sad side’ of real estate…where there are ‘dirty little secrets’ and issues that most Denver real estate agents are completely oblivious to.
And for your information, I’ve personally closed nearly $100 million in business since 1998, so I know what the ‘heck’ I’m talking about too. (The average Denver Real Estate agent closes $1 - $2 million a year…FYI) But here’s why all my “bio” is so important to you: I’m one of the nicest guys you’ll ever meet, and the last thing I’m going to do is let you and your family buy a home in the Denver area and get screwed-over buying Denver real estate. As a long time professional, I understand our Denver real estate market way too well, and I’m not going to let your unfamiliarity with our housing market cause you any grief or pain.
Here are my Top 25 Dangerous Situations Buying Denver Real Estate you need to understand and AVOID.
Even Experienced Homeowners Make Costly Mistakes When Buying in the Denver Area.
 Even though Colorado is very pretty – we have dangers that lurk all around us! So when you come out here house hunting from another state, you really need to be aware that we have some naturally occurring problems including:
• Very dry air and low humidity
• “Thinner air” – we are a mile close to the sun than most other cities
• Expansive soil, the ground has bentonite – and swells & contracts
• It’s VERY sunny here year-round – and can be very HOT in the summer
• We have Radon in our soil – a radioactive element common in western US soils
• Wind – near the foothills, it can be VERY windy a lot of the time
• We get frequent and bad hail storms
The #1 DANGER in buying any Denver real estate is bentonite. Most people moving to Denver have never heard of bentonite. Have you? Bentonite is actually a component in western soils, and is like a micro sponge. Unlike regular dirt in the United States, bentonite causes the soil to swell when the dirt gets wet – and also causes it to severely contract when the dirt dries out.
Bentonite is called an “expansive soil” because of this – and ALL new homebuilders in Colorado are required by state law to provide homebuyers a 10-Year Structural Guarantee. Here’s what happens with bentonite, in the winter and spring we normally get more moisture which can cause the dirt around your homes foundation to severely expand. Imagine what would happen if you put a sealed glass jar full of water in your freezer, and then checked on it the next morning? Odds are the glass would be broken from the ice expansion. Bentonite works the same way – except it can still crush your homes concrete foundation even when it’s warm out in the summer!
Bentonite can totally crush a home’s foundation – and warp the concrete foundation walls so bad, that the main house walls can crack and break. In Colorado, that’s the #1 problem homes have - and what we call structural damage. That same soil expansion can cause your driveways to crack, cause your garage floor to warp badly, and can break and crack your porch steps. Typical damage can cost between $24,000 to over $65,000 depending on the situation to remedy the situation.
The funny thing about bentonite is that ten houses in a row might have bentonite problems, but the next three houses are totally fine. Then, the next 25 houses have minor problems – and the remaining 10 houses are totally fine again. One side of the street might have problems and the other side has zero problems.
If a Bowling Ball Rolls Freely on a Carpeted Floor - You Have a Problem!
When you’re driving around Denver, especially on the south and southwest parts of town, and on E-470 – the Colorado Highway Department workers were not drunk when they did the wavy and bumpy concrete work – those roads were originally flat and smooth as can be when they were first graded and poured! But after a couple of years, the expansive bentonite in the soil caused the roads to heave and break apart. It’s so severe in some areas that it’s almost like riding a roller coaster especially along the stretch of E-470 and Broadway.
Now, don’t let me totally panic you here – because not all neighborhoods have bentonite problems. Please do find a good Realtor or a good Denver real estate agent to help guide you in finding a home in an area that does not have these problems. (I’ll be glad to help you here – just call me and I’ll warn you of all the bad areas!) The southern and southwestern part of town near Morrison is especially known for these horrible problems…
If you're like most people buying a home, you want to find a home in good condition and in a nice Denver metro neighborhood. But WHAT PART of town you move to and buy in can lead to some of these potentially big problems.
At 1 mile above sea level – we get more UV exposure and you need to make sure you limit your exposure to our sun!
You certainly need to be aware that you will sunburn about twice as fast in Denver than you would on the beach in Florida. But that same sun that sunburns you, is doing a real bad number on the paint on your next home you buy too!
Painting Can Be Very Expensive...
If you buy a home that was built 2-7 years ago, odds are, the Denver new homes builders did an inadequate (lousy) job painting it. So beware that you will need to paint your house, if you care about the siding & trim – within a year or so of you buying the house! (I bet they didn’t tell you that when you got off the plane at the airport!) Be aware that your south and west facing sides of your home – and ESPECIALLY the trim – will get massive heat and sun exposure. Then, it will freeze and have ice exposure in the winter - with freezing and thawing going on. So, when you’re looking at homes now, with my advice – make sure to look at those areas to see what condition each house is in! 
Now here’s some bad news... It’s pretty expensive to have a home painted correctly…and may run you $2,500 to $5,000. You might get it painted cheaper if you hire a college student or let someone ‘spray’ your house, but please DON’T do that. If you are going to live in the house for 4-5 years like most people – the manufactures of all paint sold at Home Depot and Lowes won’t warranty the paint unless you put 2 coats on – and you need 2 coats here because of the sun fading effect. Spraying 2 coats is like putting 1 coat of paint on because they have to water down the paint to make it go through their spray guns. If you neglect to keep your house properly painted here, you'll end up ruining your siding and trim boards, causing you unbelievable headaches a few years from now... The trim around the siding needs lots of caulk to. LOTS OF CAULK!!! I used 18 tubes of caulk last summer on one of my rental houses that we painted. You really need to be aware that lots of trim boards can be “dry rotted” – which means they’ve got so much sun that they dried up like balsa wood and turned into powdered driftwood. Guess what? Paint will no longer stick to these damaged boards. (When we are looking at houses together, I’ll point some of this out to you – if you’re not certain what I’m talking about here.)
Most Denver real estate agents are in such a hurry to sell you the first house you “fall in love with” that they forget that buying a house is NOT JUST getting nice stuff on the inside of the house! Smart home buyers know that the MOST EXPENSIVE repairs and fix-up expenses are on the exterior of the house.
It's Very DRY in Denver!
Next, there’s our dry air to deal with. You will probably notice within 2 days of being out here, that your nose is going to really ‘dry up’ compared to how it usually feels. Denver is really a semi-arid region – and is actually built on the old west prairie and a dry alkaline soil. You’ll discover that you need to drink about twice as much water a day here, than what you're normally accustomed to. Your skin will feel much dryer in the winter months especially. Now, with our dry air, you need to ‘protect’ your wood furniture inside your house more too. If you’ve got nice or more expensive wood furniture, tables and cabinets, then you need to make sure that you use any good oil (like Johnson's or Murphy's) or a cleaning agent on them at least once a year.
Also, you’ll want to do all your wood kitchen cabinets once or twice a year as well – just to keep them in good shape too.
The next thing that you need to know is that we have very high winds – periodically – because of the layout of the mountains and where Denver sits geographically. Areas along and close to the foothills receive lots of wind because all of the thermals, with the heating and cooling, especially in the afternoons. Places like Boulder, Erie, Louisville, Arvada, Golden, Lakewood and western parts of Littleton usually get very gusty winds in the afternoon. If you’re one of those people that likes to have barbecues and outdoor activities in the afternoon and in the evenings, then you need to pay particular attention to buying a house and living very close to the foothills – as it can be very very windy. Also, Denver homes for sale in these areas are very prone to wind damage - done mostly to your roof shingles or cedar shakes.
Because of this, you will need to ABSOLUTELY make sure that your homeowner’s insurance covers wind damage. Just ask anyone that lives in Boulder and Erie, as they get some very severe wind damage several times a year.
The next problem you need to worry about is hail damage. I believe statistically, that Denver ranks number one for the number of hail damage roof and car damage claims in the entire United States. Once again, make sure you have a very good homeowner’s insurance policy quote and absolutely double check your auto insurance policy to make sure you have adequate coverage there. Your deductibles must match your cash out-of-pocket gambling behaviors - and match your specific situation. (Ask me to refer my 2 favorite home owners insurance agents for you to compare rates and coverage's, once we get started looking at homes.)
It is especially important to make sure that you have the roof inspected properly BEFORE you buy any house in the Denver area, no matter what another silly Denver real estate agents tell you!.
Our beach front property in Denver Colorado is very nice, but there is not very much of it for sale - or available in Denver. Please make sure you're working with a very good Denver real estate agent, so you'll see these better beach front homes. ha ha ha - that's a joke! (we wish we had beach front homes here!!!)
Now, the next two items can be very serious!
The next issue you need to be aware of is that our soil contains higher degrees of radon gas components than other parts of the country. Radon is a radioactive gas, but it’s not like uranium.
Like anything radioactive, radon has been found to cause cancer and other problems over a very long-term exposure. It’s really no big deal to most people buying Denver real estate and homes for sale because the radon is a heavy gas, and is primarily found in the basements. By the way, all houses in the United States have radon in the soil and in the basements if there are basements. But, some areas in Colorado can have some very high elevated levels of radon – and that’s what you need to be careful of.
So if you buy a house that has a finished basement, or you are planning on finishing the basement – and you are planning on spending a lot time down there, or if someone is going to be living down there in a basement bedroom – then you need to be cautious and probably get a radon test done.
All of the home inspectors that I recommend can do a radon test for you. Or you can conduct your own independent test.
If radon is found to be at a higher than normal, or very high levels – the problem can be easily fixed by having the radon mitigated. A radon mitigation system costs about about $700- $900 and solves the problem completely. (I can provide you with a detailed article about radon if you’d like one and a further explanation on this potential threat.) Radon is kind of like bentonite, as it can be found in one house on a neighborhood street, but the next 50 houses on the block will have little to no problems...
Luckily, radon can be corrected by mitigation, easily fixing the problem if there is an issue.
Speaking of soil, our soil ‘stinks’ here for gardening. That's because our dirt is very sandy and almost clay-like. So if you enjoy gardening and planting flowers or vegetable gardens - you'll just have to buy lots of topsoil for those areas, if you want nice flower beads and gardens. For $100 or so, you can buy nice topsoil to add and plant in.
Size does matter ...No matter what anyone else tells you!!!
Sorry – I’m talking about two ‘other’ things here you need to consider when moving to Denver, and that's the size or square footage of our homes here, and the size of the loan you are going to get.
Most people call this “sticker shock” – as most people moving to the Denver area are a little bit shocked when they find out that our homes are a bit more expensive here. The price that you pay for Denver real estate may be quite a bit higher from where you move from. The median price of a Denver home is about $245,000; which means that half of the Denver metro homes sold below that price and the other half sold above that price. Now square footage wise - that will only be about 1800 sqft and (usually) a basement - on average.
Depending on where you want to live and what part of town, you may be able to get a LOT MORE square footage and a much bigger lot and yard. If you are open to exploring different parts around town, I can help you discover some real bargain areas to buy in - where you get much BIGGER homes for your dollar spent! (Call me or email me and I'll explain these spots to you...they're nice!)
Denver's Cost of Living Index is a Bit Higher Than Most Mid-Western Cities
Like most big cities, there are certain parts of the Denver metro real estate market that are very expensive, and other areas that have a very good value price. Unfortunately, most of our Denver new homes prices start at about $295,000 – so finding a resale house is usually the best option for most buyers. The least expensive new homes are being built by DIA (Denver International Airport), Brighton, Commerce City, and out east in on I-70 in Bennett. Please choose your next Denver real estate agent, broker or Realtor very carefully – as some of us know excellent value-priced areas around town to help you get started in your search. Naturally, this will depend on the year that the house was built and what other features you want in the house - as newer homes tend to cost more than homes built in the 1970's, 1980's and the 1990's.
This poses a big problem because many of you are going to be used to living in a bigger house and maybe even a bigger newer house - and let me warn you, as those can be very pricey here - FYI.
Traffic in most Denver real estate areas can be very bad in the morning and during the evening rush hours, just like any other big-city. And because of that, you probably don’t want to commute very far from your home to your new job. Before you ever write a Purchase Contract on any Denver homes for sale, you'll definitely want to make sure that your commute to your job will not drive you insane!
Learn How Much Home You Can Afford To BUY - Before You EVER Start Looking!!!
Like it or not, but you absolutely, positively need to get Pre-Approved for a mortgage loan before you move to Denver, Colorado - or before you begin looking at homes, if you already live here. Nothing will frustrate you more than looking at Denver houses and neighborhoods that you can’t afford to buy because you can't get qualified for that home mortgage loan! Why waste all your time (and gas) and go through all the ‘brain-damage’ looking at homes you can't even buy? Wouldn't you like to know in advance of looking what find of loan you can get, and be super intelligent and base your home buying decision upon what you are comfortable with - monthly payment wise? Aren't your monthly payments important to you?
Here’s what I strongly suggest you do; find a very creditable lender (who’s been in business at least five years) and have them do a full loan Pre-Approval for you and showing you all of your mortgage loan options you ACTUALLY can qualify for. Make them provide you a spreadsheet showing a range of house payments you qualify for and what those payments would be on adjustable rates, fixed rates, and zero down loans – like we do for our mortgage customers.
So before you "Fall in Love" with a house, you'll know if you're absolutely, positively qualified to buy it – and you won't be pressured to make a quick decision on a fantastic home deal we might find.
There are two CRITICAL reasons that you absolutely, positively need to get Pre-Approved for a loan before you move to Denver or before you start looking at houses.
First, it's because the whole national mortgage mess and credit crunch has eliminated a lot of loan programs and made it very difficult for buyers with good or even excellent credit to get approved for mortgage financing now. You'd be foolish to go out home shopping and completely wasting your valuable time (...and mine) if you can't get a loan.
Second of all, most home Sellers in Denver will NOT even consider your Purchase Offer unless it has a Lender Letter accompanying the offer. Why would a Seller take his home off the market for 2-3 weeks to "wait" for you to see if you can get a loan - and miss out on a REAL home buyer instead!!! You are just telling all parties involved (including me) that you aren't a serious buyer who can make a serious offer. Right? Additionally, make sure your Pre-Approval comes with a Good Faith Estimate, a Truth In Lending (HUD-1) Disclosure and the printed loan Pre-Approval. This way, even the Internet mortgage companies can't mislead you because they are known as the "we forgot" to put in all of your ACTUAL REAL closing costs. They seldom put in your biggest expenses like title insurance charges, homeowners insurance charges and an accurate escrow or impound account dollar figure.
Look - if they conveniently forget to tell you that your homeowner’s insurance will be about $800 -$1,000, your title expenses will be about $400-$700, and you will need to have a two to six month tax reserve (at $150 a month, that’s $300-$900) – plus you usually need a two-month homeowners insurance reserve, about $175. By them NOT telling you this, you could have $2000-$3000 more in closing expenses than you anticipated at closing - how would that make you feel?
At Mortgage Specialists LLC, my company, we pride ourselves on being one of the very best mortgage lenders in the State of Colorado. I have closed every single mortgage loan that I have written for my real estate customers in the last 4 ½ years. You are guaranteed to get an accurate Good-Faith Estimate, a Lock-in Sheet Confirmation of your interest rate & loan program – and we will close your loan exactly how we told you we will. I don't need to lie or mislead you on interest rates because I'm "bound legally" as your Buyers Agent to fully represent your legal and financial interests. Besides, I've closed nearly $100 million in real estate and mortgage transactions, love my job, I have a MBA and like finance, and enjoy helping people buy homes! Who else would write this long article warning people of "dangers" in buying Denver real estate...?
Think about this…
If you spend some time looking for a good loan – especially if you have damaged credit and credit scores below 680, you'll end up saving a fortune on mortgage interest and get a far better mortgage loan for yourself - including some of the cool $0 Down loans. Having a good mortgage broker do a little homework for you in advance will literally save you thousands of dollars over the term of your loan. In the Denver, sometimes you need to be more worried about your mortgage loan than you do about radon or bentonite - and unfortunately I’m not kidding…
Don't risk your largest financial investment to an amateur…
Naturally, all Denver real estate agents, brokers and Realtors want to see your transaction close – that's how we get paid. But unfortunately, many real estate transactions and contracts develop “problems” during the course of the Purchase Contract and closing time. My recommendation is to hire the most experienced Denver Realtor that you can possibly find. Choose someone that works primarily or almost exclusively with Buyers, who knows about the area you want to buy in. Hire a Realtor with a “ton” of experience!
Would you want to be represented by a public defender if you were falsely accused of murder - would you want to be represented by a hardened experienced professional attorney? Sometimes people forget that a good Realtor gets paid to warn you in advance of any potential problems - and to be smart enough to "solve" any problems or last minute crisises. Would you want an inexperienced Denver real estate agent, broker or Realtor helping you if:
- You discover hail and water damage on the roof after your home inspection?
- The furnace won't certify and leaks carbon monoxide at too high of levels?
- What happens if the house does NOT appraise for your purchase offer - can your Realtor save your deal?
- The Sellers change their mind and decide before closing - to NOT close!
What happens if there is a delay in closing, because you are having loan problems – for whatever reason? How confident are you that your Realtor can get things done and protect your Earnest Money Deposit?
I’m going to be real honest with you here - because Realtors earn their money NOT by showing you nice houses…we earn our money when there is a problem – and when we fixed the problem or situation. Don’t hire an amateur real estate agent or Realtor. Amateurs can make big mistakes with your money!!! Most importantly, you need to know that - "There are regular Real Estate Agents and then there are “Committed Professionals"…which one would you rather have representing YOUR financial interests?
How Does That Grab You...?
I hope the information contained in this special report has given you some very helpful advice on the many DANGERS buying and financing your next Denver home. If you count everything – I actually included about “58 Reasons” – not 25. You get a lot more value working with the Jeff Boyce Gold Team! And at this point, you're probably pretty clear that in order for you to find the right home and save money, you need someone very competent and dedicated to represent YOUR real estate legal interests. Right?
Over the past 9 years, I have recognized this fact, which is why I personally wrote this long article for you - and why I have structured my real estate and mortgage business to give you the most competent advice possible. I do this for two very selfish reasons, though. The first one is so I DON’T have to deal with “headaches and stupid problems” all the time - as I hate problems!!!
The second reason is because it enables me to maximize my time – so I can sell more houses and do more mortgage loans, because I’m not “fighting fires” like other incompetent Realtors and lenders often have to - to get paid. Most people appreciate my honest demeaner and because I don't "sugar coat" anything - just to make you happy. I'm a straight -shooter and will tell you the truth, even if it’s ‘not’ what you might want to hear. If I see a problem brewing – I’m going to tell you about it! I personally guarantee everything we do because, simply put, I'm one of the very best Realtors in Denver. I'm not saying these things to impress you or brag - but instead to impress UPON you the difference between working with a competent, dedicated professional...which I am – or working with someone who’s not…
Put us to work for you and you’ll be glad you did!!! Thanks again, I hope you enjoyed reading this article.
Call me or shoot me an email about your specific situation, and we'll get going...
Jeff Boyce
Owner/Managing Broker
Metro Brokers – Colorado Homes and Mortgage Specialists, LLC
303-588-4665
drjeffboyce@msn.com
|