Local real estate Q&A by Doug Van Etten
YOUR JOURNEY HOME
Free Press Real Estate Columnist
Q : Last week I talked with my grown children over in Denver about selling my house. We discussed the homes for sale on my street and the fact that three houses near me have sold since June. Should changes in interest rates affect when I should sell my house? And does my concern make sense from a seller’s point of view?
A: If mortgage interest rates rise, yes that will have a definite impact on you as a potential seller. Wages in Grand Junction are staying stable. If house prices rise, the only way a buyer can gain purchasing power is for interest rates to fall since the monthly payment is made up of principle and interest (P&I). Conversely, if interest rates rise and wages remain constant, buyers will be able to afford less principle payment, or your sales price. In that way the number of buyers who can qualify to buy at any given price point will decline somewhat.
An example might be this: Today’s average home price in Grand Junction is $190,000 for homes priced under $500,000. At 4.25% interest, a P&I payment on that price house would be approximately $888. With a slight rise to 4.5% interest that monthly P&I payment increases by about $26.
The bottom line is a rise in interest rates gives buyers less purchasing power which may lead to you having access to a smaller share of the pie of total homebuyers.
Q: I have looked at a dozen or so houses for sale and always been able to look over a seller’s property disclosure to learn about repair history and condition of the house. Recently, I looked at a house for sale that had no disclosure. The seller told me he did not need to provide one. I wonder if he may be trying to hide something.
The sellers of most properties are able and willing to provide you with the standard Colorado eight-page seller’s real property disclosure document. However, there are exceptions to sellers providing this document. Often, if a person has not lived in a property because it has been a rental, they will not know enough about property history details to feel comfortable making statements of fact. Another reason for no disclosure may be an estate sale or other arms-length sale. Bank-owned, REO, and HUD-owned properties will not have disclosures.
What you will always get, required by Colorado law, is a source of water disclosure. For most homes in the Grand Junction area, this form will indicate Ute Water or Clifton Water customers. Some might indicate the potable water source as being a well. Irrigation water is another story; this is disclosed on the actual purchase contract when you make an offer to buy a property. There you will learn about water shares, the ditch company, payments and other details.
Most purchase contracts prepared by Realtors will include a Square Footage Disclosure.
Colorado law indicates certain things will be disclosed within the body of the actual purchase contract even if there is not a separate property disclosure.
In the standard contract you will see disclosures about personal property being included in the sale. Status of a water tap, sewer tap and water rights are all included in the contract.
No need to feel the seller is necessarily hiding anything by not giving property disclosure. You have a right to have a home inspection. Should anything related to that guarantee in the contract not be to your satisfaction, you have the right to terminate the contract and will receive a full refund of your earnest money.
Property disclosure is for the benefit of both parties. Anything a seller discloses is much less likely to come back to haunt or bite them. For a buyer, it helps them make a well-reasoned and informed purchase offer, serves as a resource for the buyer’s home inspector to refer to and may help prevent costly damages and repairs in the future.
Doug Van Etten is a local Realtor with Keller Williams Realty. He has been helping buyers, sellers and investors for more than 20 years. For more information on investing and investment properties, visit http://www.REINWesCO.org and read Van Etten’s blog http://www.GJRealEstateAdvice.com.
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