Frequently Asked Real Estate Questions
Can a Crested Butte home or condo be rented out by the owners, when the owners are not using it, to reduce the cost of ownership?
You bet!, vacation rentals are very popular and rentals do offset the cost of ownership. A history of rentals is usually available to show you this potential. Also the less that the owners use the property and make it available for rentals the greater this potential. However, it is rare to get a rental to cash flow completely without putting a significant amount down.
If I were to purchase a second home in Crested Butte, how could it be managed in my absence?
There are several companies in the Crested Butte area that offer property management services. Sometimes the property manager is immediately on site; sometimes they are just a phone call away. Property management and its costs are always an important consideration when buying a second home.
What is a 1031 Exchange?
A 1031 Exchange is an IRS tax rule for deferring taxes on income and/or investment property. It is not necessarily an “exchange”, but you must “sell” one property and “buy” another “like kind” property within IRS guidelines. This is considered a very handy vehicle and there are time and value considerations, so check with your tax advisor.
What are the requirements for up-front funds for the purchase of a second home in a resort area?
Typically a Mortgage Company asks for 20-25% down, there are closing costs associated with the Title Company and the Mortgage Company of approximately 2-3% of the property value and you would want to have your intended purchase inspected by an engineer which would cost about $250-500.
What is a Transaction-Broker?
A transaction-broker assists the buyer or seller or both throughout a real estate transaction with communication, advice, negotiation, contracting and closing without being an agent or advocate for any of the parties. The parties to a transaction are not legally responsible for the actions of a transaction-broker and a transaction-broker does not owe those parties the duties of an agent. However, a transaction-broker does owe the parties a number of statutory obligations and responsibilities, including using reasonable skill and care in the performance of any oral or written agreement. A transaction-broker must also make the same disclosures as agents about adverse material facts concerning a property or a buyer’s financial ability to perform the terms of a transaction and whether the buyer intends to occupy the property. No written agreement is required.
What is a Seller’s Agent?
A seller’s agent works solely on behalf of the seller and owes duties to the seller which include the utmost good faith, loyalty and fidelity. The agent will negotiate on behalf of and act as an advocate for the seller. The seller is legally responsible for the actions of the agent when that agent is acting within the scope of the agency. The agent must disclose to potential buyers or tenants all adverse material facts about the property actually known by the broker. A separate written listing agreement is required which sets forth the duties and obligations of the parties.
What is a Buyer’s Agent?
A buyer’s agent works solely on behalf of the buyer and owes duties to the buyer which include the utmost good faith, loyalty and fidelity. The agent will negotiate on behalf of and act as an advocate for the buyer. The buyer is legally responsible for the actions of the agent when the agent is acting within the scope of the agency. The agent must disclose to potential sellers all adverse material facts concerning the buyer’s financial ability to perform the terms of the transaction and whether the buyer intends to occupy the property. A separate written buyer listing agreement is requierd which set forth the duties and obligations of the parties.
What is Title Insurance?
An insurance policy that agrees to indemnify the owner for defects in title caused by specific risks.
What are the hazards of lead-based paint?
For all homes built before 1978, all buyers and sellers are required by law to receive and read a pamphlet outlining the hazards of lead-based paint. Be sure to ask your real estate agent for a copy.
What are closing costs?
Closing costs are an accumulation of charges paid to different entities associated with the buying and selling of real estate. Some of the closing costs a buyer might encounter are: discount points, escrow fee, documentation fee, inspection fees and appraisal; for a seller real estate commission and title insurance premium are typically the largest fees. Check here for additional information.
What is the difference between “pre-qualified” and “pre-approved”?
If a buyer is “pre-qualified” it has been determined, with a loan officer, what price the buyer can afford based on the down payment, debts and the amount the mortgage company will approve for the mortgage. Being “pre-qualified” is only a determination of probable credit. If “pre-approved”, credit, employment and funds have been approved by the lender.