LOCK BEFORE WEDNESDAY

I’ve been saying for a while that higher interest rates are inevitable (which they are).

But like trying to time the arrival of a spring storm (an appropriate analogy this morning), because you know something is coming doesn’t always mean you’ll time its arrival to the second.

Consider this: we are in the process of planting about $1 trillion of “seed money” into our economy in the form of the stimulus package. This is the biggest spending bill in the history of the country, and it works out to over $2,500 for every man, woman, and child in America.

In my opinion, once this money starts to take root, the only thing that is going to grow “for sure” are interest rates – which will be going higher.

The next Federal Reserve meeting is Wednesday, April 29.

In terms of interest rates the Fed actually controls (namely, the Federal funds rate and the discount rate), the Fed can’t cut rates any lower than they already are.

But what investors will be watching for is the language the Fed uses in its commentary about the economy.

Everyone knows rates are headed higher. What we don’t know is when it will happen, and what will trigger the upward march.

Remember that the only interest rates the Fed actually controls are short-term and "overnight" rates - the rates banks charge each other for short term borrowing to keep their cash reserve requirements in line with government mandates.

Long-term rates (30 year mortgages, for example) are a product of the market, and pricing is based upon expectations about the future performance of the economy.

If the Fed cites positive news, long-term rates will bounce up. If the Fed doesn’t paint a cheery picture, my opinion is that rates will stay where they are.

But there are very few scenarios where I could see rates falling further.

That’s why, if it was my call to make, I’d be locking my interest rate today.

THE MARKET UNDER $250K - TIGHT AS A DRUM

Change is a fact of life. That can work for us, or it can work against us, depending on our attitude.

A year ago, it was difficult to sit with potential sellers and talk about their prospects for selling into the face of a foreclosure-ridden, discount-driven market where price was the only thing buyers (investors) cared about.

What a difference a year makes.

I mentioned to my networking group this week that “the big difference between a year ago and today is that, over the past year, we have gone from a market which was dominated by price shoppers to one that is dominated by home buyers.”

That’s a significant distinction.

Thanks to the $8,000 first-time buyer tax credit, interest rates in the 5% range and home prices that have already adjusted downward by 10 to 20% at the entry level, first-time buyers are out in droves.

And where investors only want to talk about price, first-time buyers are often more concerned with the window coverings, paint colors and the view from the back deck.

In other words, houses are selling again.

Last year, it was a pure price war, plain and simple. This year, it’s a beauty contest, and that means sellers (under $250,000) who have taken care of their homes have the best chance to obtain a “retail price” that we’ve seen in the past few years.

In January, there were 2.36 “active listings” to each one under contract under $250,000.

In February, it was 2.07.

In March, it was 1.93.

In April, it’s 1.67.

That includes the short sales, overpriced retail homes and “dead inventory” that always clutters the market. The absorption rate under $250,000 is just 2.57 months, which means at the current pace of sales, all homes in this price range would be gone in less than 3 months if no new homes were to come on the market.

The fact is, that under $250,000, the demand is through the roof.

If you own a home under $250,000 and you have been looking for a good time to sell, it’s right now.

Interest rates will go up, the tax credit will go away, and all of 2010’s first-time buyers are scrambling to buy today so that they can get the $8,000 incentive.

If you would like a current market analysis of what your home may be worth in this market, please call or email.

IMPORTANT DATES FOR COLORADO PROPERTY OWNERS

Property tax season is just around the corner.

I've had a number of responses (already) from the posting I did last Wednesday about how to appeal your property tax valuation if you feel the value has been inflated.

Here are some other important dates to track in the process:

May 1 - The Assessor mails a Notice of Valuation annually to real property owners along with an appeal form. The Assessor also gives public notice to all taxpayers concerning their rights to appeal the value placed on their property. Values are based on the Assessor's opinion of value as of June 30, 2008 and that values then follows the property for the next two years.

May 1 to June 1: Real Property Appeal Period - If you disagree with your property value, you have the right to file an appeal at this time. The Assessor must send the taxpayer a decision by the last working day in August. If you disagree with the decision the Assessor's office makes at this time, there is another appeals process that can be followed, which involves a hearing before the County Board of Equalization.

August 25 - The Assessor certifies the current total assessed valuation to each taxing entity in the county. That means schools, fire districts, "parks and rec" districts and other beneficiaries of tax revenue are given their projected revenues so that the budgeting process can begin.

December 22 - The County Commissioners levy taxes.

January 1 or as soon as possible thereafter - Tax bills are sent out. No later than January 10, the Assessor delivers tax warrants to the Treasurer.

Remember that, to file an appeal, you must provide information about comparable sales that reflect market conditions as of June 30, 2008. If there was a foreclosure or a bad comp on your street that occured after this, the Assessor won't consider it.

Please call me if you plan to file an appeal so I can help you make your case.

LEANING INTO "THE DIP"

It’s only 76 pages, and they’re little ones at that.

But Seth Godin’s “The Dip” is well worth the 60 minutes and two cups of coffee it will take to digest.

“If it scares you, it might be a good thing to try”.

The Dip is that place between success and failure, between starting and succeeding, between the fresh emotion of taking on a new venture and the hard realities of doubt and impatience.

“Quit the wrong stuff. Stick with the right stuff. Have the guts to do one or the other.”

I love to read, especially motivational or inspirational books that discuss life’s “recipes” for success. You will find that people who achieve success have many traits and experiences in common. One of them is The Dip, because almost everyone I have ever spoken to who has accomplished great things has hit it, and then fought through it.

“All our success are the same. All our failures, too.”

We succeed when we do something remarkable. We fail when we give up too soon. Persistence will not solve all of your problems, but it is the foundation upon which most success is built. I often tell people I am in the “problem solving” business, and that is true. Selling houses is a byproduct of solving problems. And solving problems is something we learn to do through experience and a commitment to listening intently to what people are saying. If I don’t hear you, I can’t solve your problem.

“No one quits the Boston Marathon at Mile 25.”

The Dip doesn’t come at mile 25 of your journey. It comes at mile 12, mile 15, mile 20… when finishing seems like it’s far off, and your labor doesn’t seem commensurate with your current circumstance. That’s when you have to commit to persevere. That’s when you have to lean into The Dip.

If hard things were easy, everyone would do them. Commit to doing some hard things this week. And if you would like a copy of “The Dip”, let me know. I liked the book so much I just ordered a dozen copies from Amazon to hand out to friends and clients who might need some encouragement. If it will help fortify your resolve, I’d be happy to send one your way.

PROPERTY TAX NOTICES COMING MAY 1 - LAST DAY TO APPEAL IS JUNE 1

Beginning May 1, county tax assessors throughout Colorado will be sending out a NOTICE OF VALUATION to every homeowner in the state. This document determines what you will pay in property taxes for the next two years.

If you disagree with the assessor's valuation of your home, you have a very limited window of time in which to protest or appeal.

Here are the actions you should take promptly upon receipt of your NOTICE OF VALUATION:

1) Examine the value assigned by the assesor's office. Is it correct? Or does it seem inflated?

2) If the value seems too high, call me and I can provide you with free recent comparable sales information to help determine if the valuation is correct.

3) If you choose to protest the assessor's valuation, remember that you have less than 30 days to formally appeal. All appeals must be filed by June 1 - with no exceptions.

HOW ASSESSED VALUES ARE DETERMINED...

Property tax assessments are made every two years in Colorado. In other words, on June 30 of even numbered years, the assessor's office takes a "snapshot" of what they feel your home is worth. Ten months later, on May 1 of the following year, they reveal this valuation to you in the form of your new tax bill, which is binding for the next two years unless you successfully appeal it.

Remember that the assessor will be basing the value of your home on data as of June 30, 2008. Property values in your neighborhood may have risen or fallen since that time.

Your tax bill is coming soon - if you decide to protest the valuation, please do not hestitate to get in touch with me. With overall tax revenues on the decline and government agencies hungry for funding, property owners may be in the crosshairs this year. Be ready to take action when your tax bill arrives.

NOW OR LATER? WHEN TO CLAIM YOUR $8,000 FTB TAX CREDIT

With the deadline for filing federal tax returns fast approaching, I have clients asking about whether 2009 buyers can claim their $8,000 tax credit on their 2008 tax return. The answer is YES.

Even if you don't close by April 15, you can still claim the credit this year. Read on to find out how...

The basic eligibility requirements for the credit are: the home must have been purchased on or after Jan. 1 and before Dec. 1, 2009; the buyer may not have owned a home in the three years prior to the purchase; and the buyer must have a modified adjusted gross income (MAGI) less than $95,000 for single tax payers or $170,000 for married filers.

Two factors affect the amount of credit qualified buyers can claim: it can only be equal to 10% of the purchase price of the home, up to a maximum of $8,000; and it is reduced for buyers with an AGI (adjusted gross income) of more than $75,000 for single filers, and $150,000 for joint-filers.

To claim the credit, buyers must complete IRS Form 5405 to calculate the amount of the tax credit, and enter it on line 69 of the IRS 1040 income tax return.

Qualified buyers have several options for when to claim the tax credit, but they can claim it only after the purchase of the home is complete.

Buyers who complete their home purchase prior to April 15, 2009, can easily claim the credit on their 2008 income tax return.

If the qualifying home purchase will be completed shortly after April 15, buyers can file an extension for tax year 2008 and claim the credit when they file their 2008 return, which must be done by October 15. Or home buyers can claim a qualified purchase on their 2009 income tax return, which they will file in 2010.

Some things qualified buyers should take into consideration when deciding whether to claim the credit on their 2008 or 2009 returns include how quickly they need the refund and their expected income for 2009.

For more information, visit http://www.federalhousingtaxcredit.com/, or give me a call and I'll put you in touch with a qualified tax professional.

WORDS OF WISDOM FOR FIRST-TIME BUYERS

First-time buyers continue to drive the activity in our market.

There are less than two active listings under $250,000 right now for each one under contract. Below $150,000, it's basically a one-to-one ratio. Half the homes on the market under $150,000 are under contract - the rest are either unrealistically priced, too beat up, or stuck in short sale pergatory.

The fact is, if it's clean, priced right and not next to the Interstate, it's probably under contract.

That's why HAVING A PLAN is so important right now.

If you are a first-time buyer, you need to do a couple of things in order to get the outcome you desire.

First, you must get pre-approved. This is not optional. In a multiple offer environment, sellers (often banks) want buyers who are rock solid. If you can't produce a pre-approval letter from a known, reputable lender, chances are it won't be you going under contract.

Second, I strongly encourage you to get together with your agent (preferably, me) for a serious heart-to-heart before you begin looking. Understanding how the real estate contract process works... understanding your rights and responsibilities as a buyer... and understanding how to deal with the competition in our market is critical to your success.

A well-written real estate contract protects you... a poorly written contract put you and your earnest money deposit at risk. If you don't understand what you are signing, don't sign.

Your agent should clearly explain the differences betweeen traditional resales, short sales, foreclosures, and HUD homes. The process for each is unique, and the strategies you employ will be different for each type of seller. Your agent should be able to clearly articulate how each of these types of sales works, and how your approach should differ from situation to situation.

Real estate agents are not commodities. They are a collection of ethics, experiences, expertise and problem-solving abilities. Some excel, some are terrible.

The agent you choose is as important as the home you buy... because if you select the wrong agent, your odds of ending up in the wrong home go up dramatically.

SURVIVING THE BLIZZARD OF 2009

It was about 12:40 this afternoon when I drove down the embankment off of Highway 36 at the Broadway exit, scrambling to get to off a completely gridlocked freeway and on to the frontage road alongside the highway so I could take my chances getting home via surface streets.

I followed a pickup truck, drawing courage from his successful navigation down a short bumpy hill and off the freeway, and by the time I left Broadway and turned on to 70th Ave I was feeling pretty unstoppable. Of course, it took another hour and 15 minutes to get home from there, but I had successfully freed myself from the snowy, gridlocked prison known this afternoon as the Boulder Turnpike.

What a day!

I had a closing scheduled for 4 p.m. this afternoon downtown, but with the bad weather blowing in and predictions calling for it to get worse during the day, I started things off this morning by coordinating an earlier closing and we all agreed to meet downtown at 10:30 a.m.

By 9 a.m. it was coming down in blankets in Arvada, but we were already committed and our closer was travelling up from Highlands Ranch to meet us halfway. In real estate, a closing is like a wedding, and there are so many moving pieces that must be aligned perfectly that cancelling or postponing is not an option we like to exercise.

By the time we finished signing our papers and completing the transaction, it was 11:30 and the snow was intensifying in Denver. By noon I was on I-25 and the snow was blowing horizontally, straight out of the north. I fiddled with the radio dial, without luck, trying to find a traffic report.

My Honda Pilot shook as gusts of wind blasted by, my frozen windshield wipers pushing smudge back and forth across my line of vision. I tried to lower the driver-side window to clean the windshield with my towel, but the window was frozen shut. The next time we came to a standstill, I got out of the car and did a rapid fire scrub on the windshield, which only helped a little.

Interstate 70 was completely shut down because of a 15 car pileup at Sheridan, so I continued north on I-25. The Boulder Turnpike had been the scene of a terrible pileup earlier in the day, but it was open now and so I figured I could take it for a little ways and then get off if things got bad. As soon as I exited I-25, the Turnpike came to a frozen stop. Thirty minutes and about 200 yards later, I made my run down the embankment.

Note to self for future blizzards: do not get on the Boulder Turnpike during a whiteout!

I made it home around 2 p.m. It took a little over two hours to go 17 miles, and I considered myself lucky.

I know there were thousands of others out there today who were suffering with me in the Blizzard of 2009. It was not fun.

But when the skies clear out and the spring sunshine returns tomorrow, we'll have one more two or three-day winter wonderland, giving my kids a final (?) chance to sled, slide and make snow angels in the backyard.

That's Colorado. Whether you love it or hate it, you always have to be ready for it!

ENDLESS REFERRALS

I just finished a book by Bob Burg called “Endless Referrals”. It’s not that referrals are new to me – cultivating and attracting referrals has been at the core of my business model for over a decade... but in the market we are in, and in the economy we are in, we all need to work on getting better at everything we do every day.

Many of you know I am very active with the Arvada Chamber of Commerce. Specifically, I meet with a group of business owners every Tuesday for lunch where we network, share information and work to build one another's business.

I gave about 15 copies of this book away last month because I think that learning how to cultivate referrals is absolutely essential to long-term success in any business. And one of the proven ways to generate referrals is to be a "giver".

Not a manipulative, calculating "giver"... no, that will never work.

Jim Rohn says that "we attract what we become". It's easy to roll over that comment and not get it... but I have internalized it to where it's part of who I am.

If you want to be surrounded by kind people... be kind. If you seek to attract honest, ethical people, you must become honest and ethical. If you want to work with well read people, be well read. If you desire to associate with compassionate people, be compassionate.

It's really a simple formula, and I have found over and over that my best referrals come from the people I have the most in common with. So work on becoming more, becoming better, becoming more humble, honest, and hardworking... and you will find that "Endless Referrals" isn't just a book title - it's a business model for long-term success and prosperity.

NEW APPRAISAL RULES FIGURE TO SLOW PROCESS

Inflated appraisals have been a huge issue in real estate for many years, and real estate commissions all over the country have had enough...

In response to complaints about too many appraisers being too cozy with lenders who routinely ask them to bring properties in "at the number" in exchange for more business, new regulations are coming soon that will force lenders to give up their existing appraiser relationships and, instead, order appraisals from "pools" of pre-screened appraisers who will not be permitted to have direct contact with the loan originator.

The two arguments against this are as follows:

1) appraisers who specialize in certain areas or certain types of properties will not be readily available to appraise in their areas of expertise, while those "out of their league" on certain types of properties will be asked to submit binding appraisals, and

2) this "appraiser pool" system will break down accountability between appraiser and lender and probably lessen the overall responsiveness of appraisers, who often will expedite appraisals or otherwise accommodate clients working off of tight timeframes for lender partners they know, trust and value.

The upside, in turn, is a perceived end to corrupt appraiser-lender relationships that are focused more on saving deals than protecting a buyer's interests.

In my opinion, however, the answer here lies with the consumer. If buyers do their research and choose to work with ethical, trustworthy lenders, these problems would not exist. I understand there have been plenty of not-so-ethical people in the lending and appraisal business, but any buyer should do some research on who he or she is dealing with before signing anything.

In the age of the Internet, there are very few secrets. Seeking out a personal referral from someone you know and trust is always the best way to find a competent service professional. Ratings agencies like the Better Business Bureau or a simple "Google Search" of a person's name or company may be all you need to do to get the answers you need.

Every piece of legislation always has unintended consequences, and while I'm sure there will be cases where shady appraisers are squeezed out of the market, we're all going to have to be prepared for extra delays and a few more headaches with some of our appraisals.

Since full licensing (with fingerprints and background checks) for mortgage lenders went into effect in Colorado two years ago, we've already flushed most of the cheaters out of our business. Now new regulations are just making it harder to do business.

ROCKY MOUNTAIN NEWS: DEATH OF A NEWSPAPER

As most of you know by now, the Rocky Mountain News ceased publication yesterday, two months after the paper's parent company announced it needed a buyer in 30 days to stay in business.

This story is interesting to me on two levels. First, back in the day (1992), I was a journalism major in college and spent two years working for a newspaper in Sacramento, California.

But second, and perhaps the more important lesson, is why the Rocky died.

Because of new technology, over the past few years I have cancelled my newspaper delivery, discontinued traditional "home phone" service and publish much of my own material electronically.

And while I thought the Rocky's website was decent, the reality is that the newspaper could not adapt fast enough to the changes in technology and to the changes in the economy.

Prepare for change.

That's about the best advice I can give to anyone. If you're a sole proprietor or an independent contractor, recognize that YOU are the product. You may be selling something, but the reality is that most people will make a decision on the SELLER before they decide on the service or commodity.

Rather than link to a story about the Rocky's demise, I thought it would be better to post this 45-slide photo gallery of Rocky employees as they gathered to hear the news on Thursday. Not pretty.

Remember that no matter who you work for or what you do, YOU are the product. I can't emphasize enough how important it is to devote some time and focus each day to looking for ways to become faster, smarter, healthier, better educated, more accountable and increasingly efficient.

Becoming a better product in the marketplace is the wisest thing you can do right now. Let the demise of the Rocky be a warning to us all...

MORE ON THE GOVERNMENT'S PLAN TO "STABILIZE" HOME PRICES

Yesterday I posted that Fannie and Freddie are getting ready to increase fees on mortgages. After hearing President Obama's speech yesterday on "stabilizing the housing market", you'll see why.

"A key element of the plan will allow up to five million borrowers who owe more than their home is worth to refinance through Fannie Mae and Freddie Mac."

If Fannie and Freddie are essentially going to agree to take on five million "bad loans", doesn't that significantly increase their operating costs?

"For those already in foreclosure (but not yet out of their homes), the federal government will provide matching funds to lenders to lower interest rates on loans. The plan requires that payments be no more than 31% of monthly income."

So if you owe more than your home is worth, but your payment is now affordable, aren't you just renting the home from the government until you decide to move, at which time you mail the keys back to the lender?

One section of the Obama housing plan that will require congressional approval for enactment would give bankruptcy judges added power to perform "cramdowns", or unilateral powers to renegotiate mortgage loans when borrowers go into bankruptcy. If this change to the bankruptcy codes is approved by Congress, get ready for a lot more bankruptcies over the next few years.

I'm not saying we shouldn't work on some kind of stabilization plan. I'm just saying this plan has a very high likelihood of driving interest rates up, which means that under the Obama plan future buyers are going to pay a large part of the price for mistakes that were made in the past.

That's why rates in the 5's RIGHT NOW are too good to pass up.