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Bundled Real Estate and Mortgage Services

A Convenient New Way To Save Big On Your Next Home Transaction

Bundled Real Estate and Mortgage Services; A Convenient New Way To Save Big On Your Next Home Transaction

Consumers benefit when service providers reduce costs by combining products and services in a convenient package. Many businesses offer package deals such as how AT&T bundles cell phone service with home Internet service.

Now the Realty & Finance Team brings consumers a unique kind of savings and convenience with bundled real estate and mortgage services. We guarantee it will be the most simple, least costly approach on your next real estate transaction.

One expert point of contact addresses all your real estate and mortgage concerns and brings it all together seamlessly, giving you crystal clear clarity so you can make good decisions quickly and take advantage of home opportunities.

Your convenience is built in at every step saving you loads of time throughout the process. There are many instances where one point of contact can greatly reduce the minutia and keep things moving along smoothly and rapidly.

The cost savings associated with our bundled services program is significant and we guarantee you will not find a better alternative in the marketplace. Our mortgage loan rates are super competitive if not the lowest available, giving you as much buying power as possible.

The consumer empowerment through bundled services is undeniable, and we are excited to bring this unique opportunity to you. We’re here to give you the best service you’ve ever gotten. We’re here to save you time, save you money, and eliminate the stress normally associated with the traditional approach.

We can quickly help you evaluate a transaction from A-Z, all things considered, mortgage and real estate, so don’t hesitate to reach out and tell us what’s happening and get some help.

For more details about our bundled services program, visit our information page on our website at

Thank you for your interest, reach out anytime if we can help.

Colorado Landlord / Tenant Legislative Update

Colorado Landlord / Tenant Legislative Update

January 10th, 2024

Navigating the Unintended Consequences: How Colorado's New Housing Policies May Worsen The Rental Crisis

In the quest to enhance tenant rights and ensure fair housing practices, Colorado has recently enacted a series of progressive legislative measures. While these laws—ranging from the Warranty of Habitability Expansion (HB23-1254) to Eviction Protections (HB23-1120) and Tenant Rental Qualifications (SB-184)—are well-intentioned, there's a growing concern among property owners and real estate experts about their potential impact on the availability of rental housing stock. It's essential to examine how these policies, though aimed at protecting tenants, might inadvertently constrict the supply of rental properties in Colorado.

The Warranty of Habitability Expansion places stringent requirements on landlords to address environmental public health events swiftly. While ensuring safe living conditions is paramount, the tight deadlines and severe penalties could deter small-scale landlords from renting out their properties. The fear of not meeting these rigorous standards and facing legal repercussions might encourage property owners to opt for other forms of real estate investment, reducing the number of rental units available.

Similarly, the Eviction Protection law, which mandates eviction mediation for tenants receiving government assistance and requires specific disclosures regarding the source of income, adds complexity to the eviction process. These added layers not only increase the administrative burden on landlords but also extend the timeframe for resolving tenancy issues. This could make landlords more selective in tenant screening, potentially leaving some high-risk tenants without housing options.

Tenant Rental Qualifications, particularly the income and credit score requirements for tenants, present another challenge. While these laws aim to protect tenants from discriminatory practices, they might also lead landlords to seek "safer" tenants to avoid the risks associated with non-payment or eviction. This shift could lead to a situation where landlords prefer to leave properties vacant or convert them to non-rental purposes rather than navigate the complexities and risks associated with renting.

The introduction of "Source of Income" as a new fair housing-protected class and regulations around Portable Tenant Screening Reports are similarly double-edged swords. While they promote inclusivity and ease in tenant screening, they also impose additional administrative and legal responsibilities on landlords. This increased burden could dissuade potential landlords from entering the market or prompt existing ones to exit, reducing the overall housing stock.

Furthermore, regulations around pet expenses and environmental hazards, though crucial for tenant welfare and environmental safety, add to the cost of property maintenance and compliance. Small landlords, in particular, may find these costs prohibitive, leading them to sell their properties or convert them to other uses, thus reducing the rental stock.

While Colorado's new housing policies are a commendable effort to protect tenants and ensure fair housing practices, they also carry the risk of unintended consequences that could constrict the rental housing market. It's vital for policymakers to strike a balance that protects tenants' rights while also encouraging property owners to continue offering rental housing. Without this balance, the noble intention of these laws often paradoxically lead to a reduction in housing stock, making it even more challenging for Coloradans to find affordable rental homes.  That's not helpful for tenants.

For Landlords, the heart of the matter is the Fifth Amendment to the U.S. Constitution, which states that no person shall be deprived of life, liberty, or property without due process of law, nor shall private property be taken for public use, without just compensation. The stringent requirements imposed by the new laws, may be construed as taking private property for public use.  Particularly the Warranty of Habitability Expansion, could be perceived as an encroachment on landlords' property rights. The strict timelines for addressing environmental health issues and severe penalties for non-compliance may disproportionately impact landlords, especially those with limited resources.

Moreover, the Eviction Protection law introduces complexities in the eviction process, potentially extending the duration during which a landlord cannot regain control of their property. This could be viewed as a challenge to the Takings Clause of the Fifth Amendment, where prolonged inability to evict non-compliant tenants might equate to an undue deprivation of a landlord's use of their property.

Additionally, the Tenant Rental Qualifications law stipulates income and credit score criteria for prospective tenants, which could limit landlords' discretion in selecting tenants. This intrusion into the decision-making process of property owners might be seen as infringing upon their liberty to contract, a right implicitly protected by the Constitution.

The introduction of "Source of Income" as a fair housing-protected class, while promoting inclusivity, also imposes restrictions on landlord preferences in tenant selection based on stability of income. This could be construed as a limitation on the freedom of landlords to manage their financial affairs without undue interference from the State, which is a liberty interest recognized by the Constitution.

Furthermore, the regulations surrounding pet expenses and environmental hazards, though important for public welfare, impose additional financial and administrative burdens on landlords. These obligations might be seen as impinging on the fundamental principle of economic liberty, where property owners are free to manage and utilize their assets with minimal state interference.

In conclusion, while the intention behind Colorado’s new housing laws is to foster fairness and safety in the rental market, there is a need for careful scrutiny to ensure they do not infringe upon the constitutional rights of landlords. It is essential for policymakers to consider the constitutional implications of such regulations and strive for a balanced approach that respects the rights of both tenants and property owners. Only through such a balanced approach can the objectives of social welfare and constitutional liberties be harmoniously achieved.

Here's a breakdown of the key landlord and tenant regulations recently passed in Colorado:

These regulations encompass a range of legal requirements and protections related to habitability, eviction, rental qualifications, fair housing, tenant screening, lease agreements, pet expenses, and environmental hazards. For landlords and property managers, it's crucial to understand and comply with these regulations to ensure lawful and ethical management of rental properties.

You can access the full text and details by visiting the Colorado General Assembly website and searching for the specific bill numbers (e.g., HB23-1068, HB23-1095, etc.)​​.

Contact Ally Realty & Finance at 720-432-1030 For Assistance.

Renting vs. Buying in the Current Market 

The future is not certain but it is predictable. The supply and demand of active listing inventory is the biggest story in the real estate market—and potentially for the foreseeable future.

October 31, 2022

Metro Denver home prices increased
$94 per day for a decade, study says

Boulder ranked 7th in the country for its average daily home price gain of $107 between
2011 and 2021. Denver ranked 10th out of 187 metros with a daily gain of $94.

October 17, 2022

State Sponsored Homelessness

MARCH 24, 2022

HB 22-1287; State Sponsored Homelessness

Mobile home parks to be legislated out of business in Colorado 

House Bill 22-1287; State Sponsored Homelessness

With rent prices skyrocketing throughout Colorado, legislators aim to make the problem worse.

Rent control sounds like a good idea until you realize it spreads homelessness.  If this legislation passes, expect a decline in one of the most affordable housing options in Colorado, along with more tent cities coming to a location near you.

What is in HB 22-1287: Concerning Protections for Mobile Home Park Residents?

State lawmakers from Northern Colorado, dismayed by changes in local mobile home parks, are proposing a sweeping new bill that would include the first statewide mandate for rent control.  Here is a link to the full bill (HB 22-1287).  

Below is a summary of some of the key provisions.

-Cap annual rent increases to 3%

-Give Residents the opportunity to purchase their parks: this will allow residents 6 months to make an offer.

-Cities will have the right of first refusal on a purchase.

-Require landlords to pay each household $7500 to $10,000/unit or higher to shut down a mobile home park to cover the high cost of moving a mobile home:

-Require a landlord who changes the use of the land comprising the park to compensate a mobile home owner who has not given notice to terminate the lease or rental agreement and who is displaced by the change in use for the reasonable costs of relocating the mobile home to a location within 100 miles of the park, the fair market value of the mobile home before the change in use, or in the amount of $7,500 for a single-section mobile home or $10,000 for a multi-section mobile home.

-Allow a resident, local government, or a nonprofit to file a complaint with the division under the dispute resolution program Impact to property owners.

What are the impacts to property owners from this new bill?

Below I’ve gone through each of the five changes to highlight the impact to property owners

-Rent increases: Capping the rent increases to 3% over inflation will disincentive any repairs to the property and future purchases/construction.

-Right of first refusal owners: This will slow the process of mobile home parks down and individual owners could use this tool to derail other sales.

-Right of first refusal cities: Imagine all the money and effort that goes into putting a deal together only to have the deal squashed by the city.  Way too much power!  Remember, absolute power corrupts absolutely, they should not have this power over private transactions.

-10k/+ unit to shut a park: This will have an enormous impact on owners as they will be “stuck” with a park that they can’t redevelop.  I could see this tied up in litigation as it is considered “taking” of mobile home property rights and there is considerable ambiguity in the compensation for the displaced resident.

-Non profits and others allowed to submit claims: As more people submit complaints to mobile home parks, the profitability will decline even further.  Unfortunately rents cannot be raised to account for repairs/updates which will force owners to do the bare minimum.

-There are a number of other provisions in the bill that will further increase costs for mobile home park owners; for example: a landlord is responsible for the cost of repairing any damage to a mobile home or lot that results from the landlord’s failure to maintain the premises of the park. Let’s say there is a sewer backup somewhere in the system and sewage backs up into the mobile home premises, the park owner would be on the hook for this even though it is not directly there fault (let’s say the user of the mobile home flushed wet wipes down a toilet causing a blockage somewhere in the line).  The potential costs for park owners will be large.

Law of unintended consequences

Unfortunately the intent of this legislation was well intentioned, but the impact will do the opposite.  With strict caps on rents there will be less investment in this property type as owners cannot amortize the repairs in rent. Furthermore with payouts to owners to redevelop properties, this will further restrict investment in new parks.  Here is an example of the unintended consequences from a CPR analysis:

John Victor, who co-owns four mobile home parks around Colorado, said that he targets rent increases of 3 percent — the same limit the bill would set. But he said that rent control would endanger his parks and others. With limited revenue, owners couldn’t respond to urgent needs, he said.

For example, state regulators recently ordered Victor and his sister to replace the septic system of Pinon Pines, a park in Buena Vista. The system had been installed by previous owners only a few years prior, but apparently didn’t meet current standards, Victor.

Replacing the system could cost up to $1 million — close to what the siblings paid for the entire park. Without the ability to raise rents, it could be “goodbye, park,” he said. 

“We don’t like rent raises. Rent raises are painful. The rent raise allows the community to continue to operate in a safe manner. At the end of the day, if you handcuff people you won’t even have a community to complain about anymore,” Victor added.

What does history tell us about the effects of rent control?

According to the Brooking institute, a liberal leaning organization:

DMQ find that rent-controlled buildings were 8 percentage points more likely to convert to a condo than buildings in the control group. Consistent with these findings, they find that rent control led to a 15 percentage point decline in the number of renters living in treated buildings and a 25 percentage point reduction in the number of renters living in rent-controlled units, relative to 1994 levels. This large reduction in rental housing supply was driven by converting existing structures to owner-occupied condominium housing and by replacing existing structures with new construction.

Long and short, study after study even by liberal organizations confirm that rent control does just the opposite of its intention by reducing supply. 


The real solution would be to make it easier to build mobile home parks and increase supply, but unfortunately the not in my backyard group staunchly oppose this option.


HB22-1287 is not the answer.  We need more supply of lower cost housing, not less.  Unintended consequences from this legislation will reduce supply by eliminating more mobile home units, restricting further development and hurting the constituents the bill was meant to protect.  Furthermore existing mobile home parks will have their values substantially reduced as rents cannot be increased even to cover basic repairs.  If this legislation passes look for a decline in one of the most affordable housing options in Colorado.

Written by Glen Weinberg

Contact Information 

voice/text at 720-432-1030.

Flipping Profits

JANUARY 16, 2022

Flipping Property For Profits

How To Successfully Find, 100% Finance, and Flip Real Estate in Colorado 

Flipping Property For Profits

How To Successfully Find, 100% Finance, and Flip Real Estate in Colorado

Sponsored by Ally Realty & Finance

Colorado’s Most Flexible Private Real Estate Investment Lender

Real estate; the diverse range of functional and financial utility makes it like no other investment.  An investment that has outperformed the stock market over the last 4 decades deserves some serious consideration as a wealth creation vehicle.  Yet finding success in this business can be very elusive, or even ruinous, without the right knowledge and relationships.  

Typically, the most challenging thing about getting started in property development is having a reliable source of funds, especially when experience and large cash down payment are lacking.  Not having a good lending relationship makes the process sluggish and causes hesitation when decisiveness is required.  Most real property lenders (hard money lenders) need a large margin of safety to make a deal work.  They require too much cash from the borrower at closing while deriving their profits from expensive monthly payments, when that cash is sorely needed in other areas of the project.  Mortgage Money Inc is a different kind of lender, and we solve these challenges through the most unique hard money lending solutions in Colorado.  Solutions we know the investment community will find refreshing, and the kind of financing needed for today’s competitive environment.

This article attempts to walk investors through the process of acquiring 1-4 unit residential properties below market, improving and reselling for a profit.  

“This from the perspective of an experienced private real

estate investment lender with money to lend in Colorado.”

The following is based on our processes, experiences and protocols and doesn’t necessarily apply to other lenders.  Let’s get started.

Setting Up For Success

Start at The Exit

The whole process of acquiring property below market, improving and reselling in a short period of time for a profit, otherwise known as “flipping”, begins with the exit strategy.  Start the process by identifying a property that appears to have profit potential and begin to determine what the likely value of the property will be after improvements have been completed.  In order to accomplish this correctly and avoid valuation problems with the re-sale, it’s important to have a basic working knowledge of appraisal guidelines.

Appraisal Guidelines

Appraisal guidelines matter because they will restrict the next buyer of the subject property, assuming they will be financing the purchase, to a justifiable appraisal value based on those guidelines.  Government Sponsored Enterprises such as Fannie, Freddie, FHA, VA, ultimately own or insure most of the mortgages in the U.S.  The GSE’s have specific guidelines with regard to how they want their appraisals prepared, and any bank that sells a mortgage to them must follow the protocol.  

There are three primary criteria that will serve to keep investors within the lines when analyzing and choosing comparable sales:  1) physical features, 2) location, and 3) date of sale; and not necessarily in that order.  Select comparable sales that have the best combination of those criteria.  Date of sale means applying more credibility to a more recently closed sale over an older one; typically within 6 months or less, but use the most recent.  Physical characteristics means the most similar, for example when valuing a ranch style floor plan, do not compare with a 2-story, tri-level, or bi-level when other ranch style plans are available for comparison. Similarity includes square footage; choose comps within 20% larger or smaller than the subject property, and then adjust for differences greater than 100 square feet.  Location or proximity; real estate values are hyperlocal, do not go outside of a 1 mile radius from the subject property unless nothing appropriate is available within the 1 mile radius, and furthermore a comparable sale ¼ mile away is better than a comparable sale ¾ miles away.  Choose comparable sales that need the least amount of adjusting by the appraiser because they are so similar to the subject property.  Utilize these governing criteria in the selection of the three primary comparable sales for the purpose of deriving the AIV or After Improved Value.  Like an appraisal, the AIV must be based on credible sales data with the exit strategy in mind; meaning if the next buyer can’t get the appraised value to match what they paid, someone has a problem.

Collateral Underwriter

Adding to the complexity of mortgage loan underwriting, beginning January 2015, Fannie Mae introduced “Collateral Underwriter” or CU, an appraisal risk assessment application developed by Fannie Mae to help loan underwriters assess appraisal quality.  CU provides a numerical risk score from 1.0 to 5.0, with 1 indicating the lowest risk and 5 indicating the highest risk based on a combination of physical features, location, and date of sale.  Features such as square footage, lot size, bathrooms, quality, view, etc. are also considered.  Flags and messages identify risk factors and specific aspects of the appraisal that may require further attention.  CU will integrate with automated underwriting systems such as Desktop Underwriter beginning in April 2015.

Suffice it to say, investors and developers should be aware of the increasing scrutiny and regulation of appraisal guidelines which may ultimately affect the end buyers ability to finance the property.  It’s a well known fact that suppressing lending lowers property values.  To avoid problems, keep all this in mind when planning the resale price of a flip, or it may indeed flop.  

Determining Feasibility

Analyzing the deal for Profit Potential

After compiling a list of prospective properties for purchase consideration, separate the winners from the losers by analyzing the profit potential for each opportunity.  Generally, the property should be acquired for no more than 60%-80% of the After Improved Value to make the flip successful.  For negotiation purposes, it’s best to identify 2-3 opportunities at a time rather than just one.  There are four categories of expense to analyze including acquisition, improvements, holding, and divestiture.  Let’s take a look at each individually starting with divestiture, or resale of the property.

Determining the AIV (After Improved Value) for Divestiture

In accordance with appraisal guidelines mentioned previously, select the three comparable sales most applicable to the subject property, with one exception; condition.  The goal is to derive the value of the subject property after it has been remodeled and improved, so select comparable sales that are in the same condition as the subject property will be after it’s improved.  Make adjustments as necessary to the comparable sales to equalize them with the subject property, and then derive from that the anticipated After Improved Value of the subject property.  This is the net resale price for purposes of divestiture. 

Calculating Purchase Price

Once the AIV has been established, deduct from the AIV the other categories of expense; acquisition, improvements, holding, and divestiture, to arrive at the optimal purchase price for acquisition of the property.

Acquisition Costs

Expected acquisition costs include physical inspections to determine the safety, structural soundness, and functional utility of the property, as well as title insurance and recording fees, appraisal, survey, and attorney’s fees if applicable.


Improvement costs can swing widely depending on condition, renovation plans, construction materials and labor availability among other factors.  This part of the process is where many investors sink themselves by having no real idea of what it’s all going to cost.  Start by walking the property with a smartphone or digital recorder.  Imagine the property in its’ after repaired condition and begin recording everything that needs to be done to affect that AIV condition, room by room, area by area, inside and out.  Be sure and record everything that may need to be addressed.  If possible bring along a contractor, four eyes are better than two.  Take the recording back to the office and begin entering the recorded data item by item into the designated place on the spreadsheet.  Also enter the estimated costs of each item if known; if not known, enter each item for which the cost will be estimated later.  The important thing at this stage is to get everything on the spreadsheet that may need to be addressed and hopefully leave nothing out.

Holding and Loan Carrying Costs

Depending on the structure of the acquisition financing, there may be monthly payments required while the property is being renovated and marketed for resale.  These holding costs may include principal and/or interest payments on the loan, builders risk insurance to cover hazards and loss, property taxes and owner’s association dues.


Next, analyze the cost of divestiture, which is what will it cost to sell and get out of the property.  Typical expense would include an owner’s title policy, property taxes, real estate commissions, seller-paid closing costs on behalf of the buyer, and attorney’s fees if applicable.  It will be helpful to ask the title company to get involved early and prepare a settlement statement to work from.

Analysis of Risk and Reward

Utilize all this information by entering it into a spreadsheet for comprehensive analysis to determine if the property will meet investment goals on risk and rate of return.  “Rehab Valuator” is the best free software I’ve found for this purpose and is the one I use. 

Start by considering what kind of return is being realized on other investments.  How does the proposed return on this property compare?  How high is the risk tolerance of the investor?  How much time and money will be invested for a particular rate of return and is that acceptable?  These answers will vary between investors.  It’s important to identify in advance what return on investment is acceptable because it helps to avoid over compromising objectives in the heat of a competitive moment.  What kind of return and risk one investor accepts will differ from the next, so it’s a personal choice that needs to be identified early and stuck with.  The ultimate test of expectations will be determined by one’s ability to make deals.

Real Estate Investment Financing From Mortgage Money, Inc. 

Working Mortgage Money Inc.  

Mortgage Money Inc. has a targeted preference or appetite for the type of loans we prefer to do based on our unique business model.  In accordance with shareholder mandates, we target a certain range of return on investment (ROI), and this tends to put our loans in a higher risk category than other lenders in this particular market space.  Similar to a “sub-prime” category in traditional lender parlance.  

Borrowers come to Mortgage Money, Inc. for loans that are too risky for other lenders; they come to MMI for customized unique lending solutions; for quick turn around and funding; for transaction rescues, for 100% financing of acquisition, improvements and carrying costs; for a high level of expertise in both lending and real estate; for experience they may lack; for a relationship with a “money guy” that is reliable and predictable and feels more like a partner than a bank; they come to Mortgage Money Inc. for flexibility, common sense underwriting, and higher Loan-to-Value-After-Improvements (LTVAI) than any other lender in town.  We don’t compete for those very safe types of loans with money down, good credit and monthly payments; our product is more niche.

Loan Pricing

The first question most developers ask is “what do you charge” or “send me your rates”.  That’s a fair question, so let me simply answer it this way; our shareholders require that we yield between 10-15% return on funds lent.  The range between 10-15% depends on risk factors in the deal such as Loan-to-Value After Improvements (LTVAI), loan structure, property characteristics, location, experience, repeat business; the more risk, the higher return required.  We achieve the ROI requirement in three ways; discount points, interest rate, and yield spread (percentage of profits shared at resale).  Pricing is allocated and balanced between these three revenues based on the individual needs of each borrower to create a highly customized lending solution.  Private lending of this nature is property specific, so what we charge depends quite literally on the property and the structure of the deal.  Often we can finance the acquisition and improvements all while not requiring any loan payments for the duration of the term.  This is what makes Mortgage Money, Inc. different from private hard money lenders that underwrite to the borrower's credit and capacity to repay, and require monthly payments and cash down for both acquisition and improvements.  We also have very unique ways of reducing risk and that enables us to further lower the cost of borrowing.  For a specific pricing quote, submit here:

Collaboration With Lender

Lender Proposal  

If the property will not be acquired with cash, it’s time to engage with a lender.  Prepare a proposal on the rehab spreadsheet and submit it to the lender for consideration.  The spreadsheet will communicate the financial aspects of the deal and clearly illustrates what each party stands to gain.  Be realistic, don’t expect to make all the money while taking no risks and not putting any money into the deal.  Understand that while finding the property is crucial to the transaction, so is the funding and you can’t do one without the other.  The lender will be taking substantial risk, typically more than others involved, and will need to make a reasonable return as well.

Planning and Refinement

If the investor and the lender have communicated well in the previous stage, and both parties are interested in proceeding, the next likely step is to meet at the property and continue the discussion.  The main purpose of the meeting is to determine if the lender will loan on the property and firm up the specifics of the improvement plan.  The lender will want to get a visual fix on the current condition while the investor communicates what it is they plan to do during the improvement process.  This is particularly important if the lender will be financing the improvement costs, because the construction draws for those improvements will be tied to specific milestones identified in the scope of work plan.  It’s important to develop a realistic improvement plan based on an appropriate budget and stick to it, because change orders are expensive and cause unnecessary delays.  

Depending on the experience level of the investor, they may want to collaborate with an experienced lender, or a real estate professional skilled with investment properties, to determine the best course of action with the property in order to achieve the highest sales price combined with lowest possible improvement costs.

Collaboration / Lender Proposal / Agreement 

Discuss the key aspects of the deal such as the risks, time to completion, structure of the financing, rate of return, and then propose conclusions to the lender and request a loan based on the terms needed to achieve the desired rate of return.  This proposal may be acceptable to the lender, or the lender may adjust the terms and counter propose to the investor for consideration.  Evaluate the proposal and come to terms under a mutually acceptable financing agreement and move forward.

Title Vesting / Taxation  

Be sure and discuss title vesting with the lender during the collaboration process as this may change the risk profile of the deal.  Some lenders do not lend to companies and trusts, others want a personal guarantee, some lend only to individuals.  The art of limiting risk through various title vesting strategies is beyond the scope of this article, but I encourage investors to consult competent counsel for advice.  William Bronchick is a well known attorney in the Denver area specializing in this kind of law, and I have used his services and came away satisfied.

Property Acquisition

Contracting for Property Acquisition 

Writing a winning real estate contract is both an art and a science.  A well written contract communicates experience, low hassle, fair dealing and professionalism; all of which are characteristics any buyer or seller would want present during the process of transacting real estate.  Start by crafting the contract around the needs of the seller in exchange for the right price and terms.  If possible, make the contract assignable so as to keep the most options available.  Arrange dates and deadlines to flow efficiently by grouping them according to related contractual actions.  For example, group delivery deadlines together for things such as title work, owner’s association docs, seller disclosures, insurance and due diligence documents, while grouping objections to those items closely together.  Group survey and inspection, and possibly the appraisal dates together, and so forth.  Are there contingencies that can be waived to make the contract more attractive?  Would a large earnest money deposit impress the seller? If there is competition for the property, would a price escalation clause make sense?  What about a Specific Performance guarantee; most buyers are too afraid to choose this option, so that creates an opportunity if the deal is right.  Have a strong “proof of funds” letter from a bank, or if financing with a private lender, obtain a letter that will show pre-approval for a loan and have one of those accompany the contract when it is submitted.    

Inspections / Due Diligence

It is important to complete inspections and due diligence as soon as possible after going under contract.  Discover everything possible early in the process.  Regardless of the contingencies which may have been waived to get the deal, I recommend completing crucial inspections anyway.  For negotiation purposes, submit your findings in writing to the seller and copy interested parties.  This can serve to put the seller in a position where they will have to disclose known defects or risk possible litigation later, and it may help massage the negotiations.  It’s better to lose $1,500 in earnest money than lose $15,000 to a bad sewer line.  Always remember the next buyer will very likely conduct a complete inspection for general issues, sewer scope and radon gas levels at minimum, so know what they are going to find and be prepared to deal with it.  Other due diligence might include warranties, building plans, construction permits, surveys, prior inspections, radon tests, soil reports, engineer reports, documents from an HOA or notices from city, county or state governments, current leases and amendments or other occupancy agreements, and other issues that may require investigation.

Construction Bids / Verifications  

The best way to limit labor and material expenses to ensure the project comes in as budgeted is to obtain multiple bids.  Create a clear, concise, detailed improvement plan and put it out for bids.  The more detailed the scope of work, the more leverage the developer will have with contractor’s.  Let all participants know they are competing for the job.  After obtaining and comparing bids, are there opportunities to utilize the best of each bid?  Take some time to verify material costs and do a “make-sense” check on labor.  For example, x price for x number of laborers for x amount of time should approximate a reasonable labor cost per worker per hour.  This helps to avoid paying rock layers like rock stars.  I recommend separating labor and materials and purchasing those materials directly.  Some contractors don’t like to break it all down, partly because they don’t like paperwork, but sometimes it is because the more detail given, the more the developer can hone in on the actual labor costs.  Some will claim they can get materials at a lower cost and so the developer should allow them to handle materials as well; which may or may not be true.  Look for ways to develop long term reliable relationships with these bidders.  Negotiate for win-win, but stay in budget.   If the developer will be directing the construction process, pay attention to the personality mix and styles of those who will be communicating with each other often.  Along with financial strain and delays on the project, it can cause a sense of panic if a contractor walks off the job because they can’t get along with the developer.

Title Insurance Commitment 

Obtain a title insurance commitment from a reputable highly rated carrier.  Developers reselling the property in less than one year can typically qualify for a “Hold Open” Title Insurance Policy, which allows them to hold the policy open until the end buyer closes on the resale.  This saves a bit of time, but mostly money, because for a nominal extra fee at the acquisition closing, the developer can avoid paying the full cost of two policies.  The Hold Open Policy option is less costly than a reissue rate as well.  Like every insurance policy, review carefully and understand the requirements and exceptions for coverage.  The best title companies will have legal counsel available for questions and solutions upon request at no additional charge.

Risk Insurance 

Builder’s Risk Insurance is a crucial part of the development process and must be obtained by the borrower and approved by the lender prior to closing.  Builder’s risk insurance differs from a typical hazard insurance policy by insuring the structure and building materials while under renovation and while being unoccupied.  Insure the property for the full value after renovation, and add to that the potential costs of demolition and debris removal, which is costlier than most realize. 

Loan Package Submission and Underwriting 

Documents typically needed for underwriting include purchase agreement and all related seller disclosures, appraisal or value analysis, engineering reports, short term resale profit analysis with long term rental contingency plan, scope of time and work budget with material and labor breakdown, improvement contract with contractor’s, copy of contractor’s liability policy, documentation of experience through prior projects completed, title insurance commitment, builder’s risk insurance binder with paid receipt for one year in advance, borrower credit report and copy of driver’s license.  For best efficiency, all documents should be submitted at one time, all together.  The verification and underwriting process will typically take 48-72 business hours in most cases. 

Closing Setup  

Once the loan is approved the lender will send the loan closing documents and a breakdown of the financial figures to the title company for settlement statement preparation.  The statements are then prepared by the title company and sent back to and approved by the lender prior to distribution to other parties.  Once all parties have reviewed and approved the settlement statements, the closing can take place.

Acquisition Closing.  

The closing date and time are typically designated according to the purchase contract.  Colorado is a “wet funding” State meaning the parties must have certifiable “good funds” at the closing table or the closing cannot not take place and the party not presenting certified funds may be in default under the purchase contract.


Once the borrower has signed all relevant documents, the title company will prepare a funding package which will be sent to the lender to evidence all documents have been executed according to the lender's instructions.  Upon review and approval of the funding package, the lender will authorize funds to be released and the title company may then disburse funds, close the transaction and record the documents.


Improvement Permitting 

Most building projects in the City and County of Denver including new construction, remodeling and repairs require a building permit plan review to evaluate the project before permits are issued.  There are some instances where only a trade specific permit or a quick permit is issued with no review required.  When a building permit plan review is necessary, plans are reviewed in one of two ways; as a ‘same day / walk-in review’ or as a ‘log-in review’.  The type of review required depends upon the value and complexity of the project.  Projects that qualify for a same day review have a total construction value less than $300,000.00 and do not require approval from any other agency.  Log-in project reviews, both main and intermediate, require approval from each reviewing authority; architectural, structural, mechanical, plumbing, electrical, fire and wastewater for issuance of a permit. 

Construction Plan Execution  

Improvements must be executed according to the scope of time and work plan in order to keep the project on track and eligible for subsequent construction draws.  Care should be taken to avoid change orders once improvements have begun as they are costly and time consuming and are often opportunities for the contractor to charge higher fees.

Construction Escrow Draws 

Construction draws are disbursed by pre-determined stages of completion in accordance with the scope of time and work plan.  Once a milestone has been reached, the project is eligible for additional escrow draw to propel it to the next stage, and so forth until the project is complete.  Receipts for materials and invoices for labor must be submitted to the lender for approval in advance.  Lien Waivers must be obtained from the contractor’s receiving payment and must indemnify the owner against sub-contractor’s leining the property as well.  The lender’s representative will walk the property to verify all the components of the milestone have been reached and then the escrow disbursement check can be cut.  It’s important to note construction escrow draws are additional funds lent on “real property” and not for “materials and labor” and so the milestone has to be completed in order to be eligible for additional escrow funds.  

Inspections; Lender / County  

Inspections will be conducted by the lender and building authority.  The lender inspects the property for conformance with the scope of time and work plan for construction escrow draws, while the building authority inspects the property for conformance to building code regulations.  Both require a 24-48 hour notification period.  

Cleanup / Listing Prep / Staging  

Once all the improvements have been completed, the property should be professionally cleaned to make everything sparkle and smell fresh.  Staging a home can make a significant difference in the resale price and is usually worth the cost.  Like any well promoted product, presentation is immensely important, exterior aesthetics, or ‘curb appeal’ is equally important.  Touring new home builders’ models in the area gives one a sense of professional product presentation for staging and showcasing a property.  Finally, take well-lit higher resolution photos showcasing all the features and benefits of the property finishes and fixtures.  Like staging, a professional may be in order to vividly capture the essence and experience of living in the property.


Listing for Resale  

Since cost can also be measured in terms of lost value, i.e. a lower sales price, having a concise and effective marketing and exit strategy is crucial to achieving the highest price.  The best way to achieve the highest price in the shortest amount of time with the least amount of cost and hassle is to list the property for sale with a professional Realtor®.  High exposure is key to getting not only the highest offers, but multiple offers simultaneously, a market dynamic which goes a long way to ensure the seller has captured the highest price possible.  Further, third party negotiation is a proven and effective method of achieving goals and objectives with less compromise.  The value created by a good Realtor® will exceed their cost and thus makes good financial sense.

Pricing for Advantage  

Pricing the property correctly is one of those very valuable services a Realtor® can provide.  Pricing too high, means taking less over a longer marketing period while pricing too low means leaving money on the table now; either way is a loser.  Price correctly and sell for the highest price in a shorter time frame.  Further, the first couple of weeks on the market are the most critical in achieving a high price, so it must be priced correctly in order to hit that target.  Bottom line; price it competitively within its micro market and realize a better profit margin when you sell.  

Contracting for Resale 

Having received multiple offers or just one offer, it’s crucial to accept the right offer the first time.  Focus on the financial strength of the buyer and their ability to close and less on who is offering the highest price.  Interview the buyer’s lender to find out how far along in the underwriting process they are.  Has the lender ‘verified’ income and asset documents for down payment, work history, does the credit and debt ratio profile meet the underwriting requirements of the loan program, have they actually run it through the computer and what was the outcome?  What if the appraisal comes in lower than the contract price, does the buyer have additional cash to solve the problem if they need it?  When choosing consider that more down payment means less risk for the lender; more security in the buyer's ability and willingness to repay means less scrutiny on the transaction as a whole, making for a smoother more reliable closing.  The lender will most likely decline to answer any questions without their borrowers permission, so anticipate this before contacting them and ask the buyer to give written permission to their lender to speak candidly in advance of the phone call.

Have the FHA anti-flipping rules been considered?  If the loan is to be FHA insured, check for the latest updated property flipping rules to be sure the deal will be in compliance before any contract is accepted.  As of January 1, 2015, the FHA anti-flipping rules are back in effect!  This means the date between recording of the last sale and the date of the new contract for the resale must be at least 90 days in between.  The purchase contract must be written on the 91st day after recording of the last sale or the loan is ineligible for FHA insurance and may be denied.  Underwriters may require the deal be canceled and restarted with a fresh contract to comply with the rule.  

This makes conventional buyers more attractive because there is no such rule for conventional financing and the appraised value does not attach to the property for 120 days as it does with FHA financing.

Also, effective 9-14-2015 FHA loans will be insured according to the new Single Family Housing Policy Handbook (SF Handbook; HUD  Handbook 40001.).  

To achieve the highest sales prices, developers should have a working knowledge of these underwriting guidelines, because first time buyers represent an anticipated 32% of the 2015 housing market and many of them will utilize FHA financing. 

Resale Process

Hold Open Title Policy  

If set up initially with the property acquisition, delivering a new purchase contract to the title company within the requisite time period will produce a title commitment under the previously ‘held open’ policy.

Inspections / Due Diligence  

Inspections conducted by the end purchaser of the property will likely include a general inspection, radon inspection and sewer inspection at minimum.  Often, when issues requiring further evaluation are found, additional professionals are brought in, such as electricians, plumbers, HVAC techs to diagnose problems and engineer solutions.  Frequently requested due diligence documents might be: warranties, building plans, construction permits, surveys, prior inspections, radon tests, soil reports, engineer reports, documents from an HOA or notices from city, county or state government.  These documents should be carefully reviewed for anticipation of problems. 


The appraisal process has been insulated from the mortgage company in most cases.  Appraisal Management Companies or AMC’s handle communication and dispatching of appraisal assignments.  If the property value is in question, it may be necessary to research and produce supporting data which can be supplied to the appraiser for their consideration.  The best way to accomplish this is to meet the appraiser at the property with the supporting documentation along with contact information so they can collaborate later if desired.

Buyer Lender Underwriting  

Once the lender has acquired all income, asset, credit, and collateral documents from the borrower, the file can be submitted to underwriting.

Closing Preparation and Setup  

In preparation for closing, the developer and lender should collaborate on the loan payoff so there are no lingering questions at the closing table.  The lender will prepare a mortgage loan payoff statement and send it to the developer for review.  The payoff statement will generally reflect the terms agreed to previously in the collaboration process, with the exception of the yield spread component which was an estimate previously, but known now due to having an executed resale purchase contract.  The payoff statement is then sent to the title company to be entered on the developers closing settlement statement.

The date, time, and location of the closing is dictated by the contract, closing instructions, and the parties mutual agreement.  

Deed Review 

Every transaction is different; every deed is different.  Deed review requires careful proofreading for typos and misspellings; comparing title commitment schedules A and B with the deed to be sure they match; making sure the choice of deed designated in the contract is prepared on the correct form.


The seller (Grantor) names appears 3 places in the deed:  In the first sentence; at the signature line; and in the notarization.  The names must be identical in all 3 places.  The seller names must be identical with the names of the owners on the title commitment.  Identical means identical so if the commitment includes “Jr.”, then the deed must include “Jr.” in all three places.


The buyer (Grantee) name appears once in the deed in the first paragraph.  The buyer names must be identical with the names of the buyers on the title commitment.


Joint Tenancy; Tenancy in Common:  for multiple buyers, the deed must provide that title be taken as provided in the Buy/Sell contract, or as countered or amended.


The legal description in the deed must be identical to the legal description in the title commitment.


The part of the deed review in which mistakes are found more often is in Title Exceptions.  Title exceptions are per the contract in the provisions titled Owner’s Extended Coverage (OEC) and Title Documents.  Title companies, the good ones included, often do not follow contractual requirements as to title exceptions.  Even after issues are brought to their attention, they still may not want to correct it.  Be persistent about getting it right and if necessary contact legal counsel for guidance, or escalate the requested corrections to their legal department for written clarification.  

The Bottom Line

Taking Profits  

How much profit can be expected out of a flip?  That is a question for each individual investor to answer, and every market is different, but context is always helpful when flipping real estate.  

According to RealtyTrac, during the first quarter of 2015, there were 17,000 single family homes flipped in the U.S.  Flipped means sold during a quarter with a prior sale in the previous 12 months.  This number represented 4% of all single family home sales during the quarter, which is the lowest level of flips seen since the first quarter of 2011, the date RealtyTrac began tracking flips.  The volume of flipping is going down, but gross profits are trending up with an average of $72,000 for the quarter; that’s the highest level seen on record.  That $72k gross profit margin represented a 35% ROI compared to the original purchase price of the property; 35% ROI has been constant for that last 5 quarters.  64% of all homes flipped went to owner occupants, which was the lowest level since 1Q 2011.  2Q 2012 was the peak when 74% of all flips went to owner occupants.  On average it took 176 days to complete the flipping process in 1Q 2015; up from 165 days a year ago.  Homes between $100-$200k accounted for more than ⅓ of all flips, and homes in this group also generated the largest ROI at 47%; the biggest ROI of any price range, followed by homes priced between $1m-$2m which returned an average gross profit of 44%.  

Look for areas with a combination of distressed housing stock at a discounted price along with affordability and demand from buyers.  When you can find markets with these characteristics, you can flip profitably according to RealtyTrac. 

Colorado Statistics: Distressed Property Compared with Remodeled

Take a look at these statistics to see if you can glean anything meaningful.

Attached Single Family

Fix-Up.  According to Recolorado, there were just 168 attached single family homes sold between May of 2014 and May of 2015 which were designated as “fix-up”; they had an average sold price of $168,172 which represented 99.7% of asking price.  On average, they were built in 1975; spent 27 days on market; were 2 bedroom 2 bathroom with 1,165 square feet above grade at a cost of $138.96 per square, and had 1,448 total square feet including the basement. 


Remodeled.  During the same period, 2,709 properties designated as “remodeled”, had an average sales price of $231,648, which represented 100.01% of asking price.  On average, they were built in 1975; spent 22 days on market; were 2 bedroom 2 bathroom with 1,154 square feet above grade at a cost of $200.74 per square, and had 1,369 total square feet including the basement.

Detached Single Family

Fix-Up.  1,245 detached single family homes sold between May of 2014 and May of 2015 which were designated as “fix-up”; they had an average sold price of $243,480 which represented 99.8% of asking price.  On average, they were built in 1957; spent 26 days on market; were 3 bedroom 2 bathroom with 1,406 square feet above grade at a cost of $181.33 per square, and had 2,025 total square feet including the basement.


Remodeled.  4,998 detached single family home sales over the last 230 days with a designation as “remodeled” had an average sales price of $392,883 which represented 99.8% of asking price.  On average, they were built in 1968; spent 30 days on market; were 4 bedroom 3 bathroom with 1,740 square feet above grade at a cost of $234.53 per square, and had 2,520 total square feet including the basement.  

Average Return on Real Estate Vs. Stocks    

According to Zillow's Spencer Rascoff, between 1975 and 2014 the average ROI for real estate was 11.6%, compared with the ROI of the stock market (S&P) at 10.4%.

The National Council of Real Estate Investment Fiduciaries produces an index showing that REITs, Real Estate Investment Trusts, provided an annualized return of 10.91% over a 20 year period between December 1991 through December 2011.

NCREIF tracks the performance of high-quality institutional commercial real estate assets such as those owned by pension funds. Their index includes properties across the country in various sectors like office, retail centers, industrial, hotels, and apartment buildings.  Between 1978 and 2012, the index shows an annualized return of 9.19%.

Residential real estate has the added benefit of functional utility; it can be lived in as a primary residence or rented, it is protected with insurance, serves to hedge inflation, it can be leveraged and borrowed against, and it will always have significant relative value in the marketplace.

Finding Flip Opportunities

Sourcing Properties 

Of course, the challenge here in Colorado remains finding inventory to flip.  Supposing the investor is not bringing any cash to the transaction, and supposing they don’t have much expertise in property development, the real value they can bring in this instance is the ability to source off-market properties.  

Realtors® specializing in investment property brokerage can be an excellent source of “coming soon” properties because they often employ strategies to cultivate new business and therefore know of off-market opportunities.  Identify these practitioners online or use a service such as EcampaignPros; contact them and ask specifically about how to work with them to buy properties before they’re listed.  As a technical matter, “listed” means the seller signs a brokerage contract for the agent to sell the property. This is an important point, because once a Realtor® lists the property, they usually owe fiduciary duties which would prohibit them from helping you get the best deal, but rather obligates them to get the seller the best deal, which means exposing it to the open market with fierce competition.


Social media is a great way to find people such as Realtors®, investors, developers, lenders, and others to network with on finding “propertunities”.  LinkedIn, Google, Facebook, and others all have groups and clubs available to join where discussions and posts can be used to cultivate relationships and advertising for the purpose of finding deals.  For example the Colorado Association of Real Estate Investors has a group on LinkedIn, if you have a LinkedIn account you can view the link, if not, sign up for a free account or find a group on your favorite social media platform; there is an array of groups to choose from to fit your niche.


There is nothing like a face-to-face intervention to break through to someone.  Door knocking in the right neighborhood with the right message can achieve great results.  I remember a time early in my career, I was cold calling through a neighborhood prospecting for business when someone answered the phone who was literally at that time having a discussion with his wife at the kitchen table about selling the house.  He was shocked at the timing of it all and took it as divine intervention.  Terry and Leslie went on to become long-time customers.  The same thing happens with door knocking; knock a lot of doors as quick as possible on a weekend with a similar message that fits you; “hello, I am looking to buy a home in this neighborhood for my family, who do you know that may be interested in selling?  No, ok here is my contact information, if you think of anyone, please let me know”.  Or if yes, “Wonderful, who would that be and would you give me an introduction, or would it be ok if I mentioned I to them that I spoke with you?”  It’s always nice to have a familiar connection through a neighbor if possible.

Targeted direct mail campaigns can be effective if done right.  Design a mailing piece  with a specific target audience in mind with a bold headline and strong imagery.  Keep content and design simple clear and concise with just one focused message.  Make a compelling, time sensitive offer to evoke immediate responses.  The right message to the right audience with consistency are the key factors in deriving results.

Having a relationship with a title company can be useful because they have so much property data, you can target a very specific group and obtain the list and mailing labels at low cost.  For example, targeting people who have been in their homes for a certain period of time, or who have not refinanced in a certain period, or a range of other data sets to aid in targeting a group. 

Rebogateway is a service that offers an impressive suite of tools for locating legal filings, mortgage delinquencies, recent sales data, distressed homeowners, for sale by owner’s, property tax defaults, absentee owners and more.  This service can be used to efficiently compile direct mail lists on all sorts of targets which can then be merged with marketing pieces and vendors for delivery.

Once a data set of good candidates is established, a mailing service can be used to ensure consistent delivery.

A cautionary note; obtaining a property from someone with equity in their home, who is in default under Colorado law, could carry a jail sentence if done improperly.  Colorado defines a borrower in “default” once they are 30 days late on their mortgage.  That’s just one missed payment!  If purchasing a property under this scenario, stay in compliance by using the Colorado Real Estate Commission form titled:  Contract to Buy and Sell Real Estate (Colorado Foreclosure Protection Act) and be sure to carefully adhere to the requirements therein.

County foreclosure auctions may be a good opportunity in circumstances where there is a lower level of competition.  Presently, auctions offer a best case scenario for the seller, but not so good for the buyer, unless the property can be purchased without the price being bid too high.  The other problem is it’s a cash only game requiring investors to bring certified funds in order to bid, which has the effect of keeping the little guy contained so the big players can dominate.  Still, if in a County with rising prices and a stock of distressed property hanging around to be sold, it could be a very good opportunity if you can find the money.  RENAV is a foreclosure property tracking service that is reasonably priced by the number of counties selected for tracking and can be useful for the auction strategy. 


Flipping real estate is an exercise in creative expression and financial savvy.  It is exciting and rewarding work that benefits lots of other people besides the developers.  Flipping real estate has traditionally been a cash intensive proposition and has therefore kept most would-be participants from getting in the game.  

Mortgage Money, Inc. offers a great loan product, especially for those candidates who are just starting out with low cash flow, who may also be in need of extra financial support and guidance from an experienced lender.  We hope you will consider Mortgage Money, Inc. for your next investment property flip.  Good luck with your real estate investing, thanks for reading!

Contact Information   

James Ponzi is the Managing Broker of Mortgage Money Inc., a Colorado based private real estate investment lender, NMLS #268804, and can be reached by email at or by voice/text at 720-432-1030.

How To Value Your Property

JANUARY 12, 2022

Real Estate Valuation Guide

How To Derive Real Estate Values By Applying Uniform Appraisal Standards

Real Estate Valuation Guide

How To Derive Real Estate Values By Applying Uniform Appraisal Standards

Welcome.  This Real Estate Valuation Guide is intended to communicate the basics with regard to how professional appraisers approach the valuation of your home or property so that you can approach it in the same manner.  The residential home appraisal is a complex and broad category and this Real Estate Valuation Guide attempts to focus on the critical aspects of comparable sales selection, common adjustments, and the resulting value of  the subject property.

Appraisal Standards

While the Uniform Standards of Professional Appraisal Practice (USPAP) sets forth standards appraisers are required to follow, it is the GSE’s and lenders that dictate the criteria for selection of comparable properties, which provide the basis of value for the mortgage loan.  It is a serious violation for the appraiser to select sales that do not fit the criteria as required by their client.

Planning Accordingly

Whether you are listing a property for sale, evaluating a fix and flip scenario, or looking into a refinance, you will likely be faced with the reality that a professional appraiser will be involved in the process at some point.  For this reason, it’s critical to foresee to the best of your ability what an appraiser is likely to conclude with regard to value.  This will help you plan accordingly and avoid a number of problems that can arise from a lower than expected valuation.

It is tremendously helpful to understand generally accepted appraisal standards.  It will aid you in price negotiations with sellers, buyers, brokers, and wholesalers, as well as bankers and hard money lenders.  It will help you dispute a bad appraisal when your deal is on the line.  These standards apply in all markets across the US.

Official Definition of Market Value (FNMA)

Market value is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

Adjustments to the comparables must be made for special or creative financing or sales concessions. No adjustments are necessary for those costs that are normally paid by sellers as a result of tradition or law in a market area; these costs are readily identifiable because the seller pays these costs in virtually all sales transactions. 

Special or creative financing adjustments can be made to the comparable property by comparisons to financing terms offered by a third-party institutional lender that is not already involved in the property or transaction. 

Adjustments should not be calculated on a mechanical dollar for dollar cost of the financing or concession, but the dollar amount of any adjustment should approximate the market’s reaction to the financing or concessions based on the appraiser’s judgment.

“Implicit in this definition is the consummation of a sale as of a specified date…”  

This means inherent to the market value of a given property is what two parties agree it’s worth.  Said another way; it’s only worth what you can get someone to pay for it.  

Appraisers attempt to document and support the value two parties agree on by finding other similar market sales.  In some cases, appraisers aren’t able to document and support the market value so there is a distinction born between “Market Value” and “Appraised Value” at that time.

Market Value; the purchase price two parties agreed to.

Appraised Value; the documentable and supportable value derived by an appraiser utilizing the Market Approach to value.

Opinions of Value

You will find no shortage of people with opinions as to what a parcel of real estate is worth.  Cash buyers generally think the value is lower because they’re paying cash.  Financed buyers are willing to value it higher because their lender is taking most of the risk.  Seller’s tend to value their home higher due to emotional attachment.  Wholesalers value things high in order to get their fee and convince you that there is still a profit left over.  Insurance companies use an entirely different approach called the replacement value.  Tax assessor valuations are based on sales that took place 24 months ago per Colorado statute.  Lenders tend to be more conservative on values because they are generally taking the biggest risk.  So there are a lot of opinions, but which is the best approach to use?  The one that satisfies the loan underwriter of course!

Underwriters have the latitude to adjust appraisal values, require new or different comparables, or reject an appraisal outright.  This is because the lender is responsible for the quality of the appraisal if and when they sell the loan on the secondary market.

Remember that the underwriters are “sticklers for the rules”, so knowing those rules makes all the difference.

AVM’s / Collateral Underwriter

Automated Valuation Models are computer generated values and should not be relied upon.  Comparable property selection is too complex for software at this time because there are too many external forces the computer cannot read.  Property condition, curb appeal, views, bad smells, junky neighbors, etc.  Spencer Rascoff’s own home sold for quite a bit less than Zillow predicted.

Appraisals go through automated underwriting too!  Loan underwriters use a system called Collateral Underwriter to evaluate the quality of the appraisal, but not the value of the property.  Collateral Underwriter is programmed with appraisal guidelines that checks those guidelines against what the appraiser used and determines a quality score between 1-5; one being the lowest risk.

Types of Valuation Approaches


The most accurate reflection of current market value available because it uses actual sales of comparable properties to derive the value of the subject property.


Used for income producing properties such as residential rentals and commercial properties.  The value of these properties is directly tied to the income produced on an annual basis.  The income approach to value is required in the valuation of two-unit to four-unit properties and may be appropriate in neighborhoods that consist of one-unit properties when there is a substantial rental market. The income approach to value may not be appropriate in areas that consist mostly of owner occupied properties because adequate rental data does not exist for those areas.  


This approach is used to estimate the cost of replacement of the improvements in today's dollars.  Marshall and Swift publishes a replacement cost guide that appraisers often use.  Insurance companies are primarily focused on replacement values.

This class will focus on the Market Approach to value because it is the approach required by the lender in most residential transactions.

Market Approach Valuation Procedures

Background Research

Programming the Search

Selection of Comparable Sales

Select comparables with the best combination of three primary criteria.

When there are no truly comparable sales for a particular property because of the uniqueness of

the property or other conditions, the appraiser must select 3 sales that represent the best indicators of value for the subject property and make adjustments to reflect the actions of typical purchasers in that market.

When someone trying to do business with you sends you comparable sales as justification of the value of a given property, you must ask yourself and investigate whether the comparables they provided are truly the best comparables.  If your data is more comparable than theirs, stick to your numbers.


Most Common Adjustments 

Most common adjustments found in 1.3 million nationwide appraisal reports 2012-2015; (in order)

Categories of Largest Adjustments

Analysis of Adjustments

The net and gross percentage adjustments to a comparable sale being in excess of 15% and 25%, respectively, may be considered as a general indicator of the comparability of a property, but they are not necessarily indicative of the accuracy of the adjustments. 

The amount of the dollar adjustments should be derived through paired sales analysis.  It is permissible for a comparable to have adjustments in excess of 15% net and 25% gross provided the appraiser explains why it was necessary to exceed those parameters.

Paired Sales Analysis 

Paired Sales Analysis is the process of isolating and identifying the value of one factor in a property valuation, such as the value of a garage, or a view, or a range of other factors needed for adjustment purposes in a CMA or appraisal.  The purpose of this process is to identify the value of adjustments made in an appraisal to a particular feature.

Consider that the value of a backing to a park or open space for example varies from neighborhood to neighborhood, so using a “rule of thumb” could cause a given adjustment to be over or undervalued.  Paired sales analysis may take quite a bit of extra work, so many appraisers tend to rely on a rule of thumb when valuing certain features.  This may or may not be bad for your appraisal.

If possible, search and find two properties with just one difference between them; the factor you are trying to solve for.  Once selections are made, time adjustments should be done, and then a paired sales analysis can be performed to identify the amount of adjustment for physical differences.  Appraisers are required to apply time adjustments as indicated by the market data.

For example; two homes of the same model in a given neighborhood are nearly identical, except one house has a 3 car garage and the other has a 2 car garage.  Comp one with a two car garage sold for $385k and comp two with a three car garage sold for $400k.  Assuming all other things are fairly equal in comparison, the $15k difference is attributable to the value of the one car garage.

Measuring Supply and Demand

How To Dispute An Appraisal

Any request for a change in the opinion of market value must be based on material and substantive issues.  Changes in market value must be supported by documentation.  Basis of conclusion, summary, and documentation may be submitted through the originating loan officer for submission to the appraisal management company.  

The appraiser works solely for the bank and is not legally permitted to discuss the assignment with anyone but their client, the bank.  They are required to perform due diligence and are expected to ask questions of others, but they are not supposed to give out information about their assignment.

If the appraised value of the subject property is a concern, make sure you meet the appraiser when they arrive for the interior inspection and provide them your comparables and build some rapport and exchange contact information.

If the appraised value comes in low, there may be something you can do about it.  Carefully review the appraisal for:

Impact of Low Appraisal Valuation


Being prepared for the appraisal in a real estate transaction is critical.  Real estate valuations are not an exact science, but there are enough guidelines to define a process and protocol specific enough that two professional appraisers should arrive at roughly the same number; give or take.  By following these guidelines, professionals may avoid the common appraisal pitfalls when buying and selling property.


At the forefront of the 2006-2012 housing collapse was real estate appraisals.  It was a scary time when lenders were forcing loan buy-backs based on faulty appraisals, and it was my job as head of the plunge protection team to ensure my mortgage company didn’t buy any loans back.  

Thankfully, we didn’t.  Through a careful understanding of appraisal guidelines, we were able to avoid buying loans back and going out of business like so many others.  I was fortunate to have in-house appraisers that taught me to recognize a good appraisal versus a bad appraisal which not only saved my company, but gave me great training that I still use every day and will attempt to impart to you here.

Presented by;
James Ponzi, President.
Ally Realty & Finance
Licensed Colorado Real Estate and Mortgage Broker

Condition Ratings and Definitions


The improvements have been very recently constructed and have not previously been occupied. The entire structure and all components are new and the dwelling features no physical depreciation.*

*Note: Newly constructed improvements that feature recycled materials and/or components can be considered new dwellings provided that the dwelling is placed on a 100% new foundation and the recycled materials and the recycled components have been rehabilitated or re-manufactured into like new condition. Recently constructed improvements that have not been previously occupied are not considered “new” if they feature any significant physical depreciation (i.e. newly constructed dwellings that have been vacant for an extended period of time without adequate maintenance or upkeep).


The improvements feature no deferred maintenance, little or no physical depreciation, and require no repairs. Virtually all building components are new or have been recently repaired, refinished, or rehabilitated. All outdated components and finishes have been updated and/or replaced with components that meet current standards. Dwellings in this category either are almost new or have been recently completely renovated and are similar in condition to new construction.


The improvements are well maintained and feature limited physical depreciation due to normal wear and tear. Some components, but not every major building component, may be updated or recently rehabilitated. The structure has been well maintained.


The improvements feature some minor deferred maintenance and physical deterioration due to normal wear and tear. The dwelling has been adequately maintained and requires only minimal repairs to building components/mechanical systems and cosmetic repairs. All major building components have been adequately maintained and are functionally adequate.


The improvements feature obvious deferred maintenance and are in need of some significant repairs. Some building components need repairs, rehabilitation or updating. The functional utility and overall livability is somewhat diminished due to condition, but the dwelling remains useable and functional as a residence.


The improvements have substantial damage or deferred maintenance with deficiencies or defects that are severe enough to affect the safety, soundness, or structural integrity of the improvements.  The improvements are in need of substantial repairs and rehabilitation, including many or most major components.

Quality Ratings and Definitions


Dwellings with this quality rating are usually unique structures that are individually designed by an architect for a specified user. Such residences typically are constructed from detailed architectural plans and specifications and feature an exceptionally high level of workmanship and exceptionally high-grade materials throughout the interior and exterior of the structure. The design features exceptionally high-quality exterior refinements and ornamentation, and exceptionally high-quality interior refinements. The workmanship, materials, and finishes throughout the dwelling are of exceptionally high quality.


Dwellings with this quality rating are often custom designed for construction on an individual property owner’s site. However, dwellings in this quality grade are also found in high-quality tract developments featuring residences constructed from individual plans or from highly modified or upgraded plans. The design features detailed, high-quality exterior ornamentation, high-quality interior refinements, and detail. The workmanship, materials, and finishes throughout the dwelling are generally of high or very high quality.


Dwellings with this quality rating are residences of higher quality built from individual or readily available designer plans in above-standard residential tract developments or on an individual property owner’s site. The design includes significant exterior ornamentation and interiors that are well finished. The workmanship exceeds acceptable standards and many materials and finishes throughout the dwelling have been upgraded from “stock” standards.


Dwellings with this quality rating meet or exceed the requirements of applicable building codes. Standard or modified standard building plans are utilized and the design includes adequate fenestration and some exterior ornamentation and interior refinements. Materials, workmanship, finish, and equipment are of stock or builder grade and may feature some upgrades.


Dwellings with this quality rating feature economy of construction and basic functionality as main considerations. Such dwellings feature a plain design using readily available or basic floor plans featuring minimal fenestration and basic finishes with minimal exterior ornamentation and limited interior detail. These dwellings meet minimum building codes and are constructed with inexpensive, stock materials with limited refinements and upgrades.


Dwellings with this quality rating are of basic quality and lower cost; some may not be suitable for year-round occupancy. Such dwellings are often built with simple plans or without plans, often utilizing the lowest quality building materials. Such dwellings are often built or expanded by persons who are professionally unskilled or possess only minimal construction skills. Electrical, plumbing, and other mechanical systems and equipment may be minimal or non-existent. Older dwellings may feature one or more substandard or non-conforming additions to the original structure.

How Seller's Lose In Bidding Wars

JANUARY 8, 2022

Home Seller’s Losing Big Money In Bidding Wars

All signs you’ve probably lost a lot of money on the sale of your house;  a line to see your house, an overwhelming number showings, 10 or more offers received, price bids up $50,000-$80,000 or more.

Home Seller’s Losing Big Money In Bidding Wars 

All signs you’ve probably lost a lot of money on the sale of your house;  a line to see your house, an overwhelming number showings, 10 or more offers received, price bids up $50,000-$80,000 or more.  

The Denver metro housing market is hotter than it's ever been.  You may have heard the fantastic stories of people waiting in long lines to tour a property for sale, an overwhelming number of buyer showings, seller’s receiving 20 or 30 offers or more for $50,000-$80,000 or more above the asking price.  Buyer’s waiving or limiting their inspections, guaranteeing appraisal shortages, bold escalation clauses and other dramatic measures intended to gain an advantage in the bidding process.  Sadly, It’s all true for those seller’s who’ve drastically underpriced their homes and have likely lost tens of thousands of dollars in the process.  Let’s examine.

Anchors matter a lot.  In negotiation parlance, an “anchor” is typically the opening bid or price which sets the pace and tone of the auction.  It signals important messages to buyers and sellers about the psychology and strategy of the bidder.  Anchor too high and it’s “crickets”; anchor on par and risk losing out on the fever of a bidding war; anchor too low and you will fail to capture maximum market value even if there is fervent bidding.  To think that you can’t underprice a house and lose a lot of money because the hot market will bid it up to the highest number is misguided.

Target the buyers who will pay maximum value.  Anchor at the right price to attract the buyer who will be the most able and willing to pay the maximum price for the property.  Anchor too low and lesser qualified buyers will bid up the property to a lesser value than higher qualified buyers would have, and you will end up with less, plain and simple.

Anchoring too low is unnecessary, extremely wasteful, and leads to buyer remorse.  Unnecessary because you do not want or need 100 people trampling through the home and wasting untold amounts of time, gas and energy when you can achieve much better results by anchoring higher.  In these negotiations there are only 2-3 real contenders so you don’t need or want 30 offers.  27 of those people never had a chance and are now needlessly frustrated.  The winning bidder that paid $60,000 over the asking price is probably feeling some remorse which leads to inspection friction.  Folks, do us all a solid and think twice before you under price.

Appraisal gaps are a common problem right now and occur when the appraised value is less than the purchase price.  This results in either a failed transaction, a purchase price renegotiation, or an increased down payment contribution from the buyer.  The best remedy for this is to choose a well capitalized buyer who will guarantee the shortage and support their ability to do so with proof of funds.  Again, anchoring sufficiently high enough will attract the right buyer with the ability to cover an appraisal gap.

A recent case study aptly demonstrates the power of price anchors with a tale of 3 homes in the same neighborhood on Iris, Garland, and Stanford. 

Iris is a 1762 square foot tri-level, Garland is a 1321 square foot tri-level and Stanford is a 1321 square foot tri-level.  All three were on the market in the same period of time recently and all three are considered to be in “C-2” condition, which means recent updates, no deferred maintenance, and little or no physical depreciation.  Really nice properties in other words.  Iris went on the market anchored at $439,900, Garland at $437,500 and Stanford at $490,000.  Here’s what happened.

Iris went under contract in 3 days for $510,000, a whopping $70,100 over the asking price, impressive right!?  Garland went under contract in 5 days for $495,000, a gaping $57,500 over ask and Stanford went under contract in 3 days for $520,000, a more typical $30,000 over ask.  Which is better; the most money over your asking price, or just the most money period?  Stanford wins.  

Note that Garland and Stanford are identical floor plans.  Why would Stanford sell for $25,000 more?  Iris is 441 square feet bigger than the other two, which is a huge difference in size and could have commanded at least a $45,000 higher price.  Incredibly, Iris sold for $70,100 over the asking price yet $10,000 less than a 441 square foot smaller house three doors away.  

The answer is price anchors.  Stanford achieved the highest price in the least amount of time because they anchored their opening price much more in line with market value rather than anchoring low and relying on the market to bid the price up.  We can see through this example the market cannot be relied upon to deliver the maximum price if you fail to anchor properly.

Stanford outperformed these other two homes with just 17 showings and 3 offers.  That’s a typical level of activity on a great performance.  Conversely, Iris had something like 87 showings and 20 offers and Garland was similar.  Stop and imagine the amount of wasted energy from all those pointless showings and offers made by people who never had a chance.  This is going on a grand scale right now.  

I have observed a pervasive psychology among buyers that every house is expected to go for $20,000-$30,000 over the asking price at minimum.  Meaning if you anchor the asking price just under par, you are almost certainly going to get around a $20-$30k premium just for pricing it right.  No need to anchor under par by much, a little goes a long way and saves everyone a lot of grief.  

Reminds me of the quote about “if you think education is expensive, try ignorance.”  Quite a painful lesson for those sellers for which Ignorance is probably bliss.  Suffice it to say I think they would have made a different choice had they known this information.  I estimate a loss of at least $25,000-$45,000 on the sale of their houses.  A solid 8% loss on Iris.  Now apply that percentage loss on your house and you begin to understand the value of a good negotiator.

One problem is only 13% of real estate agents make it past the first 5 years so there is a tremendous turn over and influx of new agents coming into the business most of the time.  Well intentioned agents that are mostly ill prepared for high stakes negotiation because the licensing curriculum does not cover negotiation training.  There’s a small percentage of agents that actively study negotiation strategy, but those that do discover the skills needed to achieve better than average results.

The skills of the negotiator hired to represent you in the sale of your house plays a major role in the amount of money you will receive.  A skilled real estate negotiator creates and captures the highest possible value for their client through research, merchandising, marketing, intelligence gathering, and advocating important interests with counterparties.  Knowing what, when, and how to communicate with the right delivery to achieve a certain outcome takes years of practice and refinement.  With those years comes a deep psychological understanding of buyers, sellers, and agents, along with the rhythms and nuances of a complex process.

In conclusion, sellers should be focused on hiring a great negotiator if they expect to reap maximum benefits from this incredible, unprecedented seller’s market.  Underpricing your house and getting a fantastic number over your asking price is not impressive except to the uninitiated.  Instead, aim for listing your home just under par and get the highest price!  Happy housing my friends.

Thanks for reading, I welcome your comments.  

James Ponzi, President.
Ally Realty & Finance

Follow Denver metro market trends updated daily:

James Ponzi is a Certified Negotiation Expert (CNE) specializing in seller representation in real estate in the Denver metropolitan area since 1997.  If you have questions about this article, contact 720-432-1030 or email  Thank you.

Market Report
December 31, 2021

JANUARY 5, 2022

Ally Realty & Finance

Annual Real Estate Market Summary Report

Colorado Denver Metro Area

December 2021

Data Tracked In 56 Charts

Single-Family Detached Homes Median and Average Closed Prices

Detached single family homes had a median closed price of $550,000 and an average closed price of $660,659; up 19% over December 2020.  We can see the pace of appreciation has accelerated considerably since December 2020 was up 8.4% over December 2019.

Attached Condos, Townhomes, Multi-Family Units Median and Average Closed Prices

Attached homes had a median closed price of $375,000 and an average closed price of $445,147; up 14.9% over December 2020.  Again we see appreciation continuing to increase since December 2020 was up 5.7% over January 2019.

Closed Price to List Price

The median percentage of closed price to list price reflects what percentage of the asking price the seller received.  For detached homes, the median closed to list price was 101.5% and 100.3% for attached homes.  The median closed price to list price has been at or above 100% since about January of 2015.


Price / Sq. Ft.

The median price per square foot for detached homes was $228, and an average of $256; up 21.3% over 2020.  For attached properties, the median was $284 and an average of $321; up 16.7% over 2020.

Volume; Price and Units

Total sales volume for detached homes was $45 billion in 2021; up 20.5% over 2020.  Volume for attached homes was $11.1 billion in 2021; up 23.3% over 2020. New listings in December were down -11.2% under 2020. Active listings were down -50.8% under 2020. Pending listings were down -3.2% under 2020.  Closed listings were down -6.6% under 2020


The number of showings a property gets is also an important indicator of demand for that property.  In December, the median number of showings until a property went pending or under contract for detached homes was 17, and 13 showings for attached condos and townhomes. The number of showings for detached homes has been sharply increasing since a low of 11 in December of 2019. Condos and townhomes increased from 5 to 11 showings over the same period.  I attribute the increases to the rapid rate that properties are going under contract, forcing buyers to look at more properties as opportunities are lost.

Market Time; Days In MLS

The amount of time on the market indicates the level of demand for housing stock.  The median number of days on market for detached homes is only 5.   The median number of days on market for attached condos, townhomes and multi-family properties is 5.  Both of these markets are heating up since time on market for detached properties has decreased -37.5%, and -58.3% for attached properties since December of 2020.

Inventory Supply

The number of months supply of homes for sale of detached single family homes is just under 1 month, a -47% reduction from last year, and just under 1 months for attached homes, a -57% reduction.  Anything under 6 months is considered to be a seller’s market.

Mortgage Interest Rates

Interest rates for 30 and 15 year fixed, and 5 year adjustable mortgage loans have been on a steady and steep increase since early January when the FED began tapering its bond purchasing programs.


Interest rates are at higher levels not seen in about 2 years.  Averages for the 30 year conventional fixed rate are hovering at 3.65%, and the 15 year fixed rate is 2.90%.  Jumbo 30 year fixed rates are around 3.25%  The FHA 30 year fixed is averaging 3.25%, and the 5 year adjustable 3.64%.



In March of 2020, the Coronavirus caused a flight to safety into U.S. Treasury Bonds, and put downward pressure on mortgage loan interest rates, which remained at historic lows for 2 years.


Today, interest rates are rising rapidly in response to the FED tapering its historic bond buying program, which has caused unprecedented levels of domestic price inflation since the 1970’s.  

Home price appreciation continues at a blistering pace caused by severe inventory shortages and increasing inflows of people moving to the Denver metro area.  Housing inventory levels are the lowest on record.  Seller’s are firmly in control with only 0.9 months of housing supply available.  The time on market continues to drop and the number of showings increases as buyers struggle to compete.  Waiving contingencies and guaranteeing to make up appraisal gaps is common. 


Buyers may experience some relief in 2022 as interest rates are expected to continue the upward trend, which will decrease housing demand and put downward pressure on prices going forward.



The Federal Reserve has begun to taper their unprecedented bond buying programs, causing rates to rise sharply.  Meanwhile, congress passed yet another massive infrastructure spending bill aimed at resuscitating the economy.  

The Fed and the Congress have seemingly succeeded in sparking inflation in a desperate bid to keep prices from sliding into a deflationary spiral.  The concern is that with about 80% of all US dollars being “printed” within the last 12 months, they may have sparked hyperinflation.

So far, endless stimulus has been a boon for asset prices and the stock markets.  Considering the easy money policies of the Fed, the severe lack of housing inventory available for either purchase or rent, and the high levels of migration to the area, I don’t see any significant relief in sight for buyers.  Although rising interest rates will have an increasing impact on the market, I still expect prices to climb moderately in 2022.

Still, there is no doubt “something has to give”.  As the interest rates increase and exacerbates the affordability gap, the promise of homeownership drifts further and further out of reach for the average buyer.  Trapping owners in homes they would rather sell, but won’t list because they’re unable to find a suitable replacement.  Buyer’s paralyzed with fear, unable to get off the fence while watching prices skyrocket out of their reach.  Tenants faced with ever increasing rents are sharing spaces to manage the costs.  Extended families moving in together to share costs.  It’s a difficult time for many when it comes to housing and something will give sooner rather than later.


Your Situation

Real estate is hyper-local and each home with its unique location and characteristics produces different outcomes.  Each neighborhood, street, and the home's location on the street is different and worthy of individual analysis.  If you or someone you know is considering selling or refinancing a property, request a free comprehensive analysis and report to aid in the decision making process.  Decision making is always much easier when you’re well informed about the market for your specific home. 

You can reach me with questions, comments, or concerns by phone or text at 720-432-1030 or by email at  I look forward to our talk.



James Ponzi,

President, Ally Realty & Finance

Licensed Realtor and Lender in Denver since 1997.

Data Source:  REColorado.

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