One good deed deserves another… in deed it does

Author: Bill McAfee; owner of Empire Title

Article Published in March 2014 Edition of The Colorado Real Estate Journal

Bill McAfee, Owner and President of Empire Title

Bill McAfee, Owner and President of Empire Title

In real estate transactions buyers and sellers see many legal documents.  The documents we are going to talk about today show ownership in varying degrees.  We will discuss 3 types of conveyance deeds.  The three types of deeds are: General Warranty Deed aka Warranty Deed, Special Warranty Deed, and Quitclaim Deed.  These deeds differ only in the amount of protection that the grantor (seller) warrants to the grantee (buyer).  All three of these deeds do transfer title to real estate; they just vary in the degree of liability and protection that the seller gives to the buyer.

The definition of a Warranty Deed according to the Colorado Real Estate Manual is a deed in which the seller warrants or guarantees title against defects that existed before the seller acquired title or that arose during the sellers’ ownership.  It does not warrant against encumbrances or defects arising from the buyers own acts. There are certain covenants for warranty’s that are contained in general warranty deeds.  The usual covenants are A) Covenant of seizin, this means the seller has ownership and has the right to convey it.  In addition, the fact that the property is mortgage or has certain restrictions would not breech this covenant.    B) Covenant against encumbrances, this means seller has no liens or claims against the property except those specifically excluded in the deed.  C) covenant of quiet enjoyment, this means the sellers guarantees the buyer will not be evicted or disturbed while possessing the property.  Claims by third parties do not breech this covenant.    D) Covenant of further assurance, this guarantees that the seller will produce and deliver any other documents that are subsequently necessary to make a good title.  E) Covenant of warrant forever, seller guarantee that the buyer will have title and possession to the property (sometimes a part of quiet enjoyment).  Covenant of seizing and covenant against encumbrances will generally relate to the past and usually do not “run with land”.  This means that the current buyer can sue the seller for any breech.  Covenant of quiet enjoyment, covenant of further assurance, and covenant of warrant forever protect against any future defect and are considered to “run with the land”.  This allows any subsequent buyer to sue for breech against any previous seller.  Colorado Statute states that covenant of seizin, peaceable possession, freedom from encumbrances, and warranty contained in any conveyance of real estate or any interest there in, shall “run with the land”, and will be to the benefit of all subsequent buyers and lienors.  To sum up a warranty deed will give the most amount of protection to a purchaser of real estate, definitely a good deed.  One good deed leads to another.

Another deed to discuss is the Special Warranty Deed.  Special Warranty Deeds warrant only against defects arising after the seller bought the property and not against defects arising before that time.  This means a buyer purchasing real estate with a special warranty deed would only have guarantees and protection against those things that the seller created against the property.  Any title issues created prior to our seller acquiring the property would not be warrantied.  In simple terms, the buyer is only protected against the liens or defects which the last seller created.  Buyer has no protections from any previous owners or encumbrancers.  Sometimes one good deed does not lead to another.

A Quitclaim Deed warrants absolutely nothing.  A quitclaim deed conveys the sellers’ present interest in the land, if any.  A quitclaim deed is frequently used to clear up a technical defect in the chain of title or to release lien claims against the property.  Examples of such deeds are corrections deeds and deeds of release.  Simply put, buyer does not receive any protection or warranties from the seller.  If warranties or protection is important to you as a buyer, quitclaim deeds may not be the deed for you.

The type of deed that a buyer desires should always be based on good fundamental judgment and the advice from a real estate agent or attorney.  If the buyer desires maximum protection against past events then the warranty deed is for you.  If the buyer is ok with a warranty and protection from the current seller only then the special warranty is the deed for you.  If no warranties or protection are desired by the buyer then the quitclaim deed will satisfy your need.  As strange as it may seem the title insurance policy that a buyer receives in a typical real estate transaction is not affected by the type of deed that the seller conveys to the buyer.  Buyers may always desire a warranty deed however sellers, such as banks, asset managers, and certain other government agencies may not be willing to issue one.  In this case title insurance is very important as the buyer may not be able to get the warranties and guarantees that they want from the seller.  Title insurance can step in to the shortfalls that special warranty deed or quitclaim deeds or even general warranty deeds may not provide.  One good deed deserves another.


Colorado Real Estate Journal

Encore! Record Low Rates Return for a Second Show

This article is written by Jay Garvens and Joey Connell

extra-extraFrom spring of 2012 until the fall of 2013, it was difficult to find a mortgage product that wasn’t in the 3% range. This was a period of historically low rates, with some borrowers able to refinance in the high-2% range. Throughout the following winter and spring, however, rates started trending upward. Most industry experts believed the time of 3% mortgage had passed, with 4-5% mortgages as the new normal. Over the last couple weeks, though, rates have been trending back downward, and we are again seeing mortgages in the 3% range. The question is: What happened?
For several years, interest rates have been reacting almost exclusively to the Fed’s bond-buying program, known as QE. The Fed has signaled for several months that they would begin tapering their bond purchases, and as economic indicators improved over the last year, investors believed tapering was imminent. This drove interest rates up. However, the Fed has yet to initiate an aggressive tapering policy, reducing their bond purchases by only 25% a month from $85 billion to $65 billion.
This, coupled with weak and dismal economic news over the last two quarters, has caused rates to trend back down. The Fed has lost confidence that the economy has recovered. They consider the anemic growth in durable goods (.5%), the artificially low unemployment rate, and the housing market losing steam over the last quarter after double-digit gains earlier in the year.
As quickly as the economy stalled, it could easily pick back up. There is no telling how long this period of extraordinarily low rates will persist, so the time to act on this news is now! Recent economic developments, while leaning negative, have offered some positive news; the signals are mixed. Any negative indicators may be aberrations in the data, and future economic news could show a brighter picture, thus driving rates back up. As it stands, though, negative news dominates our economic outlook, particularly in the housing industry.
During the second half of 2013, both rates and home prices increased dramatically. By the end, many buyers—particularly young buyers—were priced out of the market. Real estate investors limited their purchases, causing demand to fall. House prices have remained essentially flat ever since.
These developments have had a severe impact on mortgage rates. But what does this mean to you? Right now, it means record low rates! A conventional 30 year fixed rate at 3.875% with no original points. It means a VA or FHA loan as low as 3.625%. It means a conventional 15 year fixed at 3.125%. With the rapid increase in housing prices throughout 2013, it also means many people who did not have the equity to refinance during the last period of historically low rates may now be able to; their homes may finally have the equity needed. This is especially urgent for anyone who presently has an interest-only or adjustable rate mortgage. These products were very popular in 2004 and 2005, and many are set to either re-adjust or recast in 2014 and 2015 into far more expensive products.
One of the most common regrets I encounter from callers to my radio show is missing the historically low rates of 2013. Many either dragged their feet and missed their opportunity, or didn’t have the equity necessary to refinance. Whatever your excuse, don’t make the same mistake twice. This is a second chance that nobody anticipated. Don’t squander this opportunity! Whether you want to refinance to a lower rate, pay off debt, purchase a new home, or purchase an investment property, now is the time to act.

What is a Tribe?

The very fact you’re reading this blog post says something profound about our modern world. Just 15 years ago, if you wanted to learn about home mortgages or financial issues, you would go first to family, friends, or a third party met through your family or friends. Today, you’re more likely to seek advice from a personality, like me, or a brand, like Wells Fargo, or a personality and brand, like Dave Ramsey. The very nature of our personal and business networks has changed, yet most people are oblivious to this fact. These new networks form the basis of the modern tribe, and that’s the topic of this week’s show.

Before the advent of the nation-state, people arranged themselves into tribes. People formed their identity less by geographical happenstance, as we do in most of the modern developed world, and more by shared characteristics and values: religion, language, culture, ethics, etc. Today our nationality forms the basis our identity. Yet many people, while appreciating their national identity, find the distinction arbitrary, so they seek out others with shared cultural, moral, and linguistic values to form small and discrete tribes of their own.

I have been a part of several tribes in my adult life. My time in the U.S. Army felt profoundly tribal; everyone shared a concrete set of customs, values, and goals. Similarly, Green Bay Packers fans, or Cheeseheads, are a tight-knit community with an established, if bizarre, code of conduct and behavior. I have been, and currently am, part of several different tribes, but underlying each is a shared sense of purpose. This—the shared sense of purpose—is the foundation of the modern tribe.

In many instances, people are part of a tribe without even knowing it. Products and brands are able to cultivate massive, dedicated followings with individual members sharing the same tastes, ideas, and goals—even if these individuals have never met one another! Consider, for example, Apple products. There is something at work besides good design that compels Apple fanatics to preach the virtues of their products, put stickers on their bumpers, and even get tattoos of the Apple logo. Similar cult-like followings exist for places like Trader Joe’s, Ikea, and Starbucks. Similarly, bands like REM and the Grateful Dead enjoy such massive, dedicated followings whose members seem to share customs and values entirely unrelated to the music of the bands.

There is tremendous value found in the tribe, separate from the value of whatever product or music or shopping experience that forms the tribe’s basis. Sharing commons goals and purpose is spiritually and emotionally fulfilling; it satisfies us at a fundamental level to know we belong somewhere, and that we can trust in the shared purpose of a collective.

This, in fact, is the decisive factor in explaining why some people love their jobs while others hate theirs. Before even considering the particulars of the job—the pay, the work, the hours—you ought to consider the entire team, from employees to management to the president, and ask whether the team functions as a mere group of people or as a tribe. All too often, companies form and grow without instilling a sense of shared purpose in new hires. This drastically changes the culture; instead of a team excited to have found this shared purpose and pursue common goals, they instead are simply concerned with receiving a paycheck. The lack of shared purpose, and the general ambivalence toward the company’s success, manifests itself in how the team members interact with one another and how they interact with customers, suppliers, venders, and so on.

Everyone should take a moment to consider their own careers in this light. Is your workplace like a tribe, or is it merely a place to work? Are you or others on your team willing to make personal sacrifices for the good of the tribe? It may sound like a cliché—probably because it is—but groups can accomplish far more together than they can separately. You should think about your workplace, ask what your team’s shared values and purpose is, and how everyone can strive for and achieve this goal through their work.

These thoughts and ideas were inspired by the extraordinary work of Seth Godin and his book “Tribal Leadership.” If you have not already, I encourage you to seek out this book and thoroughly study it. As with all the great books I have read this past year, it will inform much of what will be discussed on future shows and reinforce the ideas found in other books. It has already provoked me to consider the radio show, its audience, my mortgage company, and its clients, and how all these pieces are beginning to integrate and become its own little tribe. These effects will, I think, become more pronounced when the radio show goes lives and I can speak one-on-one with my audience—so stay tuned for that!

A Generational Look at Our World and My Week in Nashville

 Click here to Listen to the Show Jay Garvens and Dave Ramsey

For all the time and energy I expend discussing demographics, I really should know more about my audience. True, I have a general sense of who is out there listening based on who’s calling into the show, who’s stopping by my mortgage company, and so on. But there is a specific, detailed demographic profile of my audience beyond what I can see, and fully understanding that profile is my single biggest professional goal. As you should know by know from listening to this show, demographics are the key to understanding practically every trend out there.

I read a series of stories this past week stating that most new construction over the last year has been apartment complexes and not single-family homes. I don’t know why I read a series of stories on this; I already knew it. I saw this development coming years ago! The impetus for this development is demographic. As far as single-family homes are concerned, there is a housing bubble-era supply glut that is only now beginning to normalize. Likewise, as we lose members of the Greatest Generation—estimated to be about 8,000 a day—their houses end up on the market and normalize any upward demand pressures. There is simply no reason to be building new single-family homes right now.

Similarly, the Millennial generation is maturing. It hasn’t yet started to reach its peak productive years (40-60), but it has definitely entered its career stage. Normally this is when people start a career, get married, start having kids, and so on. However, the Millennial generation is postponing matrimony; they are getting married and having kids far later than any generation before them. They have moved away from home, but do not yet need—or even want—the space of a house. Thus, they are renting apartments in massive numbers. Take a drive around Colorado Springs—north on Nevada, up on Interquest—and you’ll notice several apartment and condominium projects being built.

I see the influences and effects of demographics everywhere. In the news and newspapers. In the construction and mortgage industries. Truly, the study of demographics is one of my greatest passions. And it’s a blessing to be able to share this passion through my other great passion: radio. Radio allows me to share my insights on economics and demographics with other inquisitive individuals. Whatever the demographic composition of my audience looks like, I’m sure the vast majority listeners have that quality of inquisitiveness and curiosity in common.

I share what I know with my audience because I think that anyone taking time to listen to new information is also determined to apply what they know to improve their life. But there’s a lot I don’t know! So last week, I attended Dave Ramsey’s EntreLeadership workshop in Nashville to learn as much as I could from the man whom I consider one of the most knowledgeable and practical individuals in the field.

There is no way to cover everything I learned during that week in Nashville; it was like drinking from a fire-hose! I encourage everyone who hasn’t to pick up Ramsey’s book “EntreLeadership” and study it thoroughly. But here are a few key concepts that I think everyone should be familiar with:


#1. The Law of the Lid. This basically states that an organization—whether a business or family or church—is contained by its leadership. Thus, the organization can only grow as efficiently and as large as its leadership. The leaders or leadership team acts as a lid, and is the sole limiting factor in an organization’s growth.


#2. As goes the king, so goes the kingdom. This law both complements the Law of the Lid, and stands on its own. The fate of the kingdom follows the fate of its king. Whether in a household or business or volunteer group, the whole organization takes its cues from the leadership team. If the leaders are impatient, short-sighted, or arrogant, the entire group will follow. Leaders must be certain that they not only have good, solid principles and values but also that they project these principles and values to their kids and employees.


#3. Don’t force your goals onto other people; help them discover and achieve their own goals. The single greatest thing a leader can do is to encourage their employees to fully realize their unique qualities and achieve their own unique set of goals. It’s common—and disastrous—for leaders to pursue their own goals and use their employees as tools to achieving that goal. Ideally, leaders pursue goals by utilizing the unique qualities of their team members to achieve that same goal, while simultaneously encouraging those team members to settle on and pursue their own goals.


This really only begins to scratch the surface of my week in Nashville. But it truly was a transformative weekend. As you continue to listen to the show, you’ll pick up bits and pieces of what I learned, as I’m sure I’ll graft my newfound knowledge onto what I had already known. In the meantime, I have a huge reading list of new books to read on Ramsey’s recommendation, from which I’m sure I’ll gain more new insights to share.

photo IMG_6450

Dave Ramsey being DAve

Dave Ramsey being Dave

The 1st EntreLeader

The 1st EntreLeader

Lunch time at EntreLeadership

Lunch time at EntreLeadership

Breaking Bread with Dave Ramsey

Breaking Bread with Dave Ramsey

Making friends!

Making friends!

Welcome to Nashville

Welcome to Nashville

LIVE on the Dave Ramsey Show

LIVE on the Dave Ramsey Show

The Dave Cam

The Dave Cam

Let’s Play Monopoly & How To Win at Real Estate Monopoly

family-playing-monopoly-vintageIf everything you know about residential real estate comes from playing Monopoly, this week’s show is for you. As a game, Monopoly contains illustrative parallels with the real estate market, even though the game itself has little practical relevance to the real world—although I did once win second place in a beauty contest. The first hour of today’s show uses Monopoly to explore the world of residential real estate, and the second hour explores how you can win in the real world playing Real Estate Monopoly.

First, consider what a Colorado Springs Edition of Monopoly might look like. You have the Broadmoor instead of Boardwalk, Powers instead of Indiana Avenue. I won’t risk offending anyone in the audience by renaming Mediterranean and Baltic Avenues, but you get the point.

The first thing to consider is why Oriental Avenue is so cheap while one night in a hotel at the Broadmoor might bankrupt most people. Disparities in price are largely driven by demographics: As people mature, they work their ways from Baltic Avenue to St. Charles Place to Pacific Avenue and so on. The younger generations with less disposable income will cluster at the start of the board, while the established generations will cluster toward the end.

On a city level, this has subtle but noticeable affects. Certain qualities or amenities offered by certain neighborhoods will appeal to different demographics at different times, and real estate prices will adjust accordingly. In the 1960s, when families were large, neighborhoods with an abundance of split-level homes and nearby schools were in far higher demand. Today, with people having fewer children, and having them later in life, these formerly hot neighborhoods are seeing prices drop while older neighborhoods with more spacious floor plans and fewer rooms are in higher demand.

On a national level, this has stark and profound effects. Localized real estate bubbles in San Francisco, Washington D.C., and Seattle reflect an influx of young, wealthy professionals, causing formerly lower-middle and middle class neighborhoods to gentrify into high-income neighborhood and house values to skyrocket. You can think of the national real estate market is a bag of popcorn: each kernel, or local market, heats and pops independently of all others. Different factors cause different kernels to expand and explode quickly, slowly, or not at all.

There is a strong correlation between the demographic composition of a market and its general health. Places like Utah and Texas have very young populations and generally healthy real estate markets; Florida, on the other hand, is home to the oldest population in America and, as a result, has found it difficult to recover from its turbulent housing collapse.

These and other factors show how real estate is like Monopoly. Now the question is: How do you win? I offered three suggestions on this week’s show to help you get started and ultimately succeed.

To win at Real Estate Monopoly, you have to understand how it differs from the game, which is what Rule #1 concerns. The key difference between the two is this: Life isn’t about luck. In the real world, people don’t start out with exactly $1,500 a piece; they don’t take turns; they don’t roll dice. Each individual chooses when to move, where to stop, what to buy, how many amenities to add, and so on. Everyone starts with the exact same credit score, which is a great indicator of their general access to credit, and the choices they make in life determine whether they will continue to have this access. With credit, nobody is forced out into the cold, but plenty of people choose to end up there.

The second rule is, incidentally, my approach to both Real Estate Monopoly and regular Monopoly: start the purchase process as soon as you can. I got into real estate early and have bought higher-value homes as I go along. Few people start by buying Park Place; more often they start on Oriental Avenue and work their way up. But the key is to purchase early and stop renting! That’s why I encourage everyone to get the purchasing process started as soon as possible. And understand this: Beginning the purchasing process does not mean you’ll be purchasing soon. For some, they may be ready to by instantly; for others, they may not be ready for a few years. But the key is to start preparing now.

And finally, for rule #3, get a written plan for what you want to do and accomplish for this year. This is your strategy for Real Estate Monopoly and will force you to prioritize your wants, budget your $1,500 in monopoly money, take inventory of the opportunities out there, and ultimately act to accomplish your goals.

This week’s show was stuffed with other parallels and insights. I encourage everyone to listen and re-listen to the show, which, as always, is available in the archives. Over the coming weeks and months, as we enter the spring and summer home-buying seasons, we’ll see hundreds of new players enter the game. While they’re praying for a decent “Chance” card, you’ll be better prepared to make sound, strategic decisions.

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