Adam: Most buyers in 2026 are not struggling because of interest rates. They're struggling because of small decisions that just don't feel like a big deal at the moment, but they end up costing them thousands of dollars later. And the tricky part is this, you usually don't realize the mistake until after you've already closed. So today on a brand new episode of the Pursuit of Progress podcast, we're breaking down two of the biggest mistakes that we're seeing buyers make in today's market. By working with clients every single week, my co-host Ben and I are in this Denver market on a daily basis. But more importantly, we're going to be sharing with you guys how to avoid these makes, so making sure you make a smarter, more confident decision. Excited to be back with a brand new episode of the Pursuit of Progress podcast with my co-host Ben Adams. What is up, my man?

Benjamin Adams: What is up my brother? How important is this conversation right now at the end of May? ⁓ Interest rates have spiked with some of the recent Iran news. There's also some concerning economic data that's out right now as far as inflation, oil prices, gas prices. So this conversation needs to be had and I'm so glad that we are going to be talking about it how we can overcome these affordability issues that we're seeing creep back up again here in this Denver marketplace.

Adam: Yeah, I think we were talking maybe last week about every year they have a word of the year. I think last year it was slop, which we both had to kind of understand a little more what they even met showing our age here. Both of us are in our early 40s, but I have a feeling a two and 26 is word might be affordability or something along those lines.

Benjamin Adams: Hey, it's, yeah, I always try and put myself in the shoes of the prospective home buyer. And I get it. ⁓ when you look at property values here in Denver, they've probably come down a little bit over the last 24 months, but not in a meaningful way. And some of those price pullbacks have been offset by, ⁓ things like rising property taxes, my property, for example, I'm out here in Applewood and golden, as you know, My value has been relatively flat the last 36 months, but I just got my Jefferson County tax assessor ⁓ pamphlet in the mail and my property taxes have once again gone up significantly. And so as a home as a homeowner, that's frustrating. My value isn't going up, but my property taxes just seem to be going up and up and up homeowners insurance, not just in Denver, but for a lot of the country, we're seeing more storms, less water, more droughts. And so homeowners insurance seems to be going up as well. And so these are things that you want to be aware of if you are budgeting for a mortgage. One of the mistakes that I see, especially with first time homebuyers is a lot of a lot of times they've been renting. So when you're renting, you're thinking about what is my monthly rent? You're budgeting around that. In most cases, you're probably not paying utilities or you're paying a very minimal amount of utilities. You're definitely not paying for homeowners insurance, if there's an HOA, you're not paying for that. And when you're a homeowner, you know, not only are you paying for your mortgage, but you have some of these other expenses that need to be factored in. Property taxes, homeowners insurance, HOA, if you're looking at townhomes or a condo. And so these are things that you want to be aware of. And it's not just that either. There are also home repairs. You know, I have come out and

Adam: Big one.

Benjamin Adams: look at my furnace earlier this year and it's funny because about every two and a half years somebody comes out because it stops working and my home was built early 90s and it's an original furnace. And so every time somebody comes out they're like, you you really need to replace this. Why haven't you already? I'm like, well, because it's like 20 grand. That's why. ⁓ And if I pay you and we can get it tuned up and working again, it's like 150 bucks.

Adam: Yeah, exactly.

Benjamin Adams: So these are things that you want to be aware of, you the benefit is that you get the ability to ⁓ start building equity. You start paying that loan balance down every month. Property values will start to go up again. There's also going to be favorable tax deductions in some cases for folks that are homeowners. I know that you wanted to talk about some of the repairs that you were... ⁓

Adam: Yeah, definitely. mean, there's just all kinds of different expenses. I think even before we go there, just talking a little bit more about just this personal example that I have with a client that I'm helping recently, the past couple of weeks, you're talking about your property tax assessment, but also with these HOAs and just with condos specifically, and I actually saw an article from realtor.com this morning talking about how condos are actually one of the toughest types of properties to sell right now, just because of, think, this volatility with

Benjamin Adams: Mm-hmm. Yeah. Mm-hmm.

Adam: affordability, but not having a fixed monthly expense. And out of nowhere, you could be hit with a massive change of your HOAs. And this is what happened with a client of mine where they're paying 380 a month. And January 1, they got an email from their property management company saying that it was going to be going from 380 all the way up to 580 a month. And really just to pay for some capital improvements on the building that they just didn't have the reserves for.

Benjamin Adams: Wow.

Adam: you know, they were trying to just do it a special assessment. So sometimes with a condo association, rather than having your HOAs go up, they'll have all of the owners talk to all of them individually and have them vote on whether or not they can actually just pay for this special improvement themselves. So let's just say there's a, you know, $20,000 furnace that needs to get repaired. They break that up among all the owners. Maybe it's a thousand, 1500 bucks a person. Well, they did that, but everybody voted that they did not want to pay that as a lump sum. So instead they just increased the property HOAs by $200 a month. So that's something that they have no way to control, no way to fight. And that could be a serious, you know, deal if you guys are on a fixed income and just don't have that budgeted.

Benjamin Adams: Yeah, that's such a great point. ⁓ condos around the country are going to be very different. And I was having this conversation yesterday with another friend of mine who does some investing in Florida and a condo in Florida that is on the beach and that is for vacation purposes is going to be very different than a condo in a place like Denver, where people are not going to be using it for second homes, Airbnb, for stuff like that, they're going to be using it here in Denver to live in. And one thing that I've noticed with the HOA is is that the monthly HOA

Adam: Mm-hmm.

Benjamin Adams: and the sales price range, a lot of times there's not an alignment with affordability when it comes to that. So in other words, what I'm saying is that I'm seeing condos right now that are priced at $400,000, but then the HOA is $500 or $600 a month. And if you have a $400,000 buyer, are they really gonna be able to afford an HOA of $500 or $600 a month? A lot of times they're not. So that's why buyers... are not actively pursuing condos in the way that they were a couple years ago. And then to your point, and this is more on the lending side, a lot of buyers are not aware of this. And even folks after they buy the condo have no idea how this works. But Fannie Mae, Freddie Mac, FHA, they have certain rules and guidelines as far as how the condo is being managed from a budgeting perspective, from a profit and loss and operating income perspective, ⁓ to make sure that the property and the complex is adequately insured. It has to have the correct amount of insurance. And a lot of these condos are not being managed correctly. And that's why you're seeing these special assessments pop up that in some cases can be two or $300 a month. And if you are on a fixed income or if you're qualifying for one of these, you probably don't have a lot of extra cash. And so it's something that you absolutely need to be aware of. And it's definitely one of those things that's really impacting affordability right now.

Adam: Mm-hmm. So let's just talk through a few of the others. So we have insurance, we have HOAs, you talked a little bit about property taxes. I'd like to maybe add one other thing on the property taxes here in a minute, but can you think of anything else that it really just needs to be, like for example, you could talk about private mortgage insurance, PMI.

Benjamin Adams: Mm-hmm. Yeah, yeah. I mean, the private mortgage insurance is a good one. If you have an FHA loan, that mortgage insurance is in most cases going to be on there for the life of the loan. Conventional is a little bit different. As soon as you hit that 20 % mark, if you're paying for it monthly, it will fall off. You have to request it when it hits the 20 % mark, it will automatically fall off. Once the loan to value ratio hits 78 % or 22 % equity. But that's definitely something again, you know, property taxes, homeowners insurance, HOA, mortgage insurance. There's four different components to the payment right there, not even counting the principal and interest.

Adam: So yeah, one other added ⁓ thing I wanted to share on the property taxes, you guys, for anybody that's in Colorado listening to the podcast tonight or today, whenever you're listening to it, is just understanding that the property taxes in Colorado are based basically on the area you're in. It can be very, very different from one another. So I use this example quite a bit that there's areas near me, for example, Sterling Ranch, which is kind of the southern, southwestern side of Denver. Their annual property tax rates is high as like one and a half percent.

Benjamin Adams: Yeah.

Adam: versus places like maybe where you're at in Applewood Golden, which might be closer to half a percent. you think of a $500,000 home, we're talking about, in that case, potentially quite a bit of a difference there. That's $5,000 difference just with one area to the next for the same price of a home.

Benjamin Adams: for me. Certainly. Yeah. And if you're looking at a $600,000 home, let's say in golden and the property taxes are a half percent or roughly 3000 annually, and then you're looking at a $600,000 home and new commerce city, the property taxes could realistically be $9,000 annually. So three times as high based off of where you're looking.

Adam: Yeah, it's crazy, man. Definitely a big difference as well as other little things like Metro tax districts. We go into down a rabbit hole on a lot of this stuff. But I think another really good point that I'd like to maybe close this first point out on is what you were sharing with me off camera before we started today's podcast about just the maintenance on the home, you know, just talking about the the time ⁓ just maybe to share a little bit about that that we were talking about.

Benjamin Adams: Mm-hmm. Yeah, there's a lot of maintenance you can do yourself. But there's also going to be maintenance that you're going to need others, you know, other professional help. For example, right now, all three of my toilets, for whatever reason, are running. And so that's something that I'm going to have to deal with. I'm gonna have to get a plumber out here, they're gonna have to look at all three toilets. ⁓ I was in Kansas City for spring break, we went to the Big 12 basketball tournament. And because of the toilet issue, while we were gone, we had somebody staying at the house, but he didn't lift up the handle all the way. And so when I got home, ⁓ The ⁓ Applewood water district was out of my property, telling me that I had a leak. And I was like, starting to freak out, you know, and, you know, thankfully, it was just the fact that the toilet was ⁓ not not sealed, the water was flowing right through it. But I mean, he said it was like 150 gallons a minute is how much water was flowing through ⁓ from this leak, because all three were leaking. So I had to deal with that. You also think of things, I'm having some lights right now in my master bathroom. A fuse must have gotten blown. There's an entire grid of about four lights that are just not working. I tried replacing the light bulb. So stuff like that. But then you also have some of the monthly recurring stuff as well. I use a landscaper in the summers who comes out once a week and mows my lawn.

Adam: Dang.

Benjamin Adams: And there's there's a cost for that. It's not it's not an outrageous cost, but you just want to make sure that you're aware of all of these things. Another thing that's a little more unique, this probably goes with one of those things about where you're buying is that out in Applewood, we have a sewer fee that we have to pay every year. It's an annual sewer fee. I know Wheatridge does this as well. But a lot of these a lot of these fees are just going up. When I moved in, it was $250 10 years ago. Now it's like $750.

Adam: Mm-hmm. I have that in Denver too.

Benjamin Adams: My property taxes have almost tripled in 10 years. And I had made a social media post a couple of days ago talking about, know, I just paid my annual property taxes a couple of days ago and my mortgage isn't paid off. But even if it was like my monthly bill for property taxes and insurance is approaching a thousand dollars a month.

Adam: Crazy. Just imagine being retired and on a fixed income. You don't have the ability to account for that kind of stuff.

Benjamin Adams: Yeah. And so you're seeing this in the news. I saw Florida just in at least in their state legislature just passed or they're repealing property taxes that was voted successfully. And I don't know if it has to go to their their Senate or if there's other tiers of government that it has to be approved by. But you're starting to see more conversations like this. And I think there does need to be some type of consideration or relief, especially if you're a certain age or if your mortgage is paid off as well.

Adam: And I have seen a couple news articles haven't I don't want to speak on it without knowing the specifics but about like if you're over 65 or over 70 You're protected from the property rate a tax rate going up Above a certain very small amount every two years here in Colorado. So they might have a few things in the works but yeah, regardless the kind of Close out that first point guys is just really making it clear that if you guys are maybe considering buying a home Just making sure that you work with somebody, you know, Ben's a great example for a lender where if you're looking at three different homes, he's not just gonna say, you're pre-qualified for all three of these. He's gonna dig in and look at a lot of these other expenses. What are the property tax rates for that specific home? Is there an HOA, insurance quote for what it would cost at that specific home? All these things to actually give you that realistic number to then take, sleep on it for a night or two, and then make that decision if it's an investment you guys are willing to make.

Benjamin Adams: Yeah. Yeah, and I'm such a big believer in that what you qualify for and what you're comfortable paying a lot of times there are two different things. So you might qualify for a mortgage of $5,000 a month, but you're only comfortable paying a mortgage of $2,700 a month. And I totally get it because you don't want to be house poor. You want to do other things. You have other investments. You're going to be able to go on vacation. If all of your resources are going towards the house. it can be very uncomfortable. The margin for error is very, very low. So that is what I'm very in support of. I want people to make informed financial decisions. And I really want them to not be emotional about some of these things and making sure they really considered all these different areas and aspects of their finances.

Adam: Mm-hmm. Yeah, that's really good. Well, I'd like to just maybe just spend a few minutes now on our second point, which is really, really, I think, impactful and valuable right now. Just talking a little bit more about the affordability crisis that we have across the nation, but especially here in Colorado is just this idea of waiting for the perfect timing. You know, people get so caught up with interest rates, just thinking that, you know, big life decision like buying a house, they need to wait until everything is in alignment. You know, whether that be interest rates below 5%. ⁓ you know, all these different, you know, things have to be perfectly aligned and yes, you know, obviously every single person, the best time to buy a house is when it makes the most sense for you, that person, but people get so caught up on the interest rate. You know, I think this is such a common problem is just waiting for the perfect time to buy. And, ⁓ you know, I'm actually working with a client right now who's been sitting on the sidelines for a couple of years. And the main reason has been interest rates. You know, they're very fixated on the news, you know, watching the headlines, waiting for things to drop.

Benjamin Adams: Yeah.

Adam: hoping it feels better before actually deciding to take that first big step and make a move. But we're really starting to realize this now, I think more than ever, is that there's a lot more to that decision than just the interest rate and more importantly, the missed out on opportunities. Because again, right now it makes sense only and always if it makes sense for your situation and right now is actually a great time to be a buyer because you really have a ton of leverage and the upper hand in a lot of cases. Is that what you're kinda seeing as well?

Benjamin Adams: Mm-hmm. Yeah, I'm seeing the same thing. There's more inventory sellers nationally have outnumbered buyers by over 650,000. Now here in Denver, certain price points are always going to be competitive. If you're looking at 550 and under, the reality is that's probably going to be a pretty competitive area because there's only so many homes in that price range that are priced at 550 and under. So you're going to make sure that you're in touch with where you're looking. But other than that, you if you're out there looking and you're seeing a home that's been on the market for two weeks, a month, six weeks, that should be streaming to you that you have tremendous leverage, tremendous opportunity. What I'm seeing on my end is buyers are able to negotiate sales price reductions. They're able to get very large seller concessions to where the seller is gonna pay for all of their closing costs. Going back to the affordability thing, we can use a concession to buy the interest rate down on a permanent basis. We can also use it to do a temporary interest rate buy down that's been very popular because it's a subsidy. And it's great way of tackling interest rate risk if you feel like rates are going to come down in the future. What's great about the temporary buy down is that, you know, say for example, you did a three, two, one buy down, your interest rate in year one is going to be three full percentage points lower than what the note rate would be. So if the note rate is 6.5 % as an example, year one, would be 3.5%, 4.5 % in year two, 5.5 % in year three. and then it would mature to 6.5%. Now, if rates ended up coming down organically over the next year or two, you can still refinance with confidence because those funds are already in your escrow account. And it's a great, awesome strategy that buyers can use if they feel like rates will come down at some point. And so, yeah, so, and, you know, and I was just gonna reference my final thought here is that Warren Buffett quote ⁓ where he says, it's not about timing the market, it's about time in. the market. And when you can get in the, that's what I always say, you can't, the market's never, there's always going to be something that's unattractive about any market. It could be interest rates, it could be home values, it could be some of the intangible things that we're talking about, property taxes and homeowners insurance, but you have to get in the game. If you don't get in the game, you will never start building equity.

Adam: Mm-hmm.

Benjamin Adams: And another Warren Buffett philosophy is that he says the most powerful consumer debt is the 30 year fixed rate mortgage. And the reason for that is because you let time and inflation do the heavy lifting. When I first bought my home 10 years ago here in Applewood, my mortgage payment was $1,800 a month. And that at the time I was like, man, I don't know if I can do this. I just, I had just moved from Phoenix, Arizona, where my mortgage payment was 800. It was going to go up two and a half percent. two and half times of from what I was paying down in Arizona. And I was like, ⁓ my gosh, Ben, can you do this? And now all of a sudden, 10 years later, like you can't rent a one bedroom apartment in Denver for 1800 a month. And it's because time is doing the heavy lifting inflation is doing the heavy lifting. And so that's, that's the upside of inflation. When you own assets, inflation isn't always necessarily a bad thing because those asset prices are going to rise.

Adam: Nope.

Benjamin Adams: and your wealth is gonna increase and then it's gonna give you the opportunity to have more opportunities, more flexibility, put on a home equity line of credit or take equity out and redirect that for other things. But what you said at the beginning is you have to make sure it's right for you. That is by far and away the most important thing. Where are you at? Are you in a good spot? Do you feel secure about your career? Have you paid off some of the bad debt? far and away is way more important than anything else.

Adam: Yeah, we could go down a big rabbit hole here, but you think back to four years ago, five years ago when interest rates were, let's just say 2.8 to 3%. Let's just use 3%, which is basically half of what it is now. It'd be cool to see a study done just to see, in that five year period from when interest rates were at their lowest to where we are today, for anybody that has sold that house that they bought five years ago with that very low interest rate.

Benjamin Adams: Yeah.

Adam: I guarantee you nine out of 10 of them probably sold at a loss ⁓ or very, very flat. You they did not see much appreciation at all because when that demand was so high for, ⁓ for buyers, because the interest rates were so low, there's so many people off the sidelines and actually actively in the market with all that competition means that people are bidding against one another. They're inflating the price to the point where, yeah, you've got this great interest rate, but you paid 50 or a hundred thousand dollars more than you should. And that leads me into this most important kind of

Benjamin Adams: Mm-hmm. Yeah.

Adam: takeaway out of anything in my end on this tonight is understanding that you make most of your money on the buy, not on the sell of real estate. And because of that, you know,

Benjamin Adams: ⁓ is so true. Say that again and explain that because people don't understand what that means.

Adam: Yeah, you make the most money typically when you buy a property, not when you sell. So being able to buy when you have leverage like we do right now more than we've had probably in 20 years or more. Being able to have that leverage and use it to your advantage to buy at a low rate or sorry, buy at a low price point, get maybe a more favorable terms on the contract, maybe get some concessions, maybe like we were talking about a minute ago, getting a credit to use to then do a temporary buy down if you're using a loan. There's all of these strategies that

Benjamin Adams: Mm-hmm.

Adam: can be really only taken advantage of today because of the leverage the buyers have. And if done correctly, even if it is a 6 % interest rate, the take home amount, the profit that you get in that, going back to that five year window, the people that bought at a 2.8 % interest rate, but they're selling at a flat or maybe even a loss because they already paid for their home, is that really better in the long run than maybe a 6 % interest rate, but you're buying it at a really, really good price? when the economy and everything hopefully improves in a couple years and maybe you're to sell in five years from now, all of a sudden it's not only significantly higher in value. I think that's more important than just the interest rate is I guess, a long-winded way of me saying that.

Benjamin Adams: I know it's funny. ⁓ five years ago, I remember when rates were in the twos and I had customers and they're like, you know, I gotta take advantage of this rate. You know, of course rates are great. That's awesome. But I remember people buying homes. They didn't necessarily want because they couldn't get an offer accepted on the home that they wanted. So they had to actually go buy something they didn't want just to, it's like, well, this is like a five on my list. Like, you know, the home that I really want, I got out, bid on, I remember

Adam: Exactly.

Benjamin Adams: Every single offer had multiple other offers competing against multiple buyers every single time. So that's the name of the game. What is the market? What are the advantages that you have right now?

Adam: Yeah. And then one other point on this too guys, if you are considering buying at the moment, new construction has a ton of great deals just because oftentimes, you know, they're kind of at the mercy a little bit of the economy, meaning that, you know, when demand really goes up or goes down, they really feel the pinch probably more than anybody. And a lot of times they do actually have in-house lenders that can do some of these temporary and permanent buy downs. So oftentimes, you know, if certain communities, new construction communities have extra inventory or they're just really needing to, you know, offload some of their property, this can also be a great time for buyers if that's maybe a specific type of home that you're looking for. So just kind of keep that in mind as well.

Benjamin Adams: Yeah. Yeah. And that's those are my final thoughts as well. You know, yes, there is a little bit of an affordability crisis right now, but through seller concessions, through sales price reductions, there are ways to tackle that getting that seller credit to pay for all of your closing costs, getting a seller credit to be able to buy the interest rate down to do the temporary buy down. It's very, very impactful. And then we have other customers who are going to be a little bit more. We didn't talk as much about this today, but there's two different types of affordability. There's there's monthly affordability, which is what we've been focusing on. But then there's also the down payment or cash to close affordability as well. One thing that's great about Denver is we have a lot of down payment assistance programs with very high income limits. We have down payment assistance programs here in Denver right now. that have income limits as high as 160, 170, 180,000 and not just one, several. At North Point where I work, we have access to over 20 different minimum down payment, reduced down payment or down payment assistance programs, over 20 different programs for FHA conventional minimum down, reduced down or down payment assistance. So there are ways, if that's a concern as well, there are ways to tackle that. And what's really cool, is that some of these down payment assistance providers are now allowing down payment assistance and you can also buy the interest rate down even further. So recently I've been able to help folks get down payment assistance and then we've been able to buy the interest rate down even further with a seller concession where they're getting a rate that is significantly lower than what they would qualify for otherwise. So if something's important to you when it comes to affordability, whether it's monthly payments or down payment or cash to close, Just make sure that you're communicating that to your real estate mortgage professional and what your goals are. And a lot of times there can be a way to figure that out.

Adam: Yeah, very well said. Yeah, I think, Mayan, just close this one out, you guys. Just stop waiting for that perfect timing and start focusing on your timing. The buyers who win are the ones that not necessarily perfectly predicting the market. The ones that are winning are the ones that are prepared. They're knowing when that time does come how to take advantage of the opportunities that are placed in front of them. And I guarantee if you guys just focus on that, everything else will fall into place and you'll come out ahead in the long run.

Benjamin Adams: Yeah, you real estate's not about being perfect. It's about being prepared. Put together a game plan, understand what your goals are, make a budget, and then stay within those boundaries. And I just want to remind everyone that we do a free virtual training a couple times a month where we talk about affordability, where we help educate prospective home buyers on the Denver market. And we would love it if you joined us for one of these webinars. We do them every couple weeks. and we're going to be continuing to pick up the frequency of those. There's going to be news out in social media. You can go to Adam sells Denver. You can follow Adam on his social media. You can follow me on mine, American Money 101 on Instagram, Benjamin Adams on Facebook. And we're to be posting lots of news because we want to be able to help educate folks on the Denver marketplace and how to tackle and win the affordability game.

Adam: Well, catch you guys next time.

Benjamin Adams: All right, guys, we'll see you next time. Have a great week.

Adam: See you guys.