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Wednesday, December 26, 2012

Denver Metro Association of Realtors Takes Plunge Into Rating of Realtors

[Published Dec. 27, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

There is a long and dismal history of online rating of real estate agents.  With so many of us chasing so few transactions — the average agent only has about three per year — we agents eagerly search for ways to stand apart from our colleagues. 

Many agents boast about their “Five Star Real Estate Agent” rating from a prominent Denver magazine. However, you won’t find either the program or the agents on the magazine’s website. Why? Because it’s not the magazine’s editorial product, but rather an advertising feature in which agents pay different rates for different size write-ups.  (Basic listings are free.)  Once published, agents routinely claim they were “named a Five Star Agent” by the magazine.  But that’s not quite true.

Years ago, I lost a listing in Wheat Ridge to another agent.  The seller cited the agent’s Five-Star rating by that magazine as one of the reasons for selecting her. Since I hadn’t heard of this agent, I checked the MLS for her transactions over the past three years.  She had had no listings and had only had three buyer transactions in the last three years, yet she had been selected as a “Five-Star” agent. I was stunned.

If you Google the phrase “rating real estate agents” you’ll find many websites claiming to recommend highly rated agents.  Since I know the top agents in my area, it is amusing to search on sites like Zillow or Angie’s List for my area’s “best” agents.  On Angie’s List, the agent with the most reviews when I searched “Golden” had 10 glowing reviews, all dated November and December 2012, but on the MLS I found only two sold listings in the last 12 months, both of them in Park County, and nothing in the metro area.

On Zillow, I didn’t even recognize the names of most of the top 20 agents listed for Golden, and didn’t find myself or the three other top listing agents for Golden among the top 50 agents listed.

Many websites that help you find the “best” agent in a geographic area are really just referral sites.  They sell your contact info to the first agent they can find who will pay for the lead, usually asking 30% of the commission earned by the agent.  I used my wife’s name to test one such website, and she got a quick referral to an agent in Denver who has been on the buyer side of 15 sales in the last 12 months but not one in Jeffco, much less Golden. (When that agent spoke with Rita on the phone, he claimed that he was one of Golden’s top real estate agents!)

I had given up on the idea of online rating of real estate agents, but last month the Denver Metro Association of Realtors (DMAR) was invited to participate in the Realtor Excellence Program, or REP.  DMAR is the first and, so far, only Realtor association in Colorado to sign up for REP.  Starting in 2013, members like me will be able to use REP to send post-closing surveys to every buyer and seller client and have the results appear on the website www.RatedAgent. com. If you want to see what the ratings will look like, go to that website and search in California, where it’s already up and running.

The biggest brokerages in DMAR have already signed on to REP, and my company will definitely sign on, too.

The way it will work is that on the 15th of each month, an email survey will be sent to every client who had a closing in the previous month. If no email address is provided, a printed survey and return envelope will be mailed to the client. We won’t be able to exclude any client — all will be surveyed.

Both the agent and his (or her) broker will be notified of each returned survey, and once more than one response is received, an overall rating (with comments) will be posted on, unless the agent opts out.

In addition to providing a useful — and accurate — guide for consumers, REP could help us agents improve our professionalism thanks to the detailed feedback received from our past clients.

This Week's Featured New Listing - 5-Bedroom Lakewood Ranch With Oversized Detached Garage

7520 W. Oregon Drive, Lakewood CO 80232

This modest-looking home is a real gem. It has three main-floor bedrooms with hardwood floors and new paint, plus two more bedrooms (non-conforming) in the fully finished basement.  The oversized (20' x 30') 2-car garage has both 110 and 220-volt electric service, and there's a 10' x 16' storage shed with 110V service in the spacious backyard.  No fixer-upper here -- this home is fresh, clean, and ready to live in, with no deferred maintainenance. Take a narrated video tour at, then call your agent for Jim Smith at 303-525-1851 for a private showing. Buyer gets free use of moving truck and free moving boxes, even if you have your own agent. Full info available at  Priced to sell at only $200,000.

Thursday, December 20, 2012

Santa and his HOA

[My HOA management company has a sense of humor. Our HOA manager sent this in an email today.]

c/o Mr. B.A. Humbug
Glacial Management Company

December 21, 2010 

Dear Mr. Claus:

We are instructed by the Board of Directors to inform you of the following violations:

Your sleigh is a recreational vehicle, which is prohibited by the covenants. When we told you to move it from your yard, we clearly did not intend for you to place it on your roof. Please remove it from your premises.

Red and green colors on your house clash with the common scheme of the neighborhood. You must choose colors from our approved color list and submit an application for repainting to the Architectural Review Committee.

You are feeding wild animals which appear to be diseased. The sickest is the one with the shiny red nose. Some would even say it glows. You must discontinue this practice immediately, or we will call animal control.

You are storing toys and games in a huge canvas sack in your yard. Be advised that all outdoor storage must be approved by the Architectural Review Committee, and must be of the same style and finish as your house.

It appears that you are operating a day care center and/or workshop in violation of the CCRs. Through the fence, we hear the sound of laughing, playing games and shouting out with glee. There are numerous small persons on your property and the clatter and activity is disruptive.

The amount of mail you are receiving exceeds what will fit in your architectural approved mailbox, so you must make arrangements with the postal service for alternate delivery at a post office box or a business address.

You have made unauthorized modifications to your home which allow you to enter and exit through the chimney. You must submit an architectural request for your new entry, including evidence that this modification meets all state and local codes and is in harmony with other homes.

You have been observed making a list and checking it twice, finding out who is naughty or nice. You have no authority to do that, and it is divisive. It is the function of the Compliance Committee to determine who is naughty or nice.

Thank you for your cooperation and understanding. If you do not comply within ten days, we will refer these violations to our attorney.

North Pole Homeowners Association

Tuesday, December 18, 2012

Fannie Mae's Underwriting Rules Are Driving Buyers to Credit Unions

[Published Dec. 20, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

Credit Unions are too often overlooked by buyers as a place to obtain a home mortgage, but they are becoming increasingly attractive — in part because of the underwriting nightmare created by Fannie Mae and Freddie Mac.

I have written in the past about how most loans are sold to Fannie and Freddie, and if the lender’s underwriter fails to meet those entities’ underwriting guidelines, the lender could be forced to buy back the mortgage. Buying back just one big mortgage can put a small lender out of business, because they must sell their loans to free up capital to make new loans.

As a result, the underwriters at mortgage companies commonly make absurd demands on their clients to meet the absurd demands of Fannie/Freddie underwriters, such as to document every deposit to their checking account, no matter how small.  A client told me that he was asked to document a $50 deposit to his account from several months ago. Can't blame the underwriter for making the request -- if Fannie Mae found in a post-closing audit that this hadn't been documented property, they could make the lender buy back the loan.

Here’s where credit unions provide a refreshing change — that’s because, typically, they make what are called "portfolio" loans, meaning that they hold their loans instead of selling them to someone else. Thus, they are freed from that underwriting tyranny and can use that rare commodity — common sense. They are non-profit, too. They deserve buyers’ consideration -- and are getting it.

2013 Brings Big Change in How Inspection Issues Are Handled in Contracts

[Published Dec. 20, 2012 in the Denver Post and in four Jefferson County weekly newspapers]

Every January, real estate professionals need to familiarize themselves with changes in the state-approved real estate contracts and forms. For 2013, the biggest change will be in how inspection objection and resolution are handled.

Until now, we have all been taught that the inspection notice is not part of the contract. Thus, when resolution of inspection issues involves a price adjustment or a concession by the seller, that resolution has to be implemented through an amendment to the contract.  And that amendment never indicates why the price adjustment or concession is being made — for example, because some major defect was not repaired by the seller.

Starting in January, the inspection resolution document (which will no longer be part of the inspection objection notice) will be considered part of the contract.

When real estate professionals first heard about the Real Estate Commission’s desire to make the inspection notice part of the contract, the industry rose as one in protest.

We were primarily concerned that the inspection notice would now have to be shown to appraisers and underwriters and might kill some transactions. Many lenders joined our protest, saying, “we don’t want to know!”

However, according to attorney Kent Jay Levine, analyzing the form for a local real estate school, “The lender does not need to receive the items that the Buyer wanted to be fixed if the Seller did not agree to do the work. However, if there is a resolution between the parties, whether by repairs performed by Seller, an adjustment to the Purchase Price or a credit from Seller to Buyer, the Buyer will need to disclose this to the lender.”

Indeed, only the Inspection Resolution form has the following note just above buyer’s signature: “This document amends the Contract. Buyer must provide a copy of this Inspection Resolution to Buyer’s Lender.” The Inspection Objection form is now considered merely a “notice” to seller and is signed only by the buyer.  Even if the seller agrees to make every repair listed in this “notice to correct,” this must be embodied in the Inspection Resolution form, which then becomes part of the contract.

Even if the buyer submits the full inspection report with his objection notice, that document (which could scare an underwriter) does not get attached to the resolution agreement and therefore is not part of the contract and is not submitted to lender.

Given these clarifications, I think that both real estate agents and loan officers can relax.

Wednesday, December 12, 2012

Inspection Issues Bring Second Round of Negotiation Between Buyer & Seller

[Published Dec. 13, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

Getting a home under contract is only the beginning of the negotiation process between buyer and seller. After the buyer has had the home professionally inspected, a whole new round of negotiations can begin.

Ideally, the seller will acknowledge the problems identified by the buyer and agree to fix them, but often that is not the case.

Like most active real estate agents, I have been on both sides of this drama, and it really helps if the agent for the other party — whether buyer or seller — is also experienced at negotiating inspection issues. Why?  Because the buyer and seller in any transaction need guidance on what is and is not a reasonable inspection demand.

Health and safety issues top the list of items that the seller should be expected to address. Examples could be anything electrical; gas leaks; radon levels over 4 pCi/L; clogged sewer lines; plumbing leaks; dirty or faulty forced air furnaces; hot water heaters that are obviously beyond their rated life span; rotted or cracked trusses or joists (such as on a deck); or certain foundation issues.

The professional inspector, who charged the buyer $300-400 for his report (plus $100 for radon testing and another $100 for a sewer scope when appropriate), wants the buyer to think that this was the best money he has spent because of the value of the repairs that his report might produce for the buyer. The defects listed can be very long.

Only once have I seen a buyer’s agent write in the inspection notice that “Seller shall correct all the items in the attached inspection report.”  That is simply not reasonable.  The buyer’s agent should work with the buyer to identify only those issues which are particularly important and ignore the ones that the buyer can take care of after closing.

The seller, upon receiving the Notice to Correct, can do one of several things: 1) accept all demands; 2) accept some and refuse others; 3) offer a price reduction or monetary concession in lieu of making certain repairs; or 4) refuse the buyer’s demands altogether.  The last response could signal that the seller has a back-up offer and is trying to get the buyer to terminate the contract, which the seller cannot do. The buyer's only options at this point are to let the contract die (and get earnest money back) or withdraw the Notice to Correct and proceed with the contract.  Choices 2,3 and 4 will be expressed in what’s called a “Seller’s Alternative Resolution.”  At this point, the buyer can accept seller’s response or begin negotiation. If the two parties don’t reach agreement, the contract terminates and the buyer gets his earnest money back. It is in this process that an agent’s negotiating skills are put to the greatest test.  Personally, I enjoy that part of my job.

Thursday, December 6, 2012

Bringing Democracy to Jeffco's Board of County Commissioners

[Published Dec. 6, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

     I had a chance to sit down with Jeffco Commissioner-elect Casey Tighe last week, and we discussed an important issue which is nothing less than bringing democracy to the Board of Commissioners. There are three commissioners, each representing a third of the county, but each is elected at large — that is, by the entire county.

     Why aren’t they elected only by the residents of the district they will supposedly represent? There are two major consequences of electing all the Commissioners at large. The first is that each commissioner does not need to worry about being accountable to his (or her) district. John Odom was the perfect example of this, because his “district” was Golden, which is adamantly against completing the Beltway. If he answered only to his district constituents, do you think he’d have been so pro-Beltway?

      The second impact of the current at-large voting is that potential candidates are discouraged from running because they have to campaign across the entire county instead of just in their own district.  I suspect that’s why the Democrats failed to find a candidate to run against Faye Griffin this year.  She ran unopposed.

      The current board, when asked, wouldn’t even consider doing away with at-large voting or enlarging the board to five Commissioners. "We don't have the office space for two more commissioners," was the response.  Casey Tighe told me he’ll make sure the Board considers these proposals and bring more democracy to Jefferson County. Adding two more commissioners does cost money, but changing from at-large to district voting should cost nothing.


How to Protect Yourself From Being Scammed After the Next Big Hail Storm

[Published Dec. 6, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

      It’s a sad fact that natural disasters bring out scammers. Here in metro Denver, our most common large-scale disaster is the hail storm. When a hail storm sweeps through your neighborhood, you can expect numerous roofing companies to solicit the job of replacing your insured roof.  Since it’s unlikely you’ll recognized the name of any one of these “door knockers,” how do you protect yourself from hiring the wrong company — a scammer?

     The state legislature recognized the extent of scamming by roofing contractors when it enacted SB 38 this year, which became effective on June 6th.  Roof Brokers, a long-established Colorado firm well known to us real estate agents, provides the following checklist for homeowners. I have added my own comments to theirs:

¨ Only accept bids from local contractors.  Google the company’s name to verify and to look for negative reports. Also find out if there have been any complaints against this company by visiting the Better Business Bureau website,

¨ Only accept bids with price, scope of work and materials spelled out in detail.

¨ You have 72 hours after signing a contract to cancel it in writing. Don’t sign a contract with a cancellation fee.

¨ Request five local references that the estimator personally worked with — and call them!

¨ Ask for proof of the roofer’s Worker’s Compensation & General Liability insurance. Make sure the name on the insurance certificate matches the name on the contract.

¨ Make sure the roofer pulls a building permit and schedules a final inspection.

¨ Do not pay for materials in advance of them being delivered to your property.

¨ It is illegal for a contractor to offer to pay, waive or rebate your insurance deductible. A company can pay an advertising fee (which can be equal to the deductible) if the homeowner is willing to put a yard sign up, but only after all work is completed and paid for.

¨ Never turn over insurance checks or pay any money until the job is completed.

     I suggest you call a real estate professional (such as me) for any contractor recommendation, not just roofing. You can be sure that your agent does know the names of established roofing companies (such as Roof Brokers) — ones he has used or recommended over the years.  When a contractor is recommended by me or another agent, that contractor will want to do a good job so that they get more referrals from us, not just satisfy you as a one-time customer he may never see again.

Tuesday, December 4, 2012

Housing Market Stays Hot as Winter Sets In

Look at these charts -- buyers are still buying at a record pace despite the approach of cold weather and the holidays. Especially encouraging is the increased traffic in higher priced homes.

Wednesday, November 28, 2012

Many Realtor Association-Endorsed Candidates, Including Casey Tighe, Won

[Published Nov. 29, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

Each election, the local Realtor association — in our case the Denver Metro Association of Realtors (DMAR) — interviews candidates for local offices and will not only endorse but also, in some cases, make campaign contributions. DMAR also endorses and opposes ballot issues.

This year, DMAR endorsed Rep. Ed Perlmutter in his highly contested re-election bid, and he won handily over Republican Joe Coors. DMAR also endorsed RTD director Matt Cohen (himself a Realtor), but Matt lost by 1/2 percent to an anti-RTD candidate, Natalie Menten, which should make for some interesting board meetings. Realtor associations have traditionally been very supportive of light rail and mass transit, investing much money in passing FasTracks, for example,

DMAR also traditionally supports educational taxes such as 3A and 3B, which it supported again this year — successfully — in both Denver and Jefferson County.  Realtors know that good transit and good public education help to maintain and raise property values.

And, most dramatically, DMAR endorsed Casey Tighe in his race against incumbent County Commissioner John Odom.  Tighe eked out a margin of less than 0.5%, and only after the provisional ballots were counted. His victory is interesting, because DMAR supports “completion” of the Beltway, and Odom, like the other two current commissioners, was a big proponent of the Beltway, going so far as to attempt a legislative override of home-rule cities’ opposition to highway construction, which backfired badly on the commissioners back in April.  (I wrote about that effort in this column.)

Tighe did not make opposition to the Beltway an issue, but he is not a proponent of it and will bring a degree of open-mindedness to what is largely a development boondoggle funded by the county.

DMAR was pre-empted by the state Realtor association in the endorsement of state legislators. The Colorado Association of Realtors (CAR) was successful in its endorsement of several Jeffco legislators, including Sue Schafer, Cheri Gerou, and Libby Szabo, but failed in its endorsement of others, including candy magnate Rick Enstrom against incumbent Max Tyler. I’m not in Max’s district, but I have great respect for the quality of his work and devotion to his job. I have no idea why CAR would have opposed him. Realtor endorsements are supposed to be based on support for Realtor issues such as property rights, protection of the mortgage interest deduction, etc. Max supports these.

Insurance Lessons from Hurricane Sandy

[Published Nov. 29, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

Many homeowners in New York and New Jersey are suffering excessive uninsured losses despite having homeowner’s insurance and even flood insurance.

Homeowner’s insurance only covers damage from water that does not hit the ground before it enters the house. Flood insurance, which costs more than homeowners insurance, does cover damage from water that enters the home after touching the ground, but there is a big exception — it does not cover below-grade finished living space such as a finished basement.  It does cover basement appliances — such as furnaces — that support the above ground living space, but that’s all.

So imagine the shock of a homeowner in New Jersey whose finished basement is destroyed and he gets only $2,000 for the furnace — despite paying years of high premiums for flood insurance.

Here in Colorado, if you are in a flood prone area, this is important information to keep in mind whether or not you have flood insurance.

A more likely source of damage for the rest of us is water intrusion from a misdirected sprinkler or burst hose bib. When that water enters your basement, you will suffer damage that isn’t covered by insurance.

Monday, November 19, 2012

Habitat for Humanity Dedication Reminds Us of the Value of Home Ownership

[Published Nov. 22, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

By JIM SMITH, Realtor®

On Saturday I attended the dedication of Habitat for Humanity of Metro Denver’s 500th home, which was sponsored by Jeffco Partners for Interfaith Action.  Actually, six homes in Lakewood (two  tri-plexes) were dedicated that day, and each was allowed to claim the honor of being HFHMD’s 500th home.

In the picture is Elizabeth Ongu, after receiving the key to her new home at 1569 Chase Street. With her is her daughter, Ajuly, 7, and sons Omat, 10, and Olnar, 4. Joining in the occasion is my parrot, Flower.
This was the 12th home sponsored by Jeffco Partners.  I am honored to serve as volunteer coordinator/webmaster for this group’s annual pumpkin patch, which is the source of most of its funding for home sponsorships. Once again, this year’s pumpkin patch netted over $25,000, which went toward building the Ongu home. Members also joined Elizabeth in the actual construction of her new home.

Habitat homeowners truly know the value of home ownership — no moving every year or two; the children no longer have to change schools repeatedly; Elizabeth’s low mortgage payment is fixed, and lower than her rent payments; and the neighborhood is safe, too. Now they have a fenced yard to call their own. They can have a dog if they want (or a bird)!

In short, the Ongu family has a lot to be thankful for this week. But all of us homeowners can be thankful for those same benefits of home ownership — and thankful that we can take them for granted! They remind us that the value of home ownership goes way beyond deductibility of mortgage interest.

As Coloradans, we can be grateful for programs here in Colorado which make the American dream of home ownership a real possibility for those who don’t enjoy it yet..

Habitat for Humanity is only one such program. FHA still allows Americans to buy homes with only 3.5% down, and the Colorado Housing and Finance Authority, which I featured recently, will lend first-time home buyers that 3.5% down payment so they can buy a home with as little as $1,000.

We can also be thankful that we live  in Jefferson County, where we did not suffer as big a downturn as other areas of the state and country, and where we can safely say that the housing recession has passed.

Speaking as a real estate professional, I can also be thankful for some industry-specific and personal happenings or conditions, to wit:

* Metrolist, Denver’s MLS, has decided to abandon its in-house MLS platform in favor of purchasing software from a national industry leader, CoreLogic. Metrolist tried in vain to reinvent the wheel, and never really succeeded. I’m really impressed by Metrolist’s new CEO, Kirby Slunaker, who is also going to shake up the syndication of MLS data to consumer websites. I’m thankful and optimistic.

* The 2012 election is over. No more commercials, but also, hopefully, no more viral emails spreading mistruths about the 3.8% Medicare tax contained in Obamacare.

* Three metro Realtor Associations successfully completed their merger into the Denver Metro Association of Realtors (DMAR), and I’m honored (and thankful) I was elected to its board of directors.

* I’m thankful to own a solar-powered home and solar-powered office and to drive a Chevy Volt, which is powered by electricity generated from the sun. Over my 8,000 miles I’ve only had to refill my 9-gallon gas tank five times!

* I’m thankful to have wonderful broker associates — Jim Swanson, Karon Hesse, Carrie Lovingier and Kristi Brunel — working with me to serve home buyers and sellers with the highest level of integrity and environmental responsibility.

* And, most of all, I’m thankful for my amazing wife, Rita.