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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.

Wednesday, November 14, 2012

A Mountain Retreat—Just 30 Minutes from Golden

[Published Nov. 15, 2012 in the Denver Post and four Jefferson County weekly newspapers]

     If you like living in the woods, but not too far from “civilization,” you will like this home on 0.8 acres located up Coal Creek Canyon, about halfway to the Peak to Peak Highway. It’s just beyond Wondervu, on a ridge that offers a view of the continental divide. And yet, it’s only a 30-minute drive from either Boulder or Golden. The air is clean up here, and about the only sound you might hear other than birds is that of jets passing five miles up in the sky — that’s how quiet it is. You don’t have to visit this home to get a feel for it. You’ll find my narrated YouTube video tour of it online at . If you like it, call me for a showing. Price just reduced - now only $319,000.

It’s Easy to Believe Realtors Are Overpaid for What They Do, But Are They?

[Published Nov. 15, 2012, in the Denver Post and four Jefferson County weekly newspapers]

When you look at what a real estate agent can make on a single transaction — often over $10,000 — it’s easy to conclude that we’re a highly paid profession, perhaps even overpaid. 

According to the web site, however, the median income of real estate sales agents in the United States is $37,430. Recently the National Association of Realtors (NAR) released its annual membership profile, which showed that while those with 16 or more years in the business have a median income of $50,200, those with 2 or fewer years have a median income of $8,700 per year.  That’s before expenses, such as cell phone, car & gas, insurance, computer hardware & software, licensing fees and Realtor dues.  Average gross income for all members was $34,900 in 2011, or $15-18 per hour worked — again, before expenses.  It’s little wonder that only 43% of Realtors say real estate is their sole source of household income.

How can that be, when we can make so much money on a single transaction?

The answer is that there are so many of us. The illusion that we make a lot of money keeps drawing people into our profession.  It seems that everyone has a relative or friend who is licensed, and they are frequently drawn to hire that person to help them buy or sell a home. Many of these agents give up and quit the business after losing a bunch of money trying to make it.

In short, the vast majority of agents are just getting by.

For example, in one Lakewood ZIP code, there were 229 residential properties sold in the last 12 months. Can you guess how many different agents had those listings?  I counted 186.

You’re probably aware that we are paid only on success. Most of the time, agents work for free — and spend money doing it. Personally, 25% of my listings expire or are withdrawn without selling, despite the expenditure of significant money, not just time.  I researched several low– to high-producing agents’ statistics, and that’s pretty typical. One agent I studied had 42% of her listings expire without selling. That’s a lot of unpaid effort.

Unlike doctors and lawyers, we don’t have “billable hours.” Lawyers get paid when their clients lose (unless, like personal injury lawyers, they work on contingency), and doctors get paid whether or not their patients get better.  Real estate agents go about their business hoping but never knowing that there’s a paycheck for them somewhere down the road.  Much of the time, there isn’t.

Wednesday, November 7, 2012

Mortgage Credit Certificates Can Save First-Time Buyers Thousands of $

[Published Nov. 8, 2012, in the Denver Post and four Jefferson County weekly newspapers]

I’ve written about Mortgage Credit Certificates (MCC’s) before, but even so, I have to confess that when I’m working with a first-time home buyer, it is easy to forget about this program which has the ability to reduce the effective interest rate of a 3.5% mortgage to as little as 0.6%.  Do I have your attention?

How does an MCC lower your effective interest rate so dramatically? This was explained at the monthly luncheon of the Colorado Mortgage Lenders Association which I attended last week. Presenter Shelley Ervin explained how the MCC allows borrowers to claim as much as 50% of mortgage interest as a tax credit instead of a tax deduction, so long as the home remains their primary residence. If you know anything about tax preparation, you know that a tax credit is worth many times more than a tax deduction.

We all know (hopefully) that mortgage interest on our primary residences is tax deductible, which reduces the income on which you pay tax. But a tax credit is a refund of a portion of the interest which you paid. This tax credit is given to you not just on the first year of your mortgage but for the life of the loan, and can, over 30 years, amount to as much as $30,000. Compare that to the one-time $8,000 tax credit given to home buyers as a stimulus a few years ago. That tax credit created a rush of home buying activity, and yet it pales in comparison to the MCC program, which existed before that rebate and still continues — and this program doesn’t expire. If more buyers just knew about this program, they would be leaping off the fence and buying homes right now, while prices are still low.

Colorado’s MCC is only available from the Colorado Housing and Finance Authority (CHFA) or from a CHFA participating lender. Ask if your lender is CHFA approved.

The home featured below would be a perfect candidate for this program.  A first-time homebuyer (or veteran) could purchase this home with as little as $1,000 out-of-pocket expense, and claim 20-30% of his mortgage interest as a tax credit — basically a refund on his tax return. Given the affordability of such homes and today’s low interest rates, I’d be surprised if this home does not sell right away. Indeed, three of the five comparable sales I used in pricing this home sold in less than a week, one for $3,000 over listing price. Did those buyers take advantage of the MCC program?  Likely not. Don’t miss this opportunity, if you qualify. I’ve posted a link for more info at If you need help finding a CHFA approved lender, ask me.

Just Listed: 2-BR Bungalow in Old Town Arvada

[Published Nov. 8, 2012 in the Denver Post and four Jefferson County weekly newspapers]

     This 1950’s ranch at 5410 Garrison Street shows great pride of ownership, from the re-finished hardwood floors to the double-pane windows to the sprinklered and beautifully manicured front and back yards to the way rain wa`ter from the roof is channeled away from the foundation. I was very impressed! There is a detached garage with RV or boat parking, a storage shed and a fenced backyard. All kitchen appliances plus washer and dryer are included. The home faces west and south (on corner lot) and trees provide summertime shade. Overall, a fine little home. Be the first to see it!


Thursday, November 1, 2012

As Winter Approaches, Buyers Are Still Buying Bigtime

If you had any doubt that the housing market is recovering, look at this chart showing buyer activity over the last 13 months:

Here is the report by price range for Denver, Jeffco and the full MLS:

If you believe that real estate is seasonal, with the highest activity in the summer, notice in the top chart that April was the peak of buyer activity. Also notice that buyer activity increased from September into October and that this October's activity is about double last October's percentage-wise.

Good & Bad Effects of eContracts

[Published Nov. 1, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

I have written previously about how eContracts and eSignatures have revolutionized the real estate business. It really is great to be able to write a contract and have both parties — no matter where in the world they are located — sign them with their mouse and then deliver the contract to a title company, all within just a few minutes and without anyone, including me, printing out the document.  (It also means an agent can write a contract from anywhere in the world.)

Those are some good effects.  But there is one bad effect of this eco-friendly revolution.  That is the reduced explanation of documents to those who sign them. In the past, I would print out every document and go over each provision, paragraph by paragraph, with the client before he or she signed it.

To a large extent, that’s not happening anymore with me and many agents, and that can lead to problems. For example, last Friday I wrote an offer for $40,000 less than the asking price on a property. The seller asked her agent to counter at $10,000 less than asking price, but a typo caused that provision to be omitted. Seller signed without reading and is now under contract for $30,000 less. On paper, this wouldn’t happen.

What You Need to Know When You Choose to Buy Without Your Own Agent

[Published Nov. 1, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

Choosing to deal directly with a listing agent — without the services of a buyer’s agent — has important ramifications. This week I was reminded of a serious misconception held by some buyers.

The #1 Misconception:: Since the seller pays both agents in a transaction, the seller saves money when the buyer does not have an agent. Because the seller saves money, the buyer can get a lower price on the purchase.

This could be true, as I’ll explain below, but only partially, and usually it is not true at all. The first thing you need to know is that the listing brokerage and not the seller pays the buyer’s agent.   

For example, let’s say that a home is listed for 5.6% commission, slightly above the statistical average. In the listing agreement it states that the listing brokerage will offer part of that commission to a “cooperating” broker. In our market that “co-op” commission is typically 2.8%, regardless of the total commission.  If the total commission is 5.6%, then the listing agent retains 2.8% of the commission for himself. If it is 5%, he retains only 2.2%.  If it is 6%, he retains 3.2%, and so forth.

In any case, the seller does not benefit in any way if there is no buyer’s agent in the picture — unless the listing agreement specifies that the commission is reduced when there is no buyer’s agent to compensate. That’s called a “variable commission” arrangement, and MLS rules require the listing agent to disclose that arrangement on the MLS.

Most sellers do not think to ask their listing agent to charge them less if they “double-end” the sale of their home, but if they do ask, the listing agent will likely agree to it.  Only about 25% of agents put this provision in each listing agreement without being asked.  I just looked at a sampling of 92 listing agents, and only 22 of them specified “variable commission” on their MLS listings.  I’m one of them.

Anyone without access to the MLS — that’s you, unless you’re an agent — can’t tell whether a particular listing entails a variable commission, because this fact is not displayed on the consumer websites, only on the MLS.

The bottom line is that if you think you can pay $5,000 less on a property by not using a buyer’s agent, then the listing agent will be thrilled to write up the contract, but the chances are that the seller is getting that much less for his property and you just doubled the listing agent’s commission. Not what you intended, is it?  Meanwhile, you sacrificed your opportunity to have an agent on your side, fighting for your best interest.