How Hot Is the Real Estate Market? One Listing Draws 26 Competing Offers

[Published Jan. 31, 2013, in the Denver Post and in four Jeffco weekly newspapers]

Last week a buyer asked me to show her a new listing in Golden proper. It was listed at $349,900, and the public remarks said, “Multiple offers. Highest and best by 9 a.m. Sat., Jan. 26th.”  I showed the house and submitted an offer for $365,000 with an additional provision stating that the buyer would pay $1,000 more than any competing offer.

By Saturday afternoon, the 5-day-old listing was under contract — but not with my buyer. The listing agent explained that he had had 50 showings and 26 offers, many of them over $400,000. Four other offers had escalation clauses, too, but they were higher than mine.

What sticks in my mind from this experience is that there are still 25 disappointed buyers out there ready to buy a house, if they could only find one.  This was literally the only such listing in Golden proper! 

What better time could there be to put a home on the market?

Curious to find out how other listings were faring, I sent an email survey to 13 agents whose listings had gone under contract in the previous week asking if they had multiple offers and whether their listing was under contract at or above full price.

One of those agents reported 11 offers on her listing, ten of them above full price.

I’m still waiting for most of the agents to respond, but I can tell you that 7 of those 13 listings went under contract in less than 10 days. A couple were “stale” listings — listings that had been on the market for 100 or more days — but it was last week that they sold. 

Buyers are learning that they have to act quickly when a new listing comes on the market, which is making it even more of a seller’s market than it already was. On Monday, I had a buyer wanting a home in a certain price range, and I showed him the only five homes which were on the market in his desired area.  At day’s end, he made a full-price offer on one of them, worried that it would be gone if he kept looking for “something better.”  That’s a fairly typical attitude nowadays.  I have had several buyers recently who hesitated and, before they knew it, their #1 listing was no longer available.

Two agents reported that they sold their listings before they even put them on the MLS, just from word of mouth. The sellers accepted their full-price offers, not even giving other buyers the opportunity to submit competing offers.

When a new listing, like my new listing at 324 Lookout View Drive, goes on the MLS, an email is sent to every agent for whom that listing matches search parameters they have entered. The Lookout View Drive listing resulted in 152 emails sent to such agents. Until recently, the number of emails sent was typically well under 100.

 

In my 11 years as a Realtor, I have never experienced the kind of seller's market as intense as we are experiencing now.

Featured Listing: South Golden Home with Mountain Views

[Published Jan. 31, 2013, in the Denver Post and in four Jeffco weekly newspapers]

 

324 Lookout View Drive, Golden CO 80401

There aren’t too many 1950’s homes that are offered for sale by their original owner, but this one is being sold by two  brothers whose parents bought it new in 1954. The view you see here is not from the street. This home was positioned to face its side yard. The view from the street is much less interesting — mostly just its driveway and oversized one-car garage. When you walk through the gate you enter the scene above — a beautifully landscaped yard fronting on a former irrigation ditch, and offering a great view of the foothills. The 1/4-acre lot includes a large garden area and storage shed.

 

2013 May Be the Year When Electronic Lockboxes Finally Take Hold Here

[Published Jan. 24, 2013, in the Denver Post and in four Jeffco weekly newspapers]

By JIM SMITH, Realtor ®

Like many front range Realtors, I have several electronic lockboxes in my closet, dating back to previous failed efforts to introduce them in this market.

Unlike elsewhere in the country, these “smart” lockboxes have never caught on in the Denver market. A few years ago, the National Association of Realtors introduced its own product called the Sentrilock, and several brokerages and individual agents invested in them, including me.

Every now and then I show a listing with one of these lockboxes, but I know many listing agents who, like me, prefer to use the older mechanical lockboxes. The only reason that this lockbox has been adopted to the extent it has is that showing agents don’t have to obtain the key card. Instead, access can be obtained by the use of numeric “one-day codes” which are issued by the showing service, and, as the term suggests, are only valid for one day. Come back the next day and your code will not open the lockbox.

A newer technology was been introduced by Supra, the company which manufactures the most common mechanical lockboxes currently in use in our market. Supra’s version can be opened using a smartphone app.

This approach has great advantages over other approaches, especially as more and more real estate agents adopt smartphones. Because the agent’s phone has internet or at least cell connectivity, the information regarding each showing can instantly be communicated to the listing agent and the seller.  One such application would be to notify the homeowner the moment that the showing agent re-locks the lockbox and has left the property.

I have been told that Sentrilock is likely to introduce a new generation of its lockbox that will use this kind of technology.  If they don’t, they risk losing market share, so I’m guessing the reports are true.

To raise public awareness of the availability of electronic lockboxes, the current version of the state-approved listing agreement requires the agent to indicate whether a mechanical or electronic lockbox will be used.  The expectation is that if an agent checks the box for a mechanical lockbox, the seller might quiz the agent on why he or she is not offering the higher security electronic lockbox.

The most promising indicator that one or the other electronic lockbox will finally take hold in our market is that the Realtor associations serving the metro area have agreed to get together this week to discuss widespread adoption of an electronic lockbox. One of the associations already offers the Sentrilock product, but, depending on Sentrilock’s future offerings, this may or may not guarantee that they will be the chosen product.

The biggest disincentive to us agents in adopting electronic lockboxes always has been and will continue to be financial. Both brands of lockboxes cost over $100 each, compared to $30 or so for the current mechanical lockboxes. In addition, there is a monthly service fee of $10 or so per agent. To lessen the initial investment, the companies who manufacture the electronic lockboxes usually offer attractive programs under which they will accept mechanical lockboxes as trade-ins during the initial implementation period.  The fact that there are competitive offerings in the electronic lockbox market suggests to me that the Realtor associations could negotiate a sweet conversion deal with the winning vendor.  We’ll see.

Although our market hasn’t exactly suffered from our failure to adopt electronic lockboxes, it will be nice to get with this technology.

The Art of Giving and Requesting Good Feedback from Real Estate Showings

[Published Jan. 17, 2013, in the Denver Post and in four Jeffco weekly newspapers]

One of the most important services a listing agent can provide his or her seller is useful feedback from each showing — but he also has little control over getting buyers’ agents to provide it.

What the listing agent can do, however, is to employ a showing service which has an effective and dependable system for requesting feedback from each showing agent.

The showing service which I — and the majority of Denver area brokerages — hire is Centralized Showing Service (CSS), a national firm which has several call centers across the country.  Like RE/MAX Alliance and Coldwell Banker Residential Brokerage, my firm pays CSS to provide their service free to all my agents for all their listings, and it really makes a difference, including for getting feedback.

For $35 per listing, CSS answers their phones 7 days/week, 8am to 8pm (6pm weekends), and I have never experienced a busy signal or long wait time.  (If their Denver call center is busy, the call is routed to their San Antonio or Kansas City call center.)

What I like about CSS’s feedback system is that it allows the listing agent to specify the wording and the number of times that the feedback request is sent if no response is received. The first request is sent at the end of the showing window, so that it is in the agent’s email inbox as soon as he/she returns from the showing.

The listing agent can specify whether to use a multiple choice “survey” format, or provide a box for the showing agent to provide free-form feedback. I much prefer the non-survey feedback, and think it serves the seller better. It’s also friendlier to the showing agent.

A picture of the home is included with the feedback request, which can help the showing agent to remember which home it was.

The listing agent can specify whether the seller should receive the feedback immediately or only after it is screened by the agent. I take the position that my clients can take whatever feedback is given and I don’t want to slow down the release of that feedback to them. My sellers get the feedback simultaneously with me.

I firmly believe that it is the professional responsibility of every showing agent to give feedback, and email is always the best way. I think it’s rude to call an agent before giving them a chance to respond by email.  The wording of my email requests through CSS is “Please respond to this request so I don’t have to bother you on your cell phone,” which is effective.

Agents who use a multiple-choice feedback request often ask if the price is low, high or just right. How can the agent or seller expect a useful or honest response? If the showing agent is preparing an offer, do you think they’ll tell you the price is right — or low?  And if they’re not preparing an offer, how can you expect them to do a market analysis on your listing?  As a buyer’s agent, I wait for an expression of interest in buying a listing before I look at whether the price is high, low or reasonable.

CBI Gives Priority to Gun Checks

[Published Jan. 17, 2013, in the Denver Post and in four Jeffco weekly newspapers]

To be licensed as a real estate agent, mortgage broker, or many other professions, you have to pay for fingerprinting and then pay the Colorado Bureau of Investigation (CBI) $39 to do a background check using those fingerprints.

However, when you purchase a gun, you pay the CBI nothing for the background check and — here’s the kicker — the CBI gives you priority!

Right now there is a 3-4 month wait for new real estate licensees because of the volume of gun background checks at the CBI.  Is there a compelling public policy rationale for making people seeking employment wait behind those who want to purchase a gun?

Golden Real Estate has one such agent waiting for his CBI clearance so that the Division of Real Estate will issue his license to practice real estate.  In Colorado, it’s guns over bread and butter.

 

Arvada Home Has 5 Bedrooms & Mountain View

[Published Jan. 10, 2013, in the Denver Post and four Jeffco weekly newspapers]

This home sits on a quiet knoll in Arvada, with a mountain view from the deck outside the master suite. Four bedrooms are upstairs, and a 5th bedroom is in the 75% finished basement. In addition to the 2-car garage, there is extra off-street parking both inside and outside a 9’6” wide gate. Since there are no covenants, you can park your RV either inside or outside of that gate. Outside the 12’x21’ family room with its gas fireplace is an equally large covered patio. Inside, there is hardwood flooring in every room except the kitchen, including under wall-to-wall carpeting. Open this Sunday, 1-4 p.m.

‘Above and Beyond’ Services Can Set Apart a Full-Service Real Estate Agent

[Published Jan. 10, 2013, in the Denver Post and four Jeffco weekly newspapers]

The general public thinks that all Realtors do is show homes and write contracts and collect commission checks.  After all, what more is there to the buying and selling of homes?

I’ve written before that the average real estate agent has only two or three transactions a year. What sets some of the more successful top producers apart, I’ve found, is that they find new, different and creative additional ways that they can provide value to their current and prospective clients.

Personally, I have found all sorts of things I can do to serve my clients. One of those is to have a in-house handyman as well as a list of outside professionals who can do those little (or big) things to ready a house for market, handle inspection items prior to closing, and help a buyer make improvements after closing. Examples include tiling carpeted bathrooms; replacing light fixtures, or other light electrical tasks; replacing a toilet or other light plumbing tasks; washing windows; painting; repairing drywall, etc.

A few years ago, I sold a home for a widow who was moving out of state and wanted to sell rather than move most of her furnishings. I made a slideshow of the items, with prices, put it online and sent the link to 250 neighbors for whom I had email addresses. Everything sold, and she was delighted.

Lot of agents “farm” a neighborhood, as I do, and a typical farming activity is to sponsor a garage sale. My garage sales have some extra features — I created a website, not just a flyer, showing the participating homes and listing what each home was selling. I provided this information ahead of time to neighbors so they could have first shot at their neighbors’ items. And after the sale I used my moving truck (and handyman) to collect unsold items and take them to Goodwill or Habitat for Humanity — and provided donation receipts to each homeowner.

Last Saturday I took a couple to see models at a new home community — and then introduced them to a client who had bought a home in that community to see if he was happy and if there were any problems with his house.

I don’t believe agents should also be mortgage brokers, but it is important to understand the variety of loan programs and have a stable of loan officers with different areas of expertise from first-time home buyers with only $1,000 down payment to conventional or reverse mortgage programs.

As a “newbie,” I did not think experience mattered much, but it has, in fact, brought me more and better ways to serve my clients.

Buyer Activity Remains High Despite Reduced Inventory

Here's my latest calculations of buyer activity by locale:

And here are the calculations by price range:

Don’t Believe Reports that the Mortgage Interest Deduction Might Be Eliminated

[Published Jan. 3, 2013, in the Denver Post and in four Jeffco weekly newspapers]

There is continued talk in D.C. about including the mortgage interest deduction (“MID”) among those deductions and “loopholes” that might be eliminated. Rarely, however, is it pointed out that the mortgage interest deduction, as it exists currently, is already an example of progressive taxation.

In other words, the MID favors the lower income tax brackets over the higher income brackets.  Congress will never, in my opinion, eliminate the mortgage interest deduction entirely. At most it will change the amount of mortgage interest that can be deducted — and the deductibility of mortgage interest on second homes.

Currently, one can only deduct the interest on the first million dollars of home acquisition debt on up to two residences. Up to $100,000 of home equity debt qualifies for tax deductibility.  Of course, the rules are far more complicated than that, so do a web search, as I did, for “mortgage interest deduction rules” to learn the finer points of this tax deduction’s rules.

The “bottom line” is that the mortgage interest deduction is not an all-or-nothing affair.  It is inconceivable that Congress would vote to eliminate this tax “loophole” but rather make it more progressive than it already is.  Lower and middle income taxpayers can count on it not being eliminated for them. Any adjustment of the rules will impact only higher income taxpayers.

This doesn’t mean that interest on investment property is in danger of losing its deductibility. Interest is a business expense when it applies to investment property and is deductible in and of itself on Schedule E, where you list your rental income and deduct your operating expenses — including interest on the financing of your investment.

Furnace Efficiency Standards to Rise in May 2013

[Published Jan. 3, 2013, in the Denver Post and in four Jeffco weekly newspapers]

A “standard” forced air furnace nowadays is 80% efficient, but next May “standard” will mean 90% because that’s when no furnace lower than 90% may be sold in “northern tier” states like Colorado. (You can buy a house with an 80% efficient furnace after May, but when that furnace needs replacing, you must replace it with a minimum 90% efficient furnace.)

You can recognize a 90% or higher efficiency furnace because it has a PVC flue that goes laterally outside the house instead of a metal flue going vertically through the roof. These furnaces also have PVC air intake pipes to bring combustion air directly from outdoors.

 

This picture shows a 90% efficient furnace installed in one of my listings. The white PVC pipe on the left brings fresh outside air into the combustion chamber. The bigger PVC pipe on the right is the exhaust flue. It’s because the furnace extracts so much heat from the heat source that the flue can be plastic instead of metal.

Currently, 90% efficient furnaces cost more than “standard” furnaces, but once these furnaces are mass produced as the new standard, we can expect that the cost will be reduced substantially.

55.5 cents/mile tax deduction is a windfall for Volt owners like me!

[First 2 paragraphs published Jan. 3, 2013, in the Denver Post and in four Jeffco weekly newspapers]

The IRS allows taxpayers to deduct 55.5 cents per mile for business use of one’s personal vehicle. The deduction is not affected by how efficient your vehicle is, so I am really benefitting from my purchase of a Chevy Volt.

I have driven almost 19,000 business miles in 2012, so I will get to deduct about $10,500 on my federal tax return in April. About half those miles were driven in a Lexus hybrid, costing me $1,144 for gas. The rest of the miles were driven in my Volt, costing me only $145 for gas (and no oil changes). The electricity consumed by the Volt would have cost me another $235 if it weren’t generated by the solar panels on my home and office. Being able to deduct 55.5 cents/mile is a nice windfall, and a nice reward for buying the Volt!

As mentioned in a previous post, I'll also get to claim $13,500 in tax credits (half on my federal return, half on the state return) for buying this amazing car.  

 

Here's another unexpected, though minor, windfall... Rita and I shop at King Soopers and, like other customers, get 10 cents off per gallon for each $100 we buy in groceries.  With my Lexus hybrid, that reward rarely built up to 20 cents per gallon because of all the gas I was buying.  Now that I'm buying only 8 gallons of gas once a month, Rita is getting 40, 50 and sometimes 60 cents off per gallon when she buys 20 gallons for her car!