Clearing the Deck: Topics Worthy of Mention, But Not a Full Column

     Call this “Short Attention Span” writing… There are numerous topics I’ve been wanting to write about that keep accumulating because I can’t fashion them into a full-sized column. So, this week, lacking a “big topic” that comes to mind, I’m going to clear the deck of these “tiny topics.” Maybe some of them will resonate with you!

Sixth Grade Classes Are Being Moved to the Middle Schools

     Educators and many parents have concluded that sixth graders would do better in a school with 7th and 8th graders, and the Jeffco School Board has already begun to make that change. What you may not know is that if your 6th grader is still assigned to the elementary school, you can “choice” that student into the middle school. That’s the official term for it — I find it interesting that our educators have decided that “choice” can be a verb, not just a noun…

You May Want to Put Your Home in a Trust Instead of in Your Name

    Experts recommend that you not put your home in your own name, but in a living trust. Why? Because people die, trusts don’t. When you die with a home in your name, a court has to decide who gets your house, even if you have a will. If it’s in a trust, you decide who the successor trustee is, and you can change the trustees over time.

     I like what Linda Sommers, the estate law lawyer whose “Linda Leaving a Legacy” appears in YourHub, likes to say: “Everyone has an estate plan; if you don’t have one of your own, the state has one for you.”

VA Loans, Even Up to $1.5 Million, Can Make Sense for Veterans

      Plain vanilla VA loans — with no down payment up to $493,350 in the Denver metro area — are a great veteran’s benefit, but they do carry a “VA Funding Fee” of 2.15% of the loan amount. That fee drops to 1.5% if you put down 5% or more and to 1.25% if you put down 10% or more of the purchase price. On a $400,000 loan, that fee can total $8,600. But if you’re a veteran with a service-connected disability, the fee is waived. 

     A lot of veterans don’t realize that they can buy homes well above the VA loan limit mentioned above. They can borrow 100% up to that loan limit and 75% of any amount over that limit. Thus, you could buy a $1 million home using a VA loan with a down payment of $126,662.50, or about 12.7%. Generally speaking, you need a 620 credit score to get a VA loan, but the VA doesn’t mandate a minimum credit score. Another advantage of VA loans is that even loans with zero down payment are not charged mortgage insurance.

Sellers Deserve to Receive Quality Feedback on Showings of Their Home       

     One of the most valuable features of using a professional showing service is the automated request for feedback which is sent to the showing agent by email right after each showing.

      When you interview a listing agent, be sure to ask (1) whether they use a showing service (we recommend Centralized Showing Service, which dominates that industry), and (2) how many and what kind of feedback requests will be emailed to agents after the showing.

     CSS offers two kinds of emails — one with multiple choice survey questions which the agent (with your input) can write; or the non-survey kind which asks for feedback and provides the agent with an open text field.

     Because you can’t predict the feedback you will receive, I recommend you request the non-survey, open-ended kind of email request, so you get the most useful possible feedback from buyers.

Tiny Houses Are a Trend, Not a Passing Fad, Denver Business Journal Reports

     On April 3, the Denver Business Journal had a headline that read, “Tiny Houses Are Big Business,” and described the Sprout Tiny Homes factory in LaJunta, Colorado. The company makes five models up to 14.5 feet wide by 34 feet long and up to 760 square feet — less than the size of a 4-car garage.

    A tiny house was on Boulder’s Green Homes Tour last year, and the owners raved about it. Visitors, including me, liked what they saw, and it’s clear to me that tiny homes are going to continue to catch on.  In Denver, tiny homes are being built as a partial solution to the homeless problem. Smart!

Why Are Auto Manufacturers Still  Building Petroleum Fueled Cars?

     I recently read that half the cost of building a conventional gas-powered automobile is related to the gas engine — everything from the cooling system to the transmission to the exhaust system.  An electric car has just a battery and an electric motor, with only wires connecting them. Not even a transmission!

     Even without a further decline in the cost of the batteries — and Bloomberg predicts a 77% additional decline in battery cost by 2030 — building an electric vehicle is easier and less resource consuming, and is better for the environment.  Volkswagen says it will produce 30 new models of battery electric cars across its 12 marques (which include Audi, and Porsche) by 2020. Consumers can help accelerate this conversion in manufacturing by declining to purchase cars which, I believe, are already obsolete.

Invite Me to Deliver My 30-Minute Presentation on Sustainability

      Perhaps you’ve seen my presentation on EV’s at www.GasCarsAreObsolete.info. I recently created a presentation on the broader topic of sustainability. See my slides at  www.SustainabilityPresentation.info.

Bonuses Paid to Buyers’ Agents Could Pose a Serious Ethical Question

      Sometimes the “broker remarks” in an MLS listing will offer a cash bonus to the buyer if he brings an offer by a particular date or for full price.  At Golden Real Estate, we do not condone this practice because of its questionable ethics.

     Agents are supposed to work in their clients’ best interest. “Broker remarks” are not visible to buyers, and there’s the possibility that an agent might steer his buyer to purchase a home solely because it earns him a higher commission, which would be unethical in our opinion. We believe that any financial incentive should be offered to the buyer, not the agent.

Published June 22, 2017, in the Denver Post's YourHub section and in four Jefferson County weekly newspapers.

Taking Advantage of Order Overload, Some Appraisers Engage in Price Gouging

Perhaps you saw the Sept. 29th report on 9News. It described how some appraisers are exploiting the hot market and the shortage of appraisers to charge “rush fees” for doing appraisals quickly. One of my own broker associates, Chuck Brown, brought that story to my attention because, coincidentally, the appraiser interviewed by 9News, Brian Boizot, was the same appraiser who charged Chuck’s buyer a $1,000 “rush fee” for doing his appraisal in 3 days instead of 10 days. This appraiser simply had enough work that he could give priority to those buyers who succumbed to his extortion-like demands.

Mortgage lenders pay the appraiser, passing that cost on to the buyer, but this rush fee was invoiced directly to the buyer through Chuck, and it was the only way this buyer could count on getting the appraisal done and avoid another month’s rent ($2,500) if the closing was delayed, so he paid it. It was a VA loan.

 

It doesn’t have to be this way. Many larger mortgage companies have appraisal desks which manage the process and can limit such abuse among their preferred appraisers. Speaking with Scott Lagge, a loan officer at Eagle Home Loans, I was told that it’s common for him to pay $100 to $300 for a bona fide rush, but, while he has heard of $1,000 rush fees, he has never paid one and considers that excessive.

 

Another mortgage broker, Jaxzann Riggs of The Mortgage Network, told me she once had to pay $1,600 for a rush appraisal. That was for a conventional loan.

 

The problem is worst for VA borrowers, like Chuck’s buyer. Contributing to that problem is VA’s requirement that appraisals be ordered only through the VA web portal, which delays the process considerably. In the case of Chuck’s buyer the VA didn’t assign the appraisal to Brian Boizot until 24 days after the order was entered on the VA portal, 5 days beyond the appraisal deadline in the contract. As I’ve written before, VA buyers are already disadvantaged in winning bidding wars, and this appraisal situation only further victimizes them.

 

Such delays, whether or not through the VA, can be attributed largely to the shortage of appraisers. It is not uncommon for one appraiser after another to decline an assignment because he/she is already overloaded.

 

The shortage of appraisers began several years ago when appraisal management companies (AMCs) were introduced to isolate lenders from appraisers and avoid the type of fraudulent appraisals that created to the “toxic loan” crisis. The AMCs take a percentage of the fees that previously went entirely to the appraisers. This pay cut was so extreme that many appraisers simply quit the industry. Combine that with today’s heavy workload, and you’ve created a situation that is ripe for price gouging.

 

My advice is to use a mortgage lender with a good appraisal desk. Credit unions are also good at avoiding this kind of exploitative pricing of appraisals. When choosing a lender, ask their experience with rush fees.

Published Oct. 6, 2016, in the YourHub section of the Denver Post.