Do You Equate Real Estate Agents with Used Car Salesmen? Think Again!

[Published Oct. 25, 2012, in the Denver Post and in 4 Jefferson County weekly newspapers]

Every now and then I encounter someone with a very low regard of my profession.  That person may have good justification for their attitude toward my colleagues — and for applying their judgment against every member of that profession, including me.

Perhaps they were harmed in a real estate transaction one way or another, or believe they were treated unethically or rudely. Perhaps they felt the agent did not earn his or her commission.

You probably have your own list of grievances against real estate professionals, much as you might against other professionals.

But today I’d like to share why I think my profession — despite its occasional “bad apples” — is a lot better than some portray it.

First, however, I want to apologize to used car salesmen for this column’s headline.  In our culture  the used car salesman has (unfairly)  become a metaphor for dishonesty and misrepresentation.  I use the expression, however, only as a metaphor and not because I share that opinion of car salesmen.  I’ve bought enough cars, new and used, to know that it is not a valid generalization.

Having said that, however, let’s compare that profession to mine.

One similarity is that both of us are paid on success and not on effort. Even a successful agent like myself spends time and money day after day on sellers and buyers without getting paid for that time and expense. Just like selling cars — unless they’re on salary.

However, a car salesman always works for the dealership — it’s understood by you that he’s not on your side.  True, you can hire an auto broker, as I do (ask me for a recommendation)— but few car buyers do that. For the most part, we go to a dealership and work with a salesman whose goal is to sell you one of his dealership’s cars for as close to the list price as possible, for which he’s rewarded. 

In real estate, most buyers are represented by agents who have a fiduciary responsibility to negotiate in their buyer’s best interest. Even when the buyer is not our client, we are legally, not just ethically, required to treat the buyer fairly and with full disclosure of defects..

We can be disciplined and even lose our license for not putting our clients’ interests ahead of our own, or for not disclosing all material facts.  I’m not aware of a similar penalty in most other professions.

Cooperation with other agents is a hallmark of our profession. Imagine that you went to a dealership, and the salesman could sell you a car from any lot in town.  Because of the MLS, we can do the equivalent of that with homes.

If You’re Selling Your Home Because of an ‘Obamacare Tax’, You’ve Been Duped

[Published Oct. 18, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

There’s a viral email circulating which urges homeowners to sell their home before January 2013 because of a 3.8% sales tax on real estate hidden in the Affordable Care Act, (“Obamacare”), that goes into effect on January 1st.

I know I’m not the only real estate agent to be contacted by a homeowner about listing his/her home now to avoid that tax. I’d like to believe that none of my colleagues have accepted a listing under that false pretext.

The viral email states that the National Association of Realtors is aware of this tax and fighting to repeal it.  Yes, NAR is aware of the tax, but is not working to repeal it, because the tax doesn’t apply to the sale of most taxpayers’ homes.  NAR has created a web page explaining this tax — find a link to it at www.JimSmithColumns.com.

So that’s what the Obamacare tax is not.  What it is, simply, is a millionaire’s tax, and here’s why.

It is a tax on unearned income.  I used to have unearned income — rental income from an office building in Denver.  For five years I lived solely on that income, and I relished the fact that  I paid no Social Security or Medicare tax on my income, unlike on earned income (wages or business income). Other examples of unearned income would be capital gains and stock dividends.

What Obamacare did was apply a 3.8% Medicare tax to unearned income, but only on the amount in excess of $200,000.  Since a taxpayer’s primary residence held for at least 2 years is exempt from capital gains tax on any gain up to $250,000 (single) or $500,000 (married), and since the gain above those limits would have to exceed $200,000, it is unlikely that even an Aspen homeowner would pay this tax on selling their home. But that Aspen homeowner might, like Romney, have millions of dollars in unearned income that would now be subject to the Obamacare tax above that $200,000 threshold. Right now, their maximum tax on most unearned income is 15%.

Yet, the viral email warns you that if you sell your home for $100,000, you’ll pay a $3,800 tax because of Obamacare. It is such an outlandish lie, that it cannot go unchallenged, but so far I have only seen NAR challenge it — and well they should, since we Realtors are the ones being approached by scared homeowners who receive that viral email.

Don’t you think that if this “sales tax” on home sales were true that Romney and Ryan would be talking it up in debates and commercials? 

I just hope that no one sells their home when they don’t want to because of this lie.

This Week's Featured New Listings - Both Under $200,000

This Lakewood townhome at 1954 S. Carr St. is in the heart of a 19-townhome subdivision just south of Jewell Avenue. Upstairs, both the master bedroom and the guest bedroom have private full bathrooms. The master bedroom also has a deck overlooking the quiet backyard. On the main floor is the living room with gas fireplace and formal dining room next to the kitchen and powder room. The oversized garage is more spacious than I'm used to seeing in a townhome — about 300 sq. ft.  Take a narrated video tour at www.LakewoodTownhome.com.

 

 

 

 

 

 

 

 

 

 

 

This bungalow at 550 Winona Court, in the Barnum neighborhood of west Denver, is bigger than it looks -- and it has a rare 2-car detached garage too! Its fully finished basement includes a third and fourth bedroom and second full bathroom, for a total of 1,668 sq. ft. of living area. In back is a covered patio.  Take a narrated video tour at www.WestDenverHome.com.

 

Real Estate Is Just One Area in Which Conflict Resolution Skills Are Useful

[Published Oct. 11, 2012, in the Denver Post and four Jefferson County weekly newspapers]

With several hundred real estate transactions under my belt, you can imagine that I’ve encountered my fair share of conflict. A major source of any agent’s business, for example, is divorce. When couples break up, the family home often needs to be sold, or one party will buy out the other’s interest.

It’s tempting after dealing with a contentious divorce to make the decision never again to list a home for a divorcing couple when they aren’t on speaking terms — especially when the one living in the house is angry and has nothing to gain and lots to lose from selling the home.

When a local mediator, Ronnie Rosenbaum, asked to have coffee with me to discuss what she does, I didn’t quite know what I’d get out of doing so, other than a cup of coffee, but we had a fascinating conversation.

Ronnie pointed out that October has been declared Conflict Resolution Month in Colorado, with the slogan, “Talk, Listen, Work it Out.”

Another difficult scenario, she told me, is when siblings can’t agree on equitable distribution or liquidation of assets, including real estate, inherited from a parent.

There can be issues between and among neighbors and their HOA.  Barking dogs, encroachments, eyesores, parked RV’s and boats — there are lots of reasons that neighbors might be in conflict with each other.

From bullying between children to conflicts within and between homes, to political disagreements, there are so many opportunities for someone with Ronnie’s skills to be helpful in reducing or resolving conflict. You can reach her at 303-278-3030 or online at www.RonnieRosenbaum.com.

 

Metro Area Buyers Still Active in All Price Ranges

Here's the end of September analysis of the percentage of homes under contract by price range. The lower price ranges are going under contract quickly, often with multiple offers, and notice the increase in buyer activity in the upper price ranges.  Million-dollar homes in Denver itself are showing more strength than elsewhere:

Here is the report by area and county, showing movement over 12 months, with peak buyer activity occurring in April and a noticeable increase over last fall. :

 

 

Electric & Hybrid Vehicle Round-Up on Oct. 5th

[Published on Oct. 4, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

Are you attending the First Friday Street Fair in downtown Golden tomorrow? If so, be sure to walk one block north, across Clear Creek, to the American Mountaineering Center, where there will be an Electric & Hybrid Vehicle Round-Up from 5-7 p.m. At this event, you won’t just see the same plug-in Priuses, Nissan Leafs and Chevy Volts that you've seen before. You’ll also see some electric vehicles that aren’t yet in production, including a Chinese SUV that is totally electric and goes 185 miles on a single charge (see picture). You’ll also see one or more electric motorcycles and possibly an electric truck. Also expected: a Mitsubishi MiEV, a Ford Focus Electric, a Fisker Karma sports car, and a RideKick trailer that motorizes bicycles. It's fun!

 

Don’t Miss the All-Golden Tour of Solar & Sustainable Homes Oct. 6th

[Published Oct. 4, 2012, in the Denver Post and in four Jefferson County weekly newspapers]

Every fall I look forward to the local tour of solar and energy efficient homes, but this year is different for me in two ways.  First, all of the homes have Golden addresses, instead of being spread across the metro area.  And, second, my own home is on the tour!

Six of the homes are within the city limits, and five others are outside the city but have Golden addresses — four on Lookout Mountain, and one in The Trails subdivision just north of Golden.

This is not just a tour of homes powered by the sun.  My home, for example, is solar powered, but it also provides an education in the degree to which a home can be weatherized and daylighted to save energy. You’ll learn about air source heat pumps and the proper insulation of crawl spaces.

My contribution to the organizing committee (Golden Earth Days) has been to shoot video tours of every home on the tour — and I really learned a lot in the process!

The website for this year’s tour is a Facebook page, which you can get to via www.GoldenSolarTour.org.  The video tours have their own channel at www.YouTube.com/GoldenSolarTour. 

You can register for the tour and receive the self-guided tour book between 9am and 4pm this Saturday, Oct. 6th, at the American Mountaineering Center at 10th Street and Washington Avenue in downtown Golden, but the homes on the tour are only open until 4pm. The book costs just $5 and is your admission to each home, which is described in detail, with directions to find it.  If you take the tour by bicycle, the book is free, so come on your bike!

On Friday evening, from 5 to 7, there is a reception with complimentary wine and hors d’oeuvres at the AMC, plus an electric and hybrid vehicle round-up (see other post).

Both Friday evening and all day Saturday there is a Green Expo in the conference room of the American Mountaineering Center, where several solar and energy efficiency companies — and Golden Real Estate — will have booths and give out useful information. Our booth will be accepting polystyrene (aka “Styrofoam”) for recycling.

Every solar tour I’ve taken has taught me things I didn’t know about solar power, sustainability and energy efficiency, and this year’s tour is no exception.  Be prepared to learn something that you will want to implement in your own home. Get your questions answered about electric cars, weatherization, heat pumps, and so much more. I promise you’ll be glad you came!

 

Thanks, Norm Lewis, for Educating Realtors & Consumers on Lending Issues

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

I get a lot of feedback from readers (including fellow agents) thanking me for writing this column. In fact, I probably get 90% of my business from people who read this column, which I have published in YourHub since that section’s inception year, and in four Jeffco weeklies since earlier this year.

(My readers in the Jeffco weekly newspapers might want to visit www.JimSmithColumns.com to scan some of those earlier columns which may still be topical.)

Using paid advertising space to share knowledge rather than just promote listings or build name recognition has definitely worked for me, while also satisfying my love of journalism and writing.  Frequently I have urged people in other professions to do the same. One particular industry that cries out for such an approach is the mortgage industry. 

I can’t think of any industry which has become more complicated and confusing and just plain difficult than mortgage lending.  Because of all the foreclosures, many of which can be blamed on poor lending practices in the last decade, an unending escalation of regulation and oversight has befallen the mortgage industry.

As a result, more than half the loan officers who were in the business five years ago have left the business. And major local lenders, such as Clarion Mortgage Capital, have folded.

Amid this turmoil and confusion, one loan officer has been there for me and other Realtors — although he has changed mortgage companies a couple times — keeping up with the shifting landscape and doing his best to keep us informed and educated.  I’m referring to Norm Lewis of Peoples Mortgage.

Although Norm has not chosen to write a column like this, he does send out a weekly update which he writes himself and which I receive by email, and which you can receive, too. (Send your request to nlewis@epeoples.com.)

In addition to writing his Friday emails, Norm attends Realtor marketing sessions each week, where he always shares something we need to know about lending changes — and makes us glad we’re Realtors instead of loan officers!

In particular, I have learned from Norm about underwriting and how all underwriters live under the constant threat of “charge backs” — loans which the investor will force a lender to buy back because of a post-closing audit which uncovered some uncrossed “t.”  Mortgage companies depend on being able to sell their loans soon after closing so that they can use that capital to close other loans, and it doesn’t take more than one or two bought back loans to deplete a lender’s cash and force them out of business.

That is just one aspect of the lending business which I have learned from Norm.  Thanks, Norm, for expanding our understanding of lending.

 

PS: Although I refer buyers to Norm Lewis, he is one of many fine loan officers to whom I refer different buyers with differing mortgage needs. I also refer buyers to Bruce Gustafson of Crestline Mortgage (303-596-0780), Bonnie Butler of Colorado Mortgage Alliance (303-437-2129), Leslie Larson of Coors Credit Union (303-384-4586), Don Opeka of Orion Mortgage (303-469-1254), Julie Newland at Bank of the West (303-232-8532), and Daniel Raffield of Citywide Home Loans (303-895-1267). Other agents in our office favor Jennifer Hager of Windom Mortgage (303-618-8999), Giuseppe Battaglioli of Fairway Mortgage, Joe Selander of Cherry Creek Mortgage (720-297-1845), and Pete Holst of Holst Mortgage Group (303-233-6410).

Bear Valley Home Includes Chickens & Coop!

["This Week's Featured Listing" in the Denver Post and four Jeffco weekly newspapers]

 

 

I love this home! It sits at the intersection of 3 cul-de-sacs, next to the Bear Creek greenbelt. The address is 3239 S. Newland St., Denver. The oversized 2-car garage has been converted to an oversized master suite (as you can see in the picture), and a new detached oversized 2-car garage has been added (not visible in this picture). The home features slab granite counters, new carpeting, a newly covered (and very large) back deck, and a second master suite upstairs that was created by merging two smaller bedrooms. There’s a pellet stove, large vegetable garden and fresh eggs daily! This home will make the right buyer very happy!  Take a narrated video tour of this home at www.YouTube.com/jimsmith145

 

The #1 Mistake of Sellers: Not Checking Out Their Home’s Online Presence

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

I really wish every seller would do just one thing—go online and see how their home is being presented.  Most sellers know little more about the marketing of their home than how the sign looks in their yard and how the brochure (if there is one) looks in their brochure box.

I believe that the marketing of homes for sale would improve dramatically if each seller merely Googled their home address and checked their home’s online presence.

Two years ago, Metrolist, the local MLS, dramatically increased the length of description that could be written about each listing, but some agents continue to write as if they are limited to three lines of copy.  Here’s a description of a listing that I came across on the MLS just last week: “Gorg.Loc.* Fab.Hm WIncred.Bones&Character*Rare,Oversized 3car*Vaults  &Beams*Hgrms Thruout*4bedrms upstairs**HgEquitybldr*Grtofficewbkshelves*Lg.Laund.Rm*Htwaterheat*2fp*Plankflrsnfamrm*Alarm*Prime lot*Hurrywontlast!”

I can’t help but wonder whether the seller has seen this online description of their home and what they’d think. If I forwarded this listing to a buyer, I think I’d have to translate it into English first!

Pictures, when they exist at all, are sometimes of very poor quality, or a vertical picture may be uploaded sideways.  If a listing has just been entered, I can understand why there might be no pictures, but often I encounter old listings with no pictures. (Myself, I always wait until I have all pictures and video tour ready before I put a listing on the MLS.)

As a Realtor, I have an ethical obligation to alert a fellow agent to any errors in their listing, and I’ll also send a friendly email, asking the agent if he/she is aware that his/her MLS listing has no pictures. One agent, in reply, said I should look at an earlier expired listing of the house to see pictures!

Agents who list bank owned properties often cut corners, especially on pictures, knowing that their seller has never seen the house and won’t notice a poor marketing effort or minimal data entry on the MLS.  So, that’s what those listings usually get.

I’ll be criticized by some fellow Realtors for writing this column, because our Code of Ethics prohibits criticism of fellow Realtors. In this column, it could be said that I am doing just that, but I feel that I am criticizing patterns of behavior and not particular agents. I even modified that cryptic MLS description to make the home and agent less identifiable.  Wouldn’t it be nice if they thanked me instead of making ethics allegations?

Homeowners Associations: Good or Bad? Here Are Some Points to Ponder

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

Although “covenants” have been around for decades, the concept of homeowner associations to enforce those covenants is more recent. By my observation (from reviewing title documents for numerous closings), it is primarily the subdivisions created in the 1990’s and later which have HOAs that collect dues and manage their subdivisions — and which can enforce their covenants.

The older subdivisions had covenants, but typically there was no entity created to enforce them. If a homeowner violated a covenant, a neighbor who was upset at that violation had no recourse, other than to sue in civil court.  In addition, the older covenants typically had expiration dates, such as 30 years. If, after that time, the majority of homeowners did not petition to extend the covenants, then the covenants simply expired.

When buyers look at the various homes on the market, they will often want to know about the HOA and the dues charged. Occasionally a buyer will not even consider a home which belongs to an HOA, regardless of the amount of the dues. This could be based on a previous bad experience, or perhaps the buyer has an RV or boat trailer and wants to be able to park it at home instead of paying to store it somewhere else.

The main purpose of HOAs and the covenants they enforce is to protect the property values by preventing individual properties from becoming eyesores or annoyances to neighboring properties.

Examples include keeping driveways clear of RVs and boat trailers (other than for loading and unloading), but they also include making homeowners mow their lawns, clear weeds, and keep the exterior of the house freshly painted. In my own subdivision, I have been forced to repaint my faded garage doors, remove a lawn ornament from the open space adjacent to my house, and take trash cans inside instead of leaving them next to my house. I also got a letter once saying they had reason to believe I was planning exterior changes to my house and reminding me to get permission before starting work. (I had written about my plans in this column!)

On one level, I found this annoying, but on another I thought it was reasonable and I complied. (If I hadn’t, I could be fined, and state law allows an HOA to foreclose on a member’s home, if necessary, to collect unpaid dues and fines.)

Regarding dues, these can be excessive, but in most cases they cover valid expenses such as insurance, trash removal, common area maintenance, etc. [End of column as published in the newspapers.] 

If the HOA has a master insurance policy that spares you the expense of buying homeowner's insurance, that could be saving you $100 or more per month. If however, the HOA has a swimming pool to maintain and you never swim, your HOA dues may be in excess of the value you receive. You're paying for a swimming pool you'll never use. Find out what the HOA fee covers and whether you'll benefit from those covered services.

Regarding that master insurance policy, it's important to know if it covers interior walls in case of fire.  If it does, you only need to buy optional "tenant's" coverage for your personal property.  If it does not, however, you'll need to buy a condo policy which includes that coverage.

An important factor to consider is whether the HOA is "self-managed" or hires a management company.  If it is self-managed by the HOA officers (volunteers), your dues will probably be a better value than if your HOA hires a management company. On the other hand, a management company will probably do a better job of policing compliance with covenants -- if that's what you want!

The worst thing about management companies, in my opinion, is the fees that they extract from members when they sell their home. These companies typically charge excessive fees to produce a status letter (indicating whether you're up to date on dues payments) and other HOA documents required for a transaction -- and for transferring the ownership of your home on their records.  These fees amount to as much as $300-400, and not a penny of that benefits the HOA -- it's a profit center for the management company.

Buyers Are Still Buying in All Areas and Price Ranges

Here is my monthly gauge of market activity, first by County or MLS Area, and how it has changed over the last 11 months:

 

And here is my analysis by price range, with prior month comparison: