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 www.JeffcoHorseProperties.com . 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 www.salary.com, 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.

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 www.JimSmithColumns.com. 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!

 

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.

 

Here's a new winner for most unreadable MLS listing

Here are the public remarks for a new MLS listing.  The field allows up to 1,000 characters, but here's what this agent wrote:

wndos.Nu Hardwds Mn.Lev+Stairs.Title Kit.Ne.Granite Cntr.Plantation Shutters.Nu Gar Dr.Cust dream Garage stg.Nu Gar Dr.Spc Bdrm(16x12,14x22).6-Panel Drs.Epoxy Riv.Rk Patio.Beveled Patio Dr Close To New Light Rail.

These remarks not only appear on the MLS, but on multiple consumer websites.  Does this help consumers appreciate the home?  The agent also failed to upload an exterior photo of the home. I wonder whether the seller knows how the home is being marketed...

This Week's Featured New Listing: 5-Bedroom Arvada Ranch Home on 3/4 Acre Lot

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

 

This 1979 brick ranch at 7539 Secrest Place is located just north of the Westwoods Golf Course. Quaker Acres Park is just a short walk to the west. Equestrian, pedestrian and bicycle trails abound! The 3/4-acre lot gives an open feeling of being in the country and provides for an unobstructed view of the front range mountains. The home features hot water baseboard heat (3 zones), and an oversized 2-car garage with separate workshop. There is a laundry room on both floors, and one washer and dryer are included. The master bedroom features a walk-in closet with separate dressing room, plus a 5-piece master bathroom. Call Kristi Brunel, 303-525-2520 for a showing, or come to this Sunday’s open house, 1-4 pm.

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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!