National Association of Realtors (NAR) Bans Pocket Listings

During its annual convention earlier this month, the National Association of Realtors (NAR) voted to ban the practice of pocket listings. Pocket listings are listings which are withheld from the MLS, thereby denying other Realtors (and agents who are not Realtors) from showing and selling the listings. The rule goes into effect on January 1, 2020, but NAR is giving MLSs until May 1st to fully implement it.

Regular readers of this column know that I have long decried the practice of selling listings without putting them on the MLS. Doing so increases the chances of the listing agent “double-ending” the sale, resulting in twice the commission, but it also runs the risk of netting less money for the seller, thereby violating the ethical and legal requirement that listing agents work in the best interest of their sellers instead of themselves.

Perhaps you saw me quoted on page 10A of last Thursday’s Denver Post as welcoming this new rule. As I stated to reporter Aldo Svaldi, the only way to guarantee the highest price for our sellers is to expose their listings to the full market of potential buyers, which is only done by putting the home on the MLS. When the listing agent convinces a seller to accept an offer before their home is put on the MLS, there is no way of knowing how much money the seller will “leave on the table.”

The purpose of an MLS is to provide “cooperation and compensation.” Members of an MLS must allow (cooperate with) any other member of the MLS to sell their listing and makes it known how they’ll be compensated — in our market, typically 2.8% of the sale price.

The new policy, called “clear cooperation,” is spelled out in the following motion passed by a 91% to 9% vote of the NAR board of directors:

“Within one business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public-facing websites, brokerage website displays, digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.”

I can provide an example from my own practice. In November 2018 I listed a home for $1.1 million. Even before I put it on the MLS, a close friend of the seller said he would pay full price. The seller wanted to accept it, but my advice was to consider the friend’s offer the “opening bid” and to proceed with exposing the home to other buyers by putting it on the MLS.

Five days after putting the home on the MLS, bidding had driven up the price significantly and it sold (to the same friend) for $75,000 above full price. The seller was delighted, and so was the buyer, who only asked that his friend match the highest bid.

I could easily have made a quick commission and saved myself the chore and expense of marketing the home and managing competing offers, but I would have been violating my duty to the seller and, it turns out, cost my seller a lot of money.  I particularly like that, when all was said and done, the seller netted the full listing price, even after deducting commissions and the other costs of selling!

It will be interesting to see how this rule against pocket listings is implemented by MLSs and how effective it will be. One work-around we can expect is that listings will go on the MLS with the notation that “showings begin on such-and-such a (later) date.”

One of our broker associates, Chuck Brown, attended the NAR convention, including a panel of the titans of real estate — from Realogy, RE/MAX International, Zillow, Opendoor, Berkshire Hathaway Home Services, and others — and they, unlike the board of directors, were mostly against the new policy on pocket listings.  Zillow and Opendoor, in particular, say they’ll continue to list properties as “coming soon.”

Clearly the new rule will restrict but probably not eliminate the practice.  REcolorado’s Rules & Regulations Committee, on which I have served for over a decade, will discuss it on Dec. 10th. Expect a follow-up on this subject!

Price Reduced on Home in Golden’s Foothills

5771 Bear Paw Road, Golden CO 80403 – Just reduced to $899,000

You won’t believe the mountain and city views (all the way to DIA) from this beautiful log home in a gated community, nestled on 35 acres just 14 miles from downtown Golden, with easy access to Denver, Boulder and Eldora Ski Resort. (You can be on the slopes in 30 minutes!)  Now priced at $899,000, this peaceful, furnished retreat is one of a kind.  Complete with a plow truck and camper for extra guests or rental, all you need to do is move in!  Buyers who offer full price and close before the end of the year will receive a free 1-year home warranty.  There will be no open houses. Schedule a showing with your agent or call Kristi Brunel at 303-525-2520 or Carol Milan at 720-982-4941 for an exclusive private showing. You can find more pictures and view a drone video tour of this listing at www.FoothillsHome.info.

Here’s an Affordable Fixer-Upper in Golden!

This townhome at 1945 Yank Street is a great opportunity to do a fix-and-flip, or a great home for the handyman. It was just listed at only $250,000. There is a newer furnace, nice bay window, new roof and French doors leading out to a fenced in yard. The home needs work, however, and is priced well below market value for quick sale. This must be a cash sale and close on or before December 6th. It is sold as is. Seller will require a post-closing occupancy agreement through January 9, 2020, at no charge. There is also a carport. This location is great for shopping and access to I-70. Showings begin on Nov. 20th.  Call listing agent David Dlugasch at 303-908-4835 for more information on this opportunity, or visit www.ApplewoodHome.info. There is no open house.

My Cable News Viewing Recommendations

As a follow-up to last week’s item about our “Post-Factual Era” coming to an end, I have two cable viewing recommendations for readers wanting to understand current political events.

1)   Fox News Sunday with Chris Wallace.  Although CNN is my weekday viewing choice, I record this show for viewing on Sunday. I’m impressed with Chris’s fair questioning of guests from both parties and his choice of panelists for political discussions.

2)  Reliable Sources. This Sunday morning program on CNN is all about the media and is essential viewing in this error of “fake news” claims from both sides of the political divide. I recommend subscribing to this program’s daily email newsletter, which you can do at www.ReliableSources.com

Real Estate Buyers & Sellers Have Become Prime Targets of Cyber Criminals

A couple weeks ago, Jaxzann Riggs (right) of The Mortgage Network was the guest speaker at our weekly office meeting, educating us on the important subject of cyber security.  Here are some of the things we learned from her.

As we move into an increasingly digital age, cyber crime is rapidly becoming a major part of fraud. In fact, the Federal Bureau of Investigation’s Internet Crime Complaint Center estimates that there was an 11-fold increase in real estate email phishing scams between 2015 and 2017. Moreover, 2018 saw a 166% increase in the amount of money lost to real estate wire fraud compared to 2017.  As these crimes become more and more prevalent, what can you do to ensure that you do not become a victim?

Cyber crime can take many different forms, but one of the most common is something referred to as EAC, or “email account compromise.” The FBI estimated that this type of fraud accounted for $1.2 billion in losses in 2018—just under half of all reported losses for 2018. In real estate transactions, this typically occurs as wire fraud. There are many different variations of this scam, but the basic idea is the same: just before closing, a borrower receives an email with instructions from what appears to be their title agent/lender/Realtor, informing them that their closing funds should be wired to a different account. The information about their property is correct; the name on the email signature is identical to the person the borrower had previously been communicating with. The borrower, having no reason not to believe the request, sends the money to the new account. In reality, however, a criminal has hacked or spoofed the email address—meaning that the funds meant to be sent to the title company for closing have now wound up in the fraudster’s account. Although there are occasionally “success” stories of money being recovered, oftentimes, the money is gone for good.

If you are going to be involved in a real estate transaction, an easy step you can take to protect yourself is to create a physical list of phone numbers for those involved in your transaction: this can include lenders, Realtors, title agents and more. If you receive a change in wiring instructions, you should always call the sender to verify that the instructions are real. If the instructions came via email, do not refer to the phone number listed in the email signature or reply to the email— if it is a fraudulent email address, your reply will divert back to the criminal, and it will almost certainly contain a fraudulent phone number that does the same. Because phone numbers can easily be spoofed to appear as a different number, do not immediately assume a phone call you receive with a change in wiring instructions is legitimate, either: before wiring anything to a different location, you should always call back the number on your list to verify that the instructions are real. Although this may seem tedious and repetitive, as the old adage goes, it is always better to be safe than sorry.

Unfortunately, even when taking steps to protect yourself, wire fraud does happen. If you realize that you have fallen victim to a wiring fraud scheme, the first thing to do is immediately contact your bank and ask them to attempt a wire recall. Criminals will often have the funds transferred into a bank account in the U.S. before transferring them to a foreign account. If the money has not left the United States, there is a much higher chance your bank can stop the transfer and that the money can be recovered. Be sure to contact your local FBI and Attorney General in addition to filing a report with the FBI’s Internet Crime Complaint Center at www.ic3.gov.

Though wire fraud is scary, the best thing you can do is stay aware and prepared. By working with a trusted professional and taking precautions, you can minimize your risk. Are you looking for more tips on staying safe in our digital world?  Give Jaxzann Riggs a call at 303-320-3400.

What’s a ‘Smart Home,’ and What Elements of a ‘Smart Home’ Make Sense for You?

Home automation is now mainstream, thanks to a strong internet and widespread use of WiFi routers in our homes. Perhaps you’ve heard the term “smart home” used to describe a home with devices that can be monitored and/or controlled from your smartphone.

The most widely adopted such device is probably the Ring doorbell. You may have one on your own home. Rita and I do, plus one on the door of Golden Real Estate. If you ring our home doorbell, Rita gets an alert on her iPhone and can see and converse with whoever is there. The visitor wouldn’t know if Rita is home or not as they converse, and, even if the visitor doesn’t ring the doorbell, Rita’s alerted to “motion at the front door” and a video of it is archived in the “cloud” for later viewing — great for identifying “porch pirates.”

If you ring the doorbell at Golden Real Estate, I get the notification on my iPhone and can converse with you and perhaps arrange to have an agent meet you there shortly.

There are countless other examples of “smart” devices. For example, we have a car wash closet on the back of our office building, and I’m concerned about the pipes freezing if it gets really cold, so I installed a WiFi connected device which tells me on an app both the outdoor temperature and the temperature inside the closet. And it alerts me when the inside temperature drops below 35 degrees.

We also have security cameras inside and outside our building which I can view on my smartphone or in the office, allowing me to go back in time to capture suspicious events, such as when a snowblower was stolen last year. I have a similar system at home.

If you subscribe to Dish Network or DirecTV, you have a smart device there, able to schedule and even watch DVR recordings on your smartphone or tablet. My Samsung TV is itself “smart” which is what makes it possible to stream Netflix shows and movies.

Even our refrigerator is “smart.”  Rita and I can actually look inside the refrigerator on our smartphones while shopping!

A client of mine has an internet-connected garage door opener that alerts him when the door opens and closes, and he can open or close it from his smartphone — very useful since his detached garage faces the alley and he has no way of knowing if it is open or closed without leaving his house and walking around the garage to the alley.

WiFi-enabled (i.e., wireless) security cameras make it possible to have cameras in places not previously possible. The cameras are powered by lithium-ion batteries that last 4 to 6 months between charges and can be mounted up to 300 feet from their base station. One such application is the wireless camera on the EV charging station in our parking lot, which was once vandalized. Next time, I’ll be able to identify the culprit.

Other applications you might consider are WiFi-connected moisture detectors and smoke and carbon monoxide detectors. Baby monitors are a no-brainer, too. As long as you have your phone with you, you’ll be able to see and talk to your baby in his room.

WiFi-connected electric shades, especially on your out-of-reach windows, could help you save energy and money by opening and closing based on indoor temperature.

My solar PV system at home is internet connected, not only so I can monitor it but so the leasing company which has guaranteed a certain level of production can know when it has not produced as promised and can automatically send me a check for the under-production. (I have received two such checks.)

Nest is a big provider of smart devices, best known for their thermostat, which not only senses occupancy but can be adjusted remotely.

An alternative to lockboxes that is now widely available is the WiFi connected electric deadbolt. When someone rings your video doorbell and you want to let them into your house, you can unlock your door on your smartphone to let the person in and lock it when they go.

There are devices to make electric outlets “smart” so any device plugged into them can be powered on or off from your smartphone. A variation on that is one with dimming capability. As you can see, there’s no end to what you can do to make your home a “smart” home.

If you want to check out other devices for your home, Google is your friend, or simply go to www.SmartHome.com, which sells smart home devices from a multitude of manufacturers, including Ring, Next, Amazon, and others.

Alexa and other “smart speakers” are also “smart listeners” and, like all internet-connected devices, can be hacked, so it is important that you have strong passwords and take other precautions.

You’re Invited to a ‘Climate Reality’ Event Next Wednesday, Nov. 20th, 6-8 pm

Next Wednesday, Nov. 20th, from 6 to 8 p.m., Golden Real Estate is hosting a Climate Reality Project event called  “24 Hours of Reality: Truth in Action.”

Think of it as a “teach-in” where you can deepen your knowledge of climate facts. About 1,000 of these presentations are taking place within a 24-hour period across the globe. Fifteen of them are within the Denver metro area alone.

Our Net Zero Energy office at 17695 S. Golden Road in Golden is a suitable venue for this presentation. Think of it as an example of steps you can take at home or work to participate in the mitigation of climate change’s impacts on our planet.

Our presenter is Owen Perkins, who, like all Climate Reality Project presenters, has been personally trained by former vice president Al Gore on the topic of climate change.

Register for this event by emailing Jim@GoldenRealEstate.com or by texting Jim Smith at 303-525-1851. Refreshments will be provided. Reservations are essential, since space is limited.

Here’s some more information from ClimateRealityProject.org:Truth in Action  is a daylong global conversation on the climate crisis and how we solve it.  You want to know the truth of what’s happening to our climate. But you also want to know what we can do to solve this crisis before it’s too late. You want to know what you personally can do to make a difference… 

“Research suggests that one of the most critical things you can do right now is talk to others about the climate crisis. When we have conversations about the crisis, we shine a light on its importance in our own communities, and make it clear to our friends, families, and neighbors that this is something serious enough to talk about. In this way, we can shift public perception and increase support for taking swift action.”