How to Make Sure the Home You Buy Isn’t a ‘Money Pit’

When you go under contract to buy a home, the contract will have a deadline for inspection objection, inspection termination and inspection resolution. Every home buyer is well advised to hire a home inspector and make use of the opportunity to ensure that the home you end up buying is in good condition.

During the recent sellers’ market it was common for buyers to waive or limit their rights to object or terminate based on the condition of the home as a way of making their offers more attractive. Even then, however, the smart buyer hired a professional home inspector so they would know what they’re getting into.

Home inspectors are not licensed in Colorado, but they are typically certified by one of two professional associations. Your real estate agent can recommend inspectors that he or she knows are good based on the experience of previous clients.

The home inspector knows enough about every aspect of a home to provide a good overview, including identifying specific defects. In some areas, however, he will encourage the buyer to order a secondary inspection by someone with more in-depth expertise in the area of concern. Although a certified inspector can diagnose most electrical or plumbing problems, in some cases he might recommend a more detailed inspection by a licensed electrician or plumber. That also helps to produce an estimate for inclusion in the inspection objection submitted to the seller.

Most inspectors can recognize a structural issue but will typically urge you to have the matter evaluated by a structural engineer. This can cost a few hundred dollars but, like the general inspection itself, could allow you to demand (and hopefully get) the seller to pay for a repair instead of paying for it yourself later on.

Two routine inspections that you should consider and which your general inspector can often perform himself for an additional fee, are the sewer scope and radon test.

A sewer scope consists of running a camera from a cleanout within the house to the main sewer line in the street or alley. Until the late 1900s, most home sewer lines were made of clay pipes that are susceptible to root intrusion and collapse. A sewer scope will cost you between $100 and $150, but is well worth it. If it uncovers a collapse, the repair, if excavation is required, could cost $10,000 or more. You will want the seller to pay for that repair, not yourself.

A radon test also costs $100 or so and consists of installing a computerized device in the lowest habitable area of the house — a basement, if there is one, but only if it’s habitable, whether finished or not. This device samples the air every hour for 48 hours, and the resulting measurement is an average of those 48 readings. If the result is in excess of the EPA action level of 4 picocuries per liter of air (4 pCi/L), you should demand that the seller pay for radon mitigation. Mitigation starts at about $1,000 for a single family home, but can be considerably higher if it has a partial basement with an earthen crawl space.  Again, the $100 or so that you spend on the radon test can save you much more if you’re able to get mitigation paid for by the seller.

A final thought: The report produced by your inspector will include every little thing he or she found wrong with the house, because the inspector doesn’t want you to come back later and say he missed something, however insignificant. Typically, your inspector will highlight the serious issues which you should consider for your inspection objection. Even then, it may be wise strategically to omit the minor items that you can take care of (or ignore) yourself.

HOW THE INSPECTION OBJECTION PROCESS WORKS:

As mentioned above, there are three deadlines in the Contract to Buy & Sell:

> Inspection Objection

> Inspection Termination

> Inspection Resolution

Typically, the objection and termination deadlines are within a week or 10 days of the date on which you go under contract. Since inspection is the most common reason that a contract falls, both seller and buyer want this date to be as early as possible. The buyer can submit an objection or can terminate. If he submits an objection, he can’t then submit a termination. However, if an Inspection Resolution is not signed by both parties before the resolution deadline (typically 2-3 days later), then the contract terminates automatically.

The Inspection Objection and Inspection Termination documents are merely notices to the seller, so they are signed only by the buyer. The Inspection Resolution document is what truly matters, and it is signed by both parties, making it an amendment to the contract which, by the way, must be provided to the lender.

Help Turn Pumpkins into Habitat for Humanity Houses!

Golden Real Estate is happy once again to support the Habitat for Humanity pumpkin patches in Lakewood and Arvada. The Lakewood patch is at Garrison Street & Alameda Avenue, on the grounds of Mile Hi Church. The Arvada patch is on the grounds of Trinity Presbyterian Church at 78th Avenue & Wadsworth Blvd. Our thanks go to these two churches for providing great locations for this fundraiser.

Both pumpkin patches are operated each year by Jeffco Interfaith Partners, a coalition of a dozen local faith groups. The profits from these two volunteer-manned patches have funded over 20 Habitat for Humanity homes in the metro area over the past 2+ decades.

The pumpkins are grown on a Navajo reservation in the Four Corners area, so the sales also benefit that community, which gets 60% of the proceeds. Habitat gets the other 40%.

Yes, the pumpkins sold at our two patches may be more expensive than at your local supermarket, but you have the satisfaction of making a difference with every purchase, and the 40% of your purchase which goes to Habitat is tax deductible.  Ask for the tax receipt.

Don’t Miss the Metro Denver Green Homes Tour on Saturday, Oct. 1st

If, like many people, you have back-burnered your plans to buy a new home, now might be a good time to think about updating your current home. Making improvements that reduce the cost of ownership might be pretty appealing, too, and that’s what you’ll accomplish by adding solar panels, improving insulation, and maybe getting rid of natural gas or propane. 

This Saturday, October 1st, is your opportunity to visit a dozen metro area homes which have done just that. That’s because the first Saturday in October is the date of the annual Metro Denver Green Homes Tour. I’m on the steering committee for the tour, and I can assure you that you’ll learn a lot from this year’s selections.

The event runs from 9 a.m. to 7 p.m. and includes a “green expo” at the American Mountaineering Center (AMC) at 710 10th Street in downtown Golden.

It’s a self-guided tour. You pay $10 in person at the AMC or at  www.MetroDenverGreenHomesTour.org. If you register online, you can pick up the book describing each home plus a map to find them either at the AMC on Saturday morning or on Friday, Sept. 30th between 10 a.m. and 6 p.m. at the office of Golden Real Estate, 1214 Washington Ave., also in downtown Golden.

The homes themselves are open only until 4 p.m., after which you might want to visit the Electric Vehicle Roundup in the parking lot of The Net Zero Store (Golden Real Estate’s former office) at 17695 S. Golden Road. That event runs from 2 to 6 p.m. (See article below.)

You’ll also want to visit the “Growing Dome” at 509 9th Street, a short walk from the AMC, between 3 and 5 p.m.  There will be a “tiny home” in the AMC parking lot all day for you to visit, too.

All of that is followed by a Reception and Green Expo inside the AMC from 5 to 7 p.m. At the expo you’ll be able to visit with exhibitors who sell and install some of the sustainable upgrades which you learned about during the tour, while enjoying complimentary appetizers, local beverages and live music.

If you’d like to carpool to each of the homes in a Tesla or other electric vehicle, inquire at the AMC between 9 and 10 a.m. and they may be able to set that up for you, thanks to volunteers from the Denver Tesla Club and the Denver Electric Vehicle Council.

Leading up to Saturday’s tour, we have created a series of free lectures, the last of which is this evening, Thursday, Sept. 29th, at Jefferson Unitarian Church, starting at 7 p.m.  The speaker is Conor Merrigan, who is Sustainability Program Manager at Spirit, an environmental consulting firm. His topic is “Scaling Up Green Homes to Green Neighborhoods.”

My own contribution to the tour has been to shoot narrated video tours of each home on the tour.  I haven’t been able to shoot all of them yet, but I’ve done several of them, and you can find them as well as the video tours from prior years at www.NewEnergyColorado.com.

I’ve been committed to promoting sustainability and net zero home construction for as long as I can remember, but each and every year I find that I learn something I didn’t know — a new technology or new use of an older technology — and I get to capture what I learn on those videos so you can learn about them.

The broker associates at Golden Real Estate and I are among the most knowledgeable real estate professionals you will find when it comes to buying and selling sustainable homes as well as making a home you buy more sustainable, so feel free to contact any of us for your real estate needs. We look forward to serving you!

Don’t Miss Our Oct. 1st Electric Vehicle Roundup!

Twice a year we hold an Electric Vehicle Roundup in the parking lot of our previous office at 17695 S. Golden Road in Golden, and each year we see more and more diverse makes and models of EVs.

The star of this year’s roundup is sure to be Ford’s F-150 Lightning, provided by Larry H. Miller Ford. They have delivered several of these pick-ups already and have one for test drives which they’ll bring to our event on Saturday, from 2pm to 6pm.

You can also expect to see one or two Rivian pickups, a few Mustang Mach Es, all four models from Tesla, plus EVs by Chevrolet, Kia, Hyundai, Polestar, Audi, BMW, Nissan and other manufacturers. The owners of these cars have, collectively, driven over 600,000 miles on electricity alone, so they can tell you from personal experience what it’s like to own and drive an electric vehicle.

Inside The Net Zero Store during the EV Roundup, representatives of Helio Home Inc. will be giving a presentation and answering questions about how to make your home all-electric and even net zero energy. They are the biggest vendor in this market for heat pumps systems to replace gas forced air furnaces and heat pump water heaters to replace gas water heaters. Don’t miss the chance to have your questions answered about this important topic.

People Ask: “How’s the Real Estate Market?”

My short answer is “chaotic.”

One thing is certain: the seller’s market is now history. We’re at least in a balanced market and probably moving to a buyer’s market.

This chart tells a large part of the story. It is limited to the past 7 days of listing activity within 15 miles of downtown Denver.

There are currently about 4800 active REcolorado listings within that radius, ranging in price from $139,900 to $24,700,000.  Just under 600 of them are priced above $1,000,000, and the median price is $595,000.

Here’s the statistic that really tells the story of today’s market: the median days on the MLS of those 4800 active listings is 32 — over a month! This time last year, it was 4 or 5 days.

Roughly a quarter of the active listings have languished on the market for 2 months or longer, and about half of those for 90 days or longer.

Obviously, the surge in mortgage interest rates has played a big part, but I think it’s deeper than that. Buyers are being told that homes are overvalued, but sellers are still listing their homes based on recent comparable sales.

But recent comparable sales may have been overpriced, too, and buyers are happier on the fence than jumping into a market which they (and many professionals) don’t understand and can’t accurately predict.

I still laugh when I recall that the conventional wisdom among real estate and mortgage professionals back in January was that interest rates might reach 4% by the end of 2022. On 9/22, Freddie Mac quoted a 30-year fixed rate of 6.29%.

The stock market needs to be factored in because the 20% or more of buyers who pay cash for a home purchase are reluctant to sell stocks that have dropped in value. They don’t want to liquidate those investments until they go up again, which they will — eventually.

What Can You Do to Make Your Home More Energy Efficient?

In a previous column, I pointed out that making your home more energy efficient can save you money immediately if you finance the improvements, because the monthly payments could be less than your monthly savings. The recently enacted Inflation Reduction Act has some very generous tax credits and rebates that make such improvements even more practical and affordable. My intention this week is to give you a “roadmap” for doing so.

The logical starting point is to hire a professional to do an energy audit of your home — to identify the “low-hanging fruit,” meaning the quickest and easiest changes you can make or improvements you can install that will give you the most “bang for your buck.”

That low-hanging fruit is typically better insulation, and the energy auditor normally begins by performing a blower door test of your home. That involves installing a computer-calibrated fan in a doorway which sucks air out of your house. By depressurizing your home in this manner while all your other windows and doors are closed, the auditor can identify all the leaks which allow cold air into your home in the winter. That way you know where to caulk to make your home less “leaky.”

When it’s cold outside, the auditor can use an infrared camera pointed at your walls and ceilings to assess where you could improve your in-wall and in-ceiling insulation.

You’ll get a written report from you energy auditor with suggestions of things to do and how much benefit you will get from making those changes, whether it’s blowing insulation into your attic and walls, replacing your old gas furnaces and gas water heaters with heat pump versions, or installing better windows. Most recommended improvements will earn you a 30% tax credit under the Inflation Reduction Act.

There are more “roadmap” items, but you will learn about most of them by attending the Oct. 1 tour of green homes. See the blog post.

If you or someone your know is an energy auditor, let me know. We expect big demand for your services!

Coming October 1st: Metro Denver Green Homes Tour & EV Roundup

If you’ve ever wanted to reduce the carbon footprint of your home, you won’t want to miss the October 1st tour of metro area homes which have done just that.

You’ll learn about new forms of insulation, improved window designs, replacing natural gas with heat pumps, and so much more. After touring the homes, don’t miss the expo of vendors from 5 to 7pm.

Think of it like a Parade of Homes, but where some of the homes were built sustainable but where most of them are older homes that have been made super-sustainable.

The 9am to 4pm tour starts with registration at the American Mountaineering Center in downtown Golden, 710 10th Street. For $10 per adult, you receive a guidebook and map for your self-guided tour. If you would like to ride in an electric car to the different homes, we have volunteers who will make that happen in their own Teslas or other EVs.

After touring the homes, come to the 3-5pm EV Roundup happening in the parking lot of The Net Zero Store, 17695 S. Golden Road, where Helio Home Inc. will be holding demos and answering questions about what you can do to make your own home more sustainable or even “net zero energy.”

You can register for the tour at NewEnergyColorado.com then pick up your guide book and map at Golden Real Estate, 1214 Washington Ave. on Friday, September 30th, 10 to 6. Register for the EV event at www.DriveElectricWeek.info.

Cash Sales Are Up Less Here Than Nationally

By JIM SMITH

Like you, I’ve read reports from Zillow, Redfin, the National Association of Realtors, and others about the surge in investor purchases and the percentage of transactions that are all cash, but I can rarely confirm those reports when I do statistical searches on REcolorado, Denver’s MLS.

For example, Inman, the leading real estate news service, reported the following last Saturday: “All-cash home purchases in the U.S. hit 31.4 percent of all transactions in July 2022, up from 27.5 percent the year before, and just shy of an eight-year high reached in February, according to data released Friday by Redfin. Since the beginning of 2021, all-cash purchases have surged thanks to a pandemic-housing rush, reaching an apex in February when 32.1 percent of all transactions were made without financing, according to Redfin.”

Compare those numbers with the chart below, created from REcolorado, based on closings within 25 miles of the State Capitol.

The pandemic took root in April 2020, but there is only a modest increase in the percentage of cash transactions well into year two of the pandemic. A more significant increase can be noted in 2022, but the peak was well before the increase in mortgage interest rates which only showed up in April, and the percentage of cash sales actually dropped a little as those rates increased.

Regardless of those fluctuations, the percentages are well below the national percentages reported by Inman.