Jim Smith, Broker

Incorporated or Unincorporated? What’s the Difference?

It’s a common misconception that property taxes are lower in unincorporated areas than they are in an incorporated city or town.

Sales taxes are lower in unincorporated areas, since most cities have their own sales tax. If you register a new car in one of those cities with a sales tax, you’ll pay thousands that you wouldn’t pay registering it in an unincorporated area.

Property taxes are another matter. Take the City of Golden, for example. The mill levy for the city is 12.34 mills. Here’s the full mill levy for such a home:

If you have a Golden address but are not within the city itself, you have separate mill levies for county law enforcement, fire protection and quite possibly for water and park districts that can total far more than Golden’s mill levy, which includes all those services. If you’re in a newer subdivision, you could have an additional big mill levy for a “metropolitan tax district” which was created by the developer to pay for infrastructure. Here’s the mill levy for a home in Table Rock, that subdivision on the north slope of North Table Mountain, which does have a metro tax district:

Happy Thanksgiving! What We at Golden Real Estate Are Grateful for

Thanksgiving has always been my favorite holiday. I’ve long known the value of practicing gratitude, and Thanksgiving reminds each of us to reflect on our blessings, both individually and as members of our larger communities.

And since these columns are published on Thursdays, it has become a tradition for me to pause on this particular Thursday to write about my sincere gratitude as an individual, as a husband and step-father, as a Realtor, and as an American.

So, first of all, I’m grateful for having this platform to share with fellow real estate professionals and the general public what I know (and continue to learn) about real estate. Yes, I pay for it, but I have been rewarded greatly for the effort, both in terms of financial gain from the business it generates for me and my broker associates, and by the satisfaction it gives me from indulging in my first and favorite profession, journalism.

To be political for just a moment — and it’s sad to think this is political — I’m grateful for the mainstream media which has weathered four years of assault without forsaking journalistic standards. A free press is essential to our democracy, speaking truth to power unflinchingly.

Naturally, all of us at Golden Real Estate are grateful for those buyers and sellers who have entrusted us with their real estate needs. We know that the sale or purchase of a home is often our clients’ biggest single financial transaction, and we don’t take that responsibility lightly.

Real estate is an interesting profession. For most of us, it was not our first profession. In my case, I didn’t even think of becoming a real estate agent until my 50s. When I earned my license, I discovered several interesting facts about the profession, including that the median age of licensees was my age at the time, 54.

I also learned that it takes several years to become successful in real estate and that the average real estate agent has only two or three closings a year, not enough to make a good living. The majority of new agents give up in their first or second year, having wasted money they could ill afford to lose on software, signs, advertising, licensing and association fees, errors and omissions insurance and more.

I’m grateful when I have the opportunity to educate prospective agents about the difficulty of breaking into this profession and can save them the heartbreak of a lost year or two. But I’m also grateful when I am able to help our own broker associates succeed through the leads this column, our website, and our social media attract for us. As broker/owner, I also serve as a mentor and advisor to them, which I find quite satisfying.

I’m grateful for our MLS (Multiple Listing Service), REcolorado, which has made terrific strides toward being one of the best MLSs in the nation. I’m privileged to represent the Denver Metro Association of Realtors (DMAR) on the Rules & Regulations Committee, providing me with insights I’m then able to share in this space.

DMAR, too, has made great strides under its long-time executive director, Ann Turner. I’m grateful to her and the many Realtors who volunteer on DMAR committees, contributing to the high ethics and professionalism of our industry.

Not all real estate agents are members of the Realtor association, but they all benefit from the work that these associations do. We can all be grateful for the work of the National Association of Realtors, to which all the local Realtor associations belong. From its Washington, DC, office, it lobbies Congress to protect property rights and to fend off legislation that is harmful to our profession and in turn to all property owners.

NAR Agrees to More Transparency re: Buyer Agent Commissions

Last week, the Department of Justice simultaneously sued and settled with the National Association of Realtors regarding how brokers representing buyers are compensated and the public disclosure of that information.

As you may know — because I have written about it many times — the seller typically pays the commission of both the listing agent and the agent representing the buyer. The standard listing agreement includes the total commission and specifies how much of that commission will be shared with a buyer’s agent.

In that listing agreement, the total commission typically ranges from 5 to 6 percent, but the amount of that commission that is offered to buyers’ agents is traditionally 2.8% in our market. Our office policy at Golden Real Estate, like that of many brokerages, requires our agents to offer no less than 2.8%, because it has been demonstrated that offering less than 2.8% can result in fewer showings our listings.

Currently, that “co-op” commission is not displayed on consumer-facing MLS websites, but the settlement requires that it be displayed starting in January. Also, agents will be forbidden to tell buyers that their services are “free” or at “no cost to the buyer,” on the premise that the cost of that commission is reflected in the purchase price paid by the buyer.

Under the settlement, brokers who display MLS listings on their websites may not filter out listings which offer less than a specified co-op commission. We have never done that on our website, www.GoldenRealEstate.com.

Lastly, the settlement requires that lockbox access be provided to licensed agents who are not members of the same MLS, an issue I have never encountered.

NAR President Apologizes for Past Racist Practices

On his first day as president of the National Association of Realtors, Charlie Oppler said NAR will continue to advocate for equality and inclusion in real estate, and he apologized for NAR policies in the 1900s that contributed to discrimination and racial inequality.

Oppler spoke during the Diversity and Inclusion Summit, issuing a sobering message that sets the tone for his priorities as president of the 1.4-million member organization. “What Realtors did was an outrage to our morals and our ideals.” said Oppler. “It was a betrayal of our commitment to fairness and equality. I’m here today, as the president of the National Association of Realtors, to say we were wrong.”

“We can’t go back to fix the mistakes of the past,” Oppler continued. “But we can look at this problem squarely in the eye. And we can finally say, on behalf of our industry, that what Realtors did was shameful, and we are sorry.”

Oppler recognized the fact that “words aren’t enough,” emphasizing that the association and all Realtors should take “positive action to remedy decades’ worth of inequality.”

We at Golden Real Estate applaud Oppler for his strong statement on this subject.

Click here to read the full NAR press release.

Biden Presidency Will Bring Renewed Focus on Affordable Housing and Discrimination

As you’d expect from any Democratic administration, there will be an increased focus on middle class and low income communities’ needs in the Biden administration, and that includes housing policy.

Back in February, after losing the Iowa caucuses and the New Hampshire primary, and prior to the South Carolina primary, Biden released a $640 billion housing plan, focused primarily on increasing home ownership among Americans. Among other things, it included a $15,000 tax credit for first-time home buyers that could be used as part of the down payment at time of purchase.

“People vote based on their pocketbooks, and you don’t get a bigger pocketbook issue than housing,” realtor.com’s chief economist Danielle Hale said. “For many, [housing] is the largest monthly expense that they have. And if you own a home, it’s likely the most valuable thing that you own.”

According to Clare Trapasso’s article on realtor.com, Biden’s plan also includes down payment assistance for teachers and first responders plus changes in the appraisal process to address racial disparities. The down payment assistance, however, would be conditioned on purchasing in targeted low-income areas in need of investment.

It has long been understood that home ownership is central to building family wealth, supported statistically by the Federal Reserve’s Survey of Consumer Finances. The report covering the period 2013-2016 showed that during that period the median net worth of homeowners rose by 15% to $231,400, while the median net worth of renters fell by 5% to only $5,200. In other words, as of 2016, homeowners’ median net worth was 44.5 times that of renters.

A new 3-year survey covering the period 2016 to 2019 was released in September.

As you’d expect, there’s a racial component to the homeownership divide. According to Svenja Gudell, chief economist of Zillow Group, nearly 75% of white households own their own home, while less than half of black and Hispanic households are homeowners.

Although redlining of low-income communities, which was promoted by the FHA from its inception in 1934, was outlawed by the 1968 Fair Housing Act, the damage had been done, and it will be hard for any administration to undo it. We are just beginning to understand the problem and how to solve it.

The Biden plan also includes increased funding of Section 8 vouchers for low-income renters. At present, there’s only enough Section 8 funding to meet 25% of the demand. The plan would also prohibit landlords from discriminating against prospective tenants using Section 8 vouchers, and would provide legal assistance to tenants facing eviction.

The most progressive element of Biden’s plan may be his proposal to provide a tax credit so that no renter pays more than 30% of his/her income toward rent, estimated to cost $5 billion/year.

The plan speaks about appraisal reform, aiming to create a national standard to assure that homes in minority communities are appraised for the same as homes in comparable white communities, but that defies the core principle of appraisal — that a home is worth what a willing arms-length buyer will pay for it.

According to the realtor.com article, the Biden plan promotes the creation of a public credit agency that would take into consideration a positive history of payment of rent and utility bills, providing a higher credit score that could help renters qualify for a home mortgage.

Not mentioned in the realtor.com article about Biden’s housing plan is the president-elect’s promise to undo the elements of Trump’s tax law which favored the wealthy. However, one provision actually harmed the wealthy who live in states with high property taxes, many of which, coincidentally, voted for Hilary Clinton.

That was the provision regarding SALT — State and Local Taxes, composed primarily of real estate taxes and income tax. It limited the deduction of those taxes to $10,000 per year. I suspect that this element of the tax code will be changed under the Biden administration.

The Trump tax law also doubled the standard deduction to $24,000, which eliminated for many the benefit of charitable donations. I, for one, thought this would spell doom for many non-profit organizations, although Giving USA re-ports that donations by individuals fell only 3.4% in 2018. That’s remarkable, given that the number of taxpayers who itemized deductions fell that year to 18 million, from 46.5 million the year before, according to the Joint Committee on Taxation (per accountingtoday.com).

Those of us who are into sustainability and fighting climate change can expect the new administration to incentivize energy efficiency improvements and building codes through tax credits and grants. When Trump took office, there was a lot of concern in Golden and Jeffco that the Department of Energy, whose secretary had advocated abolishing the department until he learned it was responsible for America’s nuclear arsenal, would defund the National Renewable Energy Laboratory, but funding was actually increased by Congress. We can expect that a Biden administration will provide even greater funding to NREL, energy efficiency, sustainability and the electrification of transportation.

Biden’s February housing plan does address this issue, with the goal of cutting the carbon footprint of buildings by 50% by 2035, and providing incentives to home owners who retrofit their homes to be more energy efficient and more solar powered.

We Help Buyers and Sellers With the High Cost of Moving

If you’ve ever paid a moving company to move your furniture and other belongings to a new home, you know it can be very expensive. We’re talking thousands of dollars, even for a local move.

I have always felt that our clients deserve something more than a fruit basket or bottle of champagne at closing, so I continue to look for ways we can add value to each buyer or seller relationship.

I bought our first moving truck in 2003 and our second truck (a former Penske rental shown here) in 2017. Together those trucks have logged 200,000+ free miles for our clients, who would have spent $200,000 or more on mileage fees alone if they had rented a similar truck from U-Haul.

When a client uses us for two transactions — to sell their current home and buy their replacement home within a 50-mile radius — I not only reduce the commission charged to sell their current home, but I hire the laborers to drive the truck and to load and unload it — using boxes we provide free!

3D Printing Is Being Used to Build Houses for the Homeless With ‘Lavacrete’ Walls

An Austin, Texas, technology company named Icon was the winner of the “general excellence” category in this year’s World Changing Ideas Awards by Fast Company for their development of a 3D printer for building houses.

Their Vulcan II machine is already at work building a neighborhood of homes for Austin’s homeless population and building homes in Mexico for that country’s poor population currently living in shacks. Below is a picture of one of those Mexican homes and a closeup showing how Icon’s 3D printer works, applying layer upon layer of a specially designed mixture called Lavacrete. That product sets quickly enough that another layer can be applied on the machine’s next go-round.

All the walls of a home can be poured in 24 hours spread out over two or three days. The framing of windows and doors and construction of a wooden roof is then done using, when possible, local workers who get on-the-job training, learning skills they can apply in other jobs.

Lavacrete is a propriety adaptation of concrete which overcomes many of the shortcomings of concrete, especially in terms of aging. Because the walls are solid (no room for ducts), the homes are heated and cooled using my favorite method — heat pump mini-splits — which are also far more economical than gas forced air furnaces.

The Mexican project is in a rural area near the southern city of Nacajuca under a partnership with New Story, an international non-profit whose mission is to “pioneer solutions to end global homelessness.”

I remember seeing TV footage showing Icon’s 3D printing machine at work. Prior to that, I attended a presentation by New Story at the Rotary Club of Golden, which, as I recall, joined Rotary International in providing financial support. I am proud to be a financial supporter myself, and you can do so too at www.NewStoryCharity.org.

3D printing of homes makes sense. I have seen how 3D printers can build various products applying layer upon layer of resin as instructed by a computer program. As with those table-top machines, all that’s needed to build the interior and exterior walls of a home is a larger flat surface (a concrete slab) and a massively larger printer to float above it. Taking the process to yet a higher level, Icon has successfully built the walls of three side-by-side homes simultaneously in Austin, which is impressive and, of course, more cost effective. Here’s an aerial view of 3D printing at work:

Partnering with local non-profits and using local materials and laborers, New Story delivers its fully finished homes free to the Mexicans it is serving, but I can see it being practical in our country to offer such homes with low-cost mortgages and nominal down payments to the homeless or working poor.

The homes built by Icon for the Austin non-profit Mobile Loaves & Fishes were permitted by that city. When fully built out, their Community First Village will house an estimated 480 formerly homeless individuals, representing 40% of that city’s chronically homeless population.

Electric Cars Are Your Best Cold Weather Choice

It’s that time of year when I like to remind readers about the advantages of EVs in snow and cold weather. Here’s what you need to know.

1) No warming up is needed. Just put the car in Drive and go! Also, the cabin will be warm within 1/2 mile because it doesn’t require an engine to warm up first. In my Tesla I can turn on the heat with my phone app a few minutes earlier so the cabin, steering wheel and seat are all warm when I get in the car. Also, when I park the car for brief periods (such as when shopping), I can leave the heater on so it’s warm when I return, .

2) Your car will never break down, stranding you in a freezing car on the side of the road. The only time you see an EV on the side of the road is if there’s a flat tire or an accident. Stuck in a snow drift? The heater will keep you warm as long as you need, consuming only 3-5 miles of range per hour — and no carbon monoxide!

3) Because of its low center of gravity and its typical 50/50 front/back weight distribution, an EV handles snow-covered roads really well. My all-wheel-drive Teslas handle much better than my AWD 2009 Lexus RX 400h did in snow, aided by its standard traction control and stability control.

https://www.carvana.com/vehicle/1529040 – **Accident-free, 7-day return policy.**

4) Used EVs are your best buy. Older AWD Tesla Model S’s can be bought, undamaged and running like new, starting around $40,000. And older Tesla Models S and X come with transferrable lifetime free supercharging coast-to-coast when purchased privately instead of from Tesla.

5) There are still federal and state tax credits and various rebates to be had. For a full list, visit www.electricforall.org/rebates-incentives.

Kandi claims $7,999 effective cost in California for 59-mile electric car

Here are the first 3 paragraphs of a story just published on greencarreports.com:

“Kandi America announced Tuesday that the lowest-priced of its two small, Chinese-made electric cars has been EPA certified and cleared for California roads, and the company is preparing to start deliveries in the state.

“Considering both the federal EV tax credit and Kandi’s eligibility for the state’s $2,000 incentive, the Kandi K27 has an effective cost of just $7,999, the company reported.

“In September, Kandi updated its website to include estimated EPA-cycle numbers, with an expected 59-mile range from the 17.7-kwh battery pack. Kandi lists a seven-hour charge time on 240V AC (Level 2). The K27 isn’t for everyone, though. While it appears to be certified as a full-fledged passenger car, it can only reach 63 mph.”

Note: The $7,999 price is computed after including a $2,000 California tax credit. The tax credit Colorado is $4,000, which would bring the effective price to only $5,999 in Colorado.

Read the full article at https://www.greencarreports.com/news/1130193_kandi-claims-7-999-cost-in-california-for-59-mile-electric-car. Here are a couple pictures from that web page:

For-Sale-By-Owner Can Hurt Sellers in a Hot Market

When homes sell this easily (if priced right), you might think you don’t need to use a listing agent, but think again.

Take this example. I listed a home last week for what it was worth based on comparable sales, but it attracted 50 showings and 11 offers and I played the offers against each other to get $30,500 over the listing price, waiving appraisal.

If the owner had tried to sell it herself, fewer buyers would know about the home because it wouldn’t be on the MLS and countless other websites. And how could she have handled those 50 showings without our showing service, which is only available to licensed agents? And what about handling those 11 offers which come in using a software package used by virtually all agents, not available to sellers? It would be rather awkward, don’t you think, to conduct the bidding war and end up with as good a result?

Do you have questions? Give us a call.