Jim Smith, Broker

Arvada Ranch Has Tons of Natural Light

5194 Bristol Street.JPG This ranch-style home at 5194 Bristol Street is in the Blue Hills Estates subdivision west of Drake Middle School. Built in 1979, the seller is the original owner, and the pride of ownership is evident throughout. The original cedar siding has been replaced with fiber cement siding and freshly painted. Five large skylights bring sunlight into the family room, kitchen and the interior bathroom. The large family room has a vaulted ceiling with 3 skylights and a wood-burning fireplace with brick hearth and chimney. The covered front porch has a rich brick floor. The backyard features mature blue spruce, ponderosa pine and other evergreens. The high-efficiency furnace has both an electronic air filter and high-end Aprilaire steam humidifier. See more photographs and take a narrated video tour at www.ArvadaRanch.info. I’m holding it open on Sunday, July 15th, 11 a.m. – 2 p.m.

Listed at $448,000.

What Are the Implications When a Buyer Waives Appraisal in a Bidding War?

Real_Estate_Today_byline When a home is priced at or below its likely selling price based on recent sales of comparable homes, there’s a good chance in this seller’s market that multiple offers could bid it up, possibly above the value an appraiser might give it. So what happens then?

Fortunately, I can report that the homes I have sold above the value suggested by comparable sales have not, as a rule, had trouble appraising for the contract price. Showing the appraiser the multiple offers that were received can demonstrate real-world market value. Without seeing those competing offers, the appraiser might determine that the buyer paid more than they should have. The presence of multiple, nearly equal offers gives appraisers an important tool for justifying value in our rising market.

Whenever a purchase is financed by a lender, there will be an appraisal. Lenders require them to make sure they’re not lending based on an overstated valuation. That doesn’t mean that the buyer can’t waive appraisal objection and bring additional funds to cover the discrepancy between appraised value and contract price. The contract may or may not specify a limit to the size of discrepancy the buyer will cover. Regardless, it is important for the seller’s agent to ascertain that the buyer is able to bring that additional cash to the closing table.

If the buyer is borrowing 95% or more of the purchase price, one might ask whether bringing several thousand extra dollars to the closing table is possible. This is where it is advisable for the listing agent to interview the buyer’s lender — something we do regardless of the size of the down payment. Typically, a buyer who is putting down 20% or more of the purchase price is more likely to have available cash to cover an appraisal discrepancy.

With Golden Real Estate’s auction approach, which maximizes the purchase price for our sellers, it is not unusual for the final price to be well above what comparable sales might support. And because one can never be certain that the appraiser will be impressed enough by the existence of those other competing offers to justify the contract price, it’s a good idea to ask that buyers cover some or all of any appraisal discrepancy and that they provide evidence of their ability to bring extra funds to closing for that purpose.

Few buyers start out offering to waive appraisal, but once the bidding enters a range that is considerably above an appraisal based solely on recent sales of comparable homes, the listing agent can and should encourage waiving of the appraisal objection by the highest bidders.

One should remember, however, that an offer to waive appraisal objection is not iron clad when a lender is involved, because the buyer can still terminate based on loan objection if the appraisal ordered by the lender comes in too low for the buyer’s comfort. I’ve witnessed the scenario where a buyer who has agreed to waive appraisal objection still threatens to terminate because of the low appraisal, at which point the seller offers to lower the price to keep the contract from falling (assuming he doesn’t have a backup contract).

This is not unlike when a buyer agrees to purchase a home “as is” and use the inspection deadline only to terminate, not to demand any repairs. That can be a hollow promise. If, for example, the buyer decides to terminate because the furnace needs to be replaced, the seller is likely to say, “Wait! I’ll replace the furnace!” Why? Because the seller now knows the furnace needs to be replaced and would have to disclose that fact to the next buyer. Indeed, when I’m representing a buyer in what appears to be a bidding war, I will suggest making our offer “as is” while advising the buyer that it doesn’t mean we can’t get serious items repaired. The only time this doesn’t work is when the seller has received a backup contract that’s more attractive than ours. I point out to my buyer that the seller might be happy to have him or her terminate so that back-up offer can become the primary contract.

These two areas — appraisal and inspection — require deft skill in order to navigate the negotiation process effectively — a good reason to employ an experienced listing agent like one of us at Golden Real Estate instead of trying the for-sale-by-owner (FSBO) approach. A good listing broker can definitely justify his or her commission both in getting a higher selling price and saving money through effective negotiation.

When Will Colorado Finally License Home Inspectors?

As I have mentioned before (in an article about ending regulation of HOA managers), Colorado is a “regulation-light” state, meaning that it will avoid regulating an industry without solid evidence that regulation benefits the public.

That attitude is, in part, why Colorado was the 49^th state to regulate mortgage brokers when it did so in 2007, and is why the state still doesn’t regulate home inspectors. Currently, only 19 states do not license inspectors.

If it weren’t for the certification programs of two national trade associations, we would have no reasonable assurance of competence from the men and women who present themselves as “home inspectors.”

It’s amazing, given the value of the investment at risk, that anyone can offer their services as a home inspector without any experience and without taking even a single examination to determine their level competence. The inspector you hire could even be a felon, fresh out of prison, because there is no criminal background check required.

In addition, without regulation there is no requirement that home inspectors have the kind of “errors and omissions” (E&O) insurance that other professionals — including real estate agents — must carry. Without regulation there can be no requirement for continuing education classes, just as there is no requirement for training to become a home inspector.

Great Golden Listing Coming Soon from Debbi Hysmith

Better_front_picture Enjoy incredible mountain views from this special home at 17425 Rimrock Drive! Take advantage of the opportunity to own this 4-bedroom, 3-bathroom custom home. It backs to South Table Mountain open space, with unbeatable views of the foothills! It features an extra-tall garage — tall enough for your large truck —- with a mud room and laundry room on the main level. Look for more information in next week’s column. We have created a website for this home at www.SouthGoldenHome.com, where you can see more pictures and take a narrated video tour. That website will also have information about an open house the weekend of July 14-15. Or call your agent or Debbi Hysmith at 720-936-2443 to arrange a showing.

Last Week’s “Personal” Column Touched a Nerve

When I took the unusual step of devoting last week’s column to politics, my broker associates and I had little idea what the response from readers would be. What blowback would we get?

It’s unusual to get one or two emails or calls from readers about a column, but last week I received over 60 emails and many calls that were positive, and only 3 emails (no calls, 1 letter) of a negative nature. There were so many emails that I created a separate folder in Outlook to save them. Common themes were to thank me for my comments and for my “courage” in risking the loss of business for my brokerage, and many of the writers said they would use Golden Real Estate because they were so pleased that I spoke out. Four people came to my office on Friday to thank me in person. One came on Monday to set a listing appointment.

Several readers, including Rep. Ed Perlmutter, liked my suggestion that the Democratic leadership create a “Shadow Cabinet” to monitor the actions and pronouncements of Trump’s cabinet members.

This level of response was all the more remarkable since, by eliminating all branding in the ad, no phone number, email address, website or other contact info appeared with the column.

My blog post of that column has additional content. It’s at www.JimSmith145.blogspot.com.

I Love to Write About Real Estate, But This Week It’s Personal

By JIM SMITH, Citizen

I’m writing this week’s column from the woods near Kalispell, Montana, where we are visiting Rita’s sister and her husband. Although I usually write about real estate, that topic is not top of mind for me this week. Instead, I’m going to write about what’s really top of mind for me these days — Donald Trump and the decline and fall of the America in which Rita and I grew up.

I’m paying for this ad space personally. That’s why I removed all branding in the printed versions. The opinions I express herein are not those of the brokerage I own and manage. None of my broker associates were consulted about its content and I know that at least one would disagree with what I write below.

What’s really on my mind as Rita and I take this 10-day road trip to Boise, Seattle and now Kalispell, listening to the national news and conversing with friends and relatives, is the sad state of our republic.

Since I am also writing this on Father’s Day, I’m also thinking about my late father, Abbott Smith, an old-school proper New Englander to whom integrity was everything. I can still hear Dad saying, “Just because other people steal apples doesn’t make it right for you to steal apples.” I got my values from him.

Dad would be appalled that we have a president who, under the tutelage of his one-time lawyer, Roy Cohn, practices the principle that if you tell a lie long enough people will believe it. Also, that you should never admit you’re wrong. (Google the two names together or click here to learn about Cohn’s influence on Trump.)

Rita and I left on our vacation about the time that President Trump negotiated with his “new friend” Kim Jung Un after insulting his fellow G-7 leaders, including the prime minister of our country’s strongest ally and trading partner, Canada.

It was clear to me years ago that Donald Trump is a narcissist and bully, whose only interest is self aggrandizement and self promotion, even when it violates the emoluments provision of our Constitution. My lifelong Republican father would be turning over in his grave if he knew not only what Donald Trump is doing and saying but, worse, how the elected members of the “Grand Old Party” — most of whom at one time proclaimed “Never Trump!” (Google that phrase or click here to read the very long list) — have snapped into line with Trump because they think that’s how they can maintain what’s most important to them — their re-election.

How much further down this road must America go? The President, who says that military exercises with South Korea were “costing us a fortune,” ordered a military parade that will cost millions of taxpayer dollars that would be better spent on almost anything else. He was inspired by a parade in France, but such parades are really the trademark of Russia, China, North Korea and other dictatorships. What’s next? Oversized wall-mounted portraits of him in Washington DC?

Rotary’s “4-Way Test”

Every Tuesday we begin our breakfast meeting at the Rotary Club of Golden by reciting the Pledge of Allegiance, followed by Rotary’s 4-Way Test. I can’t picture this president beginning cabinet meetings with this declaration of “the things we think, say or do”:

First, Is It the Truth?
Second, Is It Fair to All Concerned?
Third, Will It Build Goodwill and Better Friendships?
Fourth, Will It Be Beneficial to All Concerned?

Try applying that test to such Trump policies as separating immigrant children from their parents, while falsely claiming the Democrats made him do it. Or how about denying climate change and removing all use of that phrase from EPA documents on the subject? What about imposing tariffs on our closest trading partners, while claiming falsely that trade wars are “good” and “easy to win”? It’s hard to think of any Trump policy for which any one of those four questions could be answered in the affirmative.

Well-intended policies often need to be reversed, but Trump, as taught by Roy Cohn, will never admit he’s wrong, so he allows bad policies to stay in place when they shouldn’t, just to avoid admitting a mistake. That’s why he insists on keeping nonsensical campaign promises he made — such as bringing back coal, quitting the Paris Climate Accords, quitting the Trans-Pacific Partnership, exiting the Iran agreement, or abandoning NAFTA, among others. (The list is pretty long!)

As offended as we have been by so many of this president’s words and deeds, we’re also saddened by the lack of an articulate opposition by both Democrats and those once-moderate never-Trump Republicans.

Also, as a professional journalist, I am saddened by the attacks on the mainstream media as the “enemy of the people” (a Stalinist term) and by the use of the phrase “fake news” to dismiss honest journalistic coverage. The complicity of Fox News in this process is disappointing to anyone who knows and appreciates real journalism.

So what can be done about this situation? Below are two “modest proposals” that I’d like to advance.

A Couple Modest Proposals for Saving America

It’s easy to criticize President Trump and where he is leading us, but where are the proposals to remedy this situation? Here are mine.

The first is for the Democratic Party to create what the British Parliament has long had and which I learned about in the 7th and 8th grades — a “Shadow Cabinet.”

Wikipedia describes this pillar of British government as follows:

The Shadow Cabinet is a feature of the Westminster system of government. It consists of a senior group of opposition spokespeople who, under the leadership of the Leader of the Opposition, form an alternative cabinet to that of the government, and whose members shadow or mirror the positions of each individual member of the Cabinet. It is the Shadow Cabinet’s responsibility to scrutinize the policies and actions of the government, as well to offer an alternative program.

In most countries, a member of the shadow cabinet is referred to as a Shadow Minister. In Canada, however, the term Opposition Critic is more common. In the United Kingdom’s House of Lords and in New Zealand, the term “spokesperson” is used instead of “shadow.”

I propose that the minority party (currently the Democratic Party) designate political leaders to serve as Shadow Secretaries for each Cabinet department. (How cool would it be if they recited the 4-Way Test when they meet as a group?) The Shadow EPA administrator could focus his or her attention on the unreported activities and pronouncements of EPA Administrator Scott Pruitt. The Shadow Secretary of Energy could monitor the actions and pronouncements of Secretary Rick Perry, and the Shadow Attorney General could do the same regarding Attorney General Jeff Sessions. And so forth for every other Cabinet member. Their press conferences would be covered, including by Fox News, and provide information which is currently only being provided by investigative reporters who are readily dismissed by the president as “fake news.” Sen. Chuck Schumer and Rep. Nancy Pelosi simply cannot provide this service or play this role. Good candidates for a current Shadow Cabinet would be former heads or deputies of those cabinet departments.

I wish the Republicans had had a Shadow Cabinet during the Obama administration for the same reasons. All sides would benefit from the perspective provided by a Shadow Cabinet. It would serve to keep the “real” Cabinet and the President honest. The worst part of the current situation is how easily the President can dismiss investigative reporting that is critical of his administration. If, instead, the reporters were covering the informed statements of department experts, it wouldn’t be as convincing when that coverage is labeled “fake news.”

My second proposal is that some newsworthy opponent of the current president (likely a Democrat) announce his or her candidacy for President now instead of next year. Doing so not only provides a mechanism for fundraising (which is working well for Trump), but it also makes it possible to have full-fledged rallies (also working well for Trump) that would garner coverage by all the media, providing yet another avenue for turning the mainstream media into reporters covering newsmakers critical of the Trump administration instead of providing the analysis themselves, which has only made them vulnerable to charges of partisanship (aka “fake news”).

Lastly, I want to reiterate that these are my personal remarks and not those of my real estate brokerage or its broker associates. I’m not worried that speaking out on this subject will hurt my brokerage or me financially, but if it does, I am willing to pay that price, and I will understand if an agent wants to disassociate him or herself from what I have written and leave our brokerage. Our democracy, our country, our future as a nation are too important for me to remain silent any longer about this president, his denial of climate change, his assault on the free press, and his total disregard for telling the truth.

Here’s Why You Should Not Sell Your House Without Putting It on the Market

Real_Estate_Today_byline Imagine the heartbreak. You’ve been waiting for a home in a particular neighborhood that backs to open space. There are very few of them. Your agent has set up an MLS alert so you’ll be notified the minute such a home goes on the market.

One day you get an MLS alert — your dream house was just listed! Two minutes later, before you can even call your agent to schedule a showing, you get a second alert that it’s under contract. Then, two minutes later, a third alert that it’s sold. What happened?

It’s simple. Listings can only be entered on the MLS as “Active” and then changed to “Under Contract” and “Sold.” Apparently a buyer’s agent had convinced the homeowner to sell their home for $925,000. The seller agreed. After all, the county assessor’s most recent valuation was $924,138, and the seller purchased the home in 1997 for $343,400. A tidy capital gain indeed!

But it’s not that simple. That assessor’s valuation was as of June 2016 — two years ago! Valuation software shows the home is worth up to $150,000 more today. Heck, even Zillow shows it as being worth $10,000 more.

Given the opportunity to see the home and submit competing offers, other buyers could well have driven the price over $1 million.

So it was a lose-lose — or should we say win-lose-lose? That buyer won, getting the home for less than it’s worth, but the seller and the would-be buyer both lost. And, oh yes, the buyer’s agent was rewarded with a big commission for convincing the seller to part with their home for what the county assessor said it was worth two years ago! (This was an actual recent sale.)

Don’t let this happen to you. A savvy seller would treat an unsolicited offer to buy their home as the “opening bid.” Professional agents, like the ones at Golden Real Estate, would analyze the market and help you determine your initial asking price. Our approach is to list homes at a price that attracts the greatest number of qualified prospective buyers. Using this ad space and other media, we expose our listings to the widest possible market. In short, we do exactly what buyer’s agents hope you won’t do – work diligently to give sellers the best opportunity to benefit from the current sellers’ market.

The scenario described above has contributed to the limited inventory of active listings. As I wrote in my March 22 column (download-able at www.JimSmithColumns.com), homes that are on the MLS between one and four days sell for much more than those at zero days. Experience has shown us that 4 days on market is the “sweet spot,” where, with a solid pricing strategy and effective marketing (like that offered by Golden Real Estate), potential buyers are given the best opportunity to find, view and make an offer on your home.

The following chart (source: REcolorado) shows the ratio of sold price to list price for listings sold since Jan. 1, 2018:

1 Day on Market = 102.0%

2 Days on Market = 102.2%

3 Days on Market = 102.2%

4 Days on Market = 102.3%

5 Days on Market = 102.2%

6 Days on Market = 101.5%

7 Days on Market = 100.5%

8 Days on Market = 100.0%

9 Days or longer = Under 100%.

Of course, there can be legitimate reasons for a property to be sold without being put on the market, such as selling to a relative or friend, but any arm’s length transaction really should be put on the market. Otherwise, you could be leaving money on the table.

Gentrification vs. Revitalization — It’s a Hard Topic for a Meaningful Conversation

Real_Estate_Today_byline I have long wanted to write about gentrification but only if I could contribute meaningfully to the conversation. Now, after attending a recent panel discussion on the topic hosted by the Denver Metro Association of Realtors (DMAR), I’m ready to give it a go.

Most of the attendees were fellow Realtors or other professionals who make their living in real estate, so the discussion lacked the sort of emotion and volume that a public meeting on this subject might contain. Let’s face it, the process, whether you call it gentrification or revitalization, financially benefits those in the industry, although it’s fair to say we all are concerned about its social impacts.

gentrification: the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that oft-en displaces poorer residents. (Merriam-Webster)

Before returning to Colorado in 1991, I lived in Brooklyn for 20 years, where gentrification was already a big topic of discussion, without the euphemism of “revitalization.” So, it’s not a new subject for me as a journalist, which was my profession back then. Al-though it has started more recently here, I observe the same process at work in the Denver metro area.

One of the panelists at the recent DMAR event was Denver City Councilwoman-at-Large Robin Kniech, who observed that the reason we call it “revitalization” is that society allowed such neighborhoods to suffer from a lack of investment for decades, leading to the need for revitalization.

revitalization: the process of making something grow, develop, or become successful again. (Cambridge English Dictionary)

“We are only talking about revitalization because there has been an abandonment that preceded it,” she said. “Government, and typically the private market, stopped investing in an area. We stopped investing in it in many cases because we didn’t value who was living there the same as we did other parts of our city.”

Meanwhile, panel member Craig Fitchett, who is in charge of acquisition and development for Delwest (a developer), asserted that you can’t have revitalization without at least some degree of gentrification — i.e., the displacement of low-income residents.

Lori Pace, a broker associate at Porchlight Real Estate Group, expressed what I would have said had I been on the panel — that the solution to displacement is for residents of neighborhoods experiencing gentrification to own instead of rent their homes so they can benefit from the wave of appreciation that revitalization invariably brings to a neighborhood.

Programs from organizations like the Colorado Housing and Finance Authority (CHFA) are designed to help first-time home buyers become homeowners with as little as $1,000 out-of-pocket expense. And while these programs still require the buyer to demonstrate an income that supports a mortgage, many of these tenants are already spending more on rent than they would pay for a mortgage… if they could only make that transition to homeownership.

“Once this process of ‘gentrification’ starts in a district, it goes on rapidly until all or most of the original working-class occupiers are displaced and the whole social character of the district is changed.” –-Sociologist Ruth Glass, who coined the term “gentrification” in 1964

While there are programs that help tenants with rent and utility costs, it seems more could be done to guide residents of transitional neighborhoods facing gentrification into existing homeownership programs like CHFA’s. In addition, I’d like to see the creation of new programs geared toward helping tenants become homeowners. Home ownership is the real answer to gentrification.

In last week’s column, I wrote about a program that could help tenants about to be displaced from their homes by a developer. It described a company which will buy that tenant’s home (unless it’s a condo), and sign a 1- to 5-year lease with right to purchase at pre-determined prices over the 5-year period. You can re-read that column at www.JimSmithColumns.com.

I’m glad that DMAR brought this conversation to the forefront with their May 22nd panel discussion, but the conversation needs to continue. What are your thoughts on this matter? Post your own thoughts and ideas on this subject below.

New Program Helps Buyers (and Sellers Who Need to Buy) Succeed in This Market

Real_Estate_Today_byline Today’s “sellers market” can prove challenging for almost any home buyer – including those who have a home to sell. Here are some examples of buyers and sellers and the challenges they face:

►Homeowners who would like to sell but are worried they won’t be able to find a replacement home.

►Homeowners who don’t feel they can compete as a buyer because they must make any purchase contingent on selling their current one.

►Home buyers relocating to Colorado who would prefer to rent for a while before buying.

►Tenants whose landlord is selling the home they’re renting, and would like to buy it but need time to qualify for a loan.

►Tenants who see a home for sale on the MLS and wish they could rent it instead.

Golden Real Estate can now meet the needs of such would-be home buyers. Under our innovative program, you need only be pre-approved as a tenant, not as a home buyer. Once approved as a tenant, you let us show you homes (except condos) that are for sale up to $550,000, knowing that we have a cash buyer ready to purchase the home and rent it to you.

Our cash buyer is Home Partners of America. Every agent at Golden Real Estate is an approved agent for them. The process is quick and painless. Here’s how it works. We submit your name and contact information to the buyer. They interview you to determine whether they would accept you as a tenant. Once approved, you visit their website, where all qualifying homes from the Denver MLS are listed, with one important difference – each home displays a rental price in addition to its sale price. Once we’ve helped you find a home you’d like to rent, you are presented with a rent-with-right-to-purchase contract. That contract will contain a grid of rental and purchase prices spanning the next five years. You never have to purchase and you don’t have to rent beyond year one.

Below is an example of that grid for a current MLS listing we found with a purchase price of $475,000.

These figures are only estimates because they assume the home is purchased for its listing price. It could be purchased for more or for less, and there could be other costs, such as repairs, associated with making the home ready for you to move in.

As long as you remain within the terms of your agreement, you will never be asked to leave during those five years. Move, rent or buy – it’s entirely up to you.

The rent is deemed to be at market rate, so none of your rent is applied to the purchase price. You don’t have to wait until the end of your lease to purchase. You can purchase for the designated price at any time during your lease term, as shown in the grid.

Revisiting those examples of challenged buyers above, this program has the potential to meet all of their different challenges.

The homeowner who wants to sell can now do so without worrying about finding a replacement home or submitting an offer contingent on the sale of their current home. They can sign a rental agreement with Home Partners on a house that they might ultimately want to buy, but don’t have to buy. This allows the homeowner to put their home on the market using Golden Real Estate without worrying about making themselves homeless. The program gets them into an interim home, whether or not it’s one they ultimately choose to buy. They sell their home, get their cash and become a stronger non-contingent buyer with a big down payment, who can then take as long as they need to find their new home.

What about the person relocating to Colorado? This program is perfect for them, because it allows them to “test drive” a home and neighborhood they think they might like without having to fully commit to it until they have familiarized themselves with the metro area. They have the luxury of time that they might not otherwise enjoy.

What about the tenant whose house is being sold and they have to move? Home Partners might be able to purchase that house and keep them as a tenant – a tenant who now has the security of a guaranteed right to stay for 5 years, plus the right to purchase the home if they later qualify.

People often walk into our office and ask if we handle rentals – we don’t. This program provides an opportunity to many of these walk-ins, who would really prefer to buy but aren’t yet ready for one reason or another. Also, the inventory of homes for rent is even smaller than that of homes for sale. Wouldn’t it be great if nearly every home (except condos) priced up to $550,000 on the MLS was also available to rent? With this program, that opportunity is yours.

You can’t contact Home Partners directly. If you think the program might be for you, you apply for it through me or one of my broker associates at Golden Real Estate. You are under no obligation to follow through, even after you are approved as a tenant. But if you like what you see, we’ll start showing you homes for sale which Home Partners is willing to purchase for you to rent.

There are other brokerages who participate with Home Partners in this program, but you’ll benefit from using Golden Real Estate, because we offer free moving into your rental — and into your ultimate purchase, if different. Conditions apply, but at the very least you have free use of our moving trucks, boxes and packing materials. Call or email me for details. (See below.)

You’re also welcome to call our office at 303-302-3636 and speak to the agent on duty. We’re happy to answer all your questions.

What Is Title Insurance and Why Do Buyers and Sellers Need It, Anyway?

Real_Estate_Today_byline In a real estate transaction, the seller’s biggest single expense after brokers’ commissions is typically the title insurance policy — a little understood cost of selling real estate. What does it cover, and why is it required?

While most insurance protects you from future risks, title insurance protects you from past risks. Title insurance guarantees that you get title to property free and clear of any liens or claims of ownership. Since we consider this the responsibility of the seller, that is who pays for the title insurance, although I understand that in some states it is common for buyers to pay for it.

Another difference between title insurance and other types of insurance is that the premium is paid only once for lifetime coverage.

Although it’s unusual for a claim to be made on a title policy, it does happen. For example, I once had to file a claim regarding a building I purchased in 1991. A year after closing, I received a “lis pendens” (suit pending) notice from a Texas lawyer. I simply forwarded it to Land Title, which had issued the title insurance policy, and they settled the matter at no expense or inconvenience to me.

Unless it’s a cash transaction, there is a “piggy-back” policy issued to protect the mortgage lender. This policy is for the amount of the loan, versus the owner’s policy that protects the buyer up to the full purchase price. Such policies cost less because they require no additional work by the title company, and are typically issued at the buyer’s expense.

There are two kinds of title companies. There are direct underwriters, such as Fidelity National Title or Stewart Title, while other title companies serve as agents for those larger companies. Since the policies are underwritten by those big national companies, you’re not really at risk by using an agent company. However, you could have a problem if the agent company holding part or all of your down payment goes out of business prior to closing. Those funds are supposed to be segregated in escrow accounts, but when commingling or misuse of funds occurs — as it has in the past — it can be a big deal.

Since Colorado has a somewhat antiquated regulatory environment in this arena; it is recommended that buyers and sellers obtain a “Closing Protection Letter” (which typically costs $25) to better protect their monies throughout a real estate closing.

All title insurance rates and closing settlement fees are regulated by the Division of Insurance. However, these filed rates and fees can still vary substantially, because of various discount programs offered by each company. The cost of title policies can vary by $100 to over $1,500, depending on the transaction; and the fee for conducting a closing can range from $100 to $750. Because of these variations, I recommend that sellers visit www.CompareTitleCompanies.com before selecting their title company.