Author: Jim Smith, Broker

The phrase in the headline above is one of two value statements that appear on all of Golden Real Estate’s yard signs. (The other is “Hometown Service Delivered With Integrity.”) One of the ways in which we “model environmental responsibility” is in the efficient use of energy at our office.

>  First we had 5 kW of solar photovoltaic (PV) panels installed on the roof of our office.

>  Next, in 2012, we purchased our first electric car, a Chevy Volt. Then, in 2014 we purchased our first Tesla.

>  That led to the installation of another 5 kW of solar PV at the rear of our parking lot, followed by another 10 kW to support the free charging stations we had installed in our parking lot.

¨  In our office, we installed four sun tunnels (aka Solatubes, a brand name), which draw natural sunlight into our office, reducing our electrical consumption.

>  We removed the gas water heater that came with our building and installed a tankless electric one.

>  We super-insulated our building to reduce the amount of natural gas required to heat it.

Thus, it was only a matter of time before we stopped burning natural gas altogether. We had a heat pump (called a “mini-split”) system in-stalled, replacing the large natural gas furnace-A/C unit (shown here on our roof) which had effectively heated and cooled our office for many years, but which gave us a natural gas bill as high as $175 per month in the winter.

Following the installation of the mini-split system in late November, we had Xcel Energy remove our gas meter. As a result, our December 2017 Xcel  Energy bill was just $11.79, which is the what Xcel charges to be connected to their electric grid. That bill (and bills of the foreseeable future) reflected zero kilowatt-hours purchased from Xcel, which functions as our “battery,” allowing us to send excess solar-generated electricity to Xcel when the sun is shining, then draw it back when needed. This process (called “net metering”), enables us to power our office (including heating and cooling) and charge our electric cars and those of visitors without buying any electricity from Xcel.

Mini-splits are commonly used in other countries for the heating and cooling of homes and businesses and they’re beginning to gain traction in the United States because of their efficient use of electricity instead of natural gas or other fossil fuels.

Bill Lucas-Brown of GB3 Energy, the company that installed our system, believes that mini-splits are the future — so much so that they are the only heating and cooling systems he’s installing nowadays. On Bill’s recommendation, we had Bill install what he considers the best system on the market, made by Mitsubishi. It utilizes a single condenser unit that powers three wall-mounted interior units. It is so efficient, we just leave the wall units set at 70 degrees day and night.  It’s also an intelligent system, in that it can sense where people are and direct warm air (or cool air when needed) toward them.

Mini-splits are also ductless. A mini-split condenser can support multiple wall units, and in our application the coils from one roof-mounted unit (at left) run across our roof to the location of the three wall units mounted at ceiling height (below). This allowed us to remove the ducts hanging from our office ceiling, which we then re-painted white, making the office feel bigger and brighter.

We left the 30-year-old furnace and A/C unit on the roof, saving the cost of removing it by crane.  As you can see in the photo, the condenser unit which feeds all three wall units is quite small – even smaller than the A/C compressor sitting outside a typical home.

How does a heat pump work? Look at this diagram which I downloaded from www,ashen.org:

When it’s cold outside, a heat pump extracts heat from the outside air (which it can do even below freezing) and transfers that heat inside. When it’s warm outside, it reverses direction and acts like an air conditioner, removing heat from your home. A heat pump efficiently moves heat as opposed to generating it.

The diagram shows the architecture of a heat pump system for a typical home. In such an installation, you’ll see one or more ground-mounted condenser units, with coils running along the bottom of the exterior walls and then up the walls to where the interior wall units are positioned. Our system is similar except that our condenser unit is on the roof, which keeps both it and the coils to the three wall units out of sight.

The improved comfort level, accomplished with minimal noise and without obvious air flow, was immediately noticeable by our agents and visitors alike. You’re welcome to visit us and experience it yourself.

As mentioned above, we removed the furnace ducts. At right is a picture of those ducts sitting in our parking lot, waiting to be picked up for recycling.

So, what’s next at Golden Real Estate? It would be hard to improve upon the energy efficiency of our office, so our next move will likely be to replace our gasoline-burning 2004 box truck (provided free to Golden Real Estate’s buyers and sellers and to local non-profits) with a battery powered electric box truck. Electric box trucks are being manufactured in other countries and should be widely available here within the next few years. It was with that intention that we installed our two EV charging stations next to where we park our trucks, as shown in the picture at left. Currently, clients and non-profits who borrow our trucks at no cost are still expected to replace the gasoline they burn, but when they borrow our new electric truck, we can say, “Never mind about refueling it. Just plug it in when you return it.”

If you’d like more information on mini-split systems, you can call or text Bill Lucas-Brown at 970-846-4766.

In my Dec. 7th column, I sounded the alarm about certain provisions of the House and Senate tax bills which were particularly detrimental to the real estate market. Well, lobbyists from the National Association of Realtors (NAR) swung into action, and the worst of those provisions are not in the final conference committee bill — even though some of them were in both the Senate and House versions.

The greatest sigh of relief was heard when the exemption from capital gains on the sale of one’s primary residence (up to $500,000) was retained for sellers who have lived in their homes more than two but less than five years prior to selling their home.  Both versions of the tax bill had increased the qualifying period to five of the past eight years, negatively impacting nearly 20% of potential sellers. Implementation would have only further exacerbated the current shortage of active listings.

Despite the fact that both the House and Senate versions included that provision, the conference committee, whose job it is to reconcile different provisions, got rid of this one. We can probably credit the lobbying by NAR, reinforced by over 300,000 emails and phone calls made by NAR members like myself. There is no better example of the way NAR serves not only its members but also the industry as a whole and the general public in the protection of property rights. Those real estate agents who have chosen not to join a brokerage firm like Golden Real Estate, where every agent is a Realtor, should consider that NAR is serving their interests, too. Indeed, those non-Realtors benefit from the dues paid by us Realtors. This is another reason you should ask if your agent is a Realtor.

The mortgage interest tax deduction was saved entirely, unless your mortgage is in excess of $750,000. The prior limit was $1 million. This change won’t affect taxpayers in the metro area to the degree it will, say, in Aspen. Mortgage interest is also deductible on second-home mortgages up to the same limit — of particular interest to upper-income taxpayers.

The deductibility of state income taxes and local property taxes is another matter. The limit is $10,000 on those taxes combined. (This is one provision that disproportionately impacts the wealthy.) Thus, if you owe $10,000 in income taxes and $5,000 in property taxes (which includes, I believe, the ownership tax on your cars), only $10,000 of that $15,000 will be deductible for tax year 2018, compared to all of it being deductible for 2017. Don’t forget that the limit applies to all taxes paid during 2018, so if you make estimated tax payments during 2018, those are added to what you pay with your 2017 state return in April. The combination could easily push you beyond the $10,000 limit on deductibility.

For this reason, it may make sense for you to pre-pay your state income tax (postmarked by Dec. 31^st), in excess of what you’ll owe in April. Then on your 2017 return have the excess applied to your 2018 taxes instead of being refunded to you.

Mind you, I am speaking as a layman, not as any kind of tax advisor, based solely on my understanding of what I have read in the coverage of the tax bill and what my tax accountant has told me.

I heard on National Public Radio that, according to the Washington Post, 83% of the tax benefits will go to the top 1%, and only 17% of the tax benefits will go to the rest of us.  It’s hard to escape the conclusion that the tax cuts for the bottom 99% were merely window dressing — in effect, the price paid for passing a tax bill whose real purpose was to benefit the millionaire and billionaire class of which virtually every Congressman and Senator — and the President — is a member. As an aspiring member of that class myself, I find the process and the final bill offensive. Judging from the unpopularity of the final tax bill among voters, that ruse is not working as well as it could. When, if ever, has a tax cut been disliked by two-thirds of the voters? The GOP’s hope is that when the new withholding tables take effect in February, voters will forget that they were manipulated in this manner.  We’ll see!

One way the top 1% will benefit from the new tax bill is from an all-new tax deduction of 20% of “pass-through income” from certain entities, including S corporations and LLCs. I’m told, however, that middle class people can also take advantage of that deduction to save a significant amount on their taxes.

I’m advising my broker associates to create such entities instead of being paid directly by Golden Real Estate.  And, because our brokerage is an S Corporation, our tax accountant is telling Rita and me that we can expect to have over $50,000 of next year’s income go un-taxed — money that would have been taxable under 2017’s tax provisions.

In other news for real estate owners, the 1031 tax deferral program for investment properties was not eliminated.

Again, this is all second-hand information from a layman (me), and it is certainly possible that it is not entirely accurate or may not apply to you. Therefore, I encourage you to consult your own tax advisor to see what specific tax strategies you should consider.

The only action you might want to take today, as mentioned above, is the pre-payment of state income tax, and also property tax, if it is not escrowed and paid by your mortgage lender.

Mortgage Credit Certificate Program Saved

Two other real estate programs killed in the House version of the tax bill but revived by the conference committee are the private activity tax-exempt bonds, including single-family and multifamily Housing Bonds, and the Low Income Housing Tax Credit. The Mortgage Credit Certificate program, administered by the Colorado Housing Finance Authority, depends on the issuance of such bonds.

Federal Tax Credit for EV’s Also Saved

In an earlier column I reported that the $7,500 tax credit for purchasing electric vehicles was killed in both the House and Senate versions of the tax bill, but, lo and behold, the conference committee deleted all mention of that tax credit in the final tax bill, meaning that it remains in place. It has been speculated that the big automobile companies like GM, which are just now getting into making electric cars, are probably responsible for preserving the credit. The tax credit applies only to the first 200,000 EVs sold by a manufacturer, so its retention is less significant for Tesla and Nissan, which are already approaching that limit.

A reader recently asked why property taxes vary so much, particularly since the state constitution requires that all property taxes be based on full valuation based on actual sales of comparable properties.

The biggest discrepancy arises from the taxing of non-residential property at four times the rate of residential property.

Let’s say you buy a vacant lot valued by the assessor at $200,000. Until that lot has a house on it, the assessed (i.e., taxable) valuation is 29% of $200,000, or $58,000. At 100 mills, (a typical mill levy), the annual tax on that vacant land would be $5,800.

Now let’s say you build a house on the lot, increasing the market value by an additional $200,000, for a total of $400,000. Because it’s now considered a residential parcel, the assessed valuation is only 7.2% of $400,000, or  $28,800. At 100 mills, the annual tax on that residential parcel would now be only $2,880.

The other big discrepancy is in new subdivisions where the developer creates a “metropolitan tax district” which issues bonds to pay for infrastructure work – sewers, sidewalks, streets, gutters, etc.  To pay off those bonds, a mill levy, typically about 50 mills, is assessed on all the parcels in that subdivision.  If the usual tax is 100 mills, that’s a 50% increase in property taxes compared to homes not in that tax district.

You’re probably aware that buyers typically pay nothing to be represented by a Realtor in a real estate transaction, because in virtually all transactions the listing agent splits his or her listing commission with the buyer’s agent.  It’s called a “co-op commission” because the buyer’s agent (also known as the “selling” agent) is cooperating with the listing agent in the sale of his or her listing. My own analysis reveals that 95% of residential transactions involve both a listing and selling agent.

Builders of new homes also offer a co-op commission when a buyer has an agent, yet in too many cases, buyers deal directly with the builder’s salesperson and do not take advantage of the opportunity to have an agent on their side. It’s similar to buying an automobile from a dealer — the salesperson isn’t your friend.

This is particularly unfortunate when you realize that you pay just as much for the house when the builder doesn’t have to compensate your agent. You gain nothing and lose a lot when you buy a new home without professional representation.

I did a survey of 45 builder salespersons and the Realtors who put builders’ homes on the MLS, and learned that as few as half their transactions are with buyers who have an agent representing them.

In case it’s not obvious that you’re better off having your own agent when buying a home from a builder, let me point out some ways that having an agent on your side can benefit you.

First of all, your agent can tell you whether the builder is using the buyer-friendly state purchase contract or – as is usually the case – a contract prepared by the builder’s attorney. Any contract prepared by a builder’s attorney is written to protect the builder, not you. Although a real estate agent is allowed to interpret the state contract to buyers, only a lawyer can explain or interpret a builder’s contract. Your agent can refer you to a trusted real estate attorney who will help you understand the contract before you sign it.

It’s fair to say that a builder’s sales representative will not give as much weight as your agent would to the importance of consulting a real estate attorney. That salesperson also may not stress the importance of hiring a professional home inspector to make sure the home is well built and built to code.

Just because a home is new does not guarantee that it was properly built, or even built to code.  I always recommend having a home inspector make three visits when you buy a new home — once after framing is complete but before the drywall is installed, and a second time prior to closing. You’d be surprised what these inspections can uncover. I also recommend a third visit a year later, before the builder’s warranty expires.

One thing your agent can tell you is whether the deposit money you provide at contract time is non-refundable (as is usually the case) and whether you’ll be spending thousands of dollars, not only for design-center upgrades but also for window coverings and landscaping, including a sprinkler system.

Your agent can also tell you whether the builder has created a “metropolitan tax district,” which means that you, not the builder, will be paying hundreds or thousands of dollars in extra property taxes for up to 30 years to cover the community’s infrastructure costs, including streets, sidewalks, and sewers.

If you hire an agent from Golden Real Estate, you’ll also get assistance with your moving costs, including use of our moving trucks, moving boxes, packing materials and labor. Don’t shortchange yourself by not engaging one of us in the purchase of your new home.  Call us at 303-302-3636.

As with most Realtors, real estate was not my first career. I started out as a newspaper reporter/editor/publisher, then transitioned to typography, using the typesetting equipment I had purchased for my newspapers.

Just as I’ve never let go of my love of journalism, I’ve never let go of my love of typography. I design and compose this full page ad myself every week, and I take pleasure in making it as well written and readable as possible. The choice of typefaces for headlines and text is a big part of that.

If I had my choice, the text typeface in my newspaper ads would not be 10 point Arial Narrow but a serif typeface like Times Roman. “Serifs” are those subtle accents at the bottoms, tops and ends of letters, but they play a huge role in readability.  Sans-serif typefaces like Arial or Helvetica don’t have those accents.  [This blog post is in Times Roman.]

At right is a Times Roman letter with serifs next to an Arial letter without serifs. Can you see how much those little serifs improve readability, especially for smaller type sizes?

As a typographer, I learned that serif typefaces should be used for text, and that sans-serif typefaces should be used only for headlines, subheads, captions, and other limited-text applications.

You’ll notice that most newspapers, magazines and books — but not most websites — follow this rule, with Times Roman the most common text typeface. The Denver Post doesn’t let me use Times Roman lest my ad be mistaken for editorial content. Compare my Arial Narrow text with the same size type in that newspaper’s news stories, and you’ll probably agree that those little serifs make text more readable. Also notice that sans-serif headlines and sub-heads work really well when combined with serif body text.

Unfortunately, Microsoft, seemingly unaware of these typographic principles, has from the beginning made sans serif typefaces like Calibri the default typefaces for Outlook, also making the default size fairly small. Given that space is not a limitation in emails or websites, it’s sad that this has become the standard. Note: You can change the default font and type size for outgoing emails in Outlook and other applications.  I use 12 pt. Georgia, a particularly readable serif typeface.

Another annoyance, especially for us older Americans, is the use of thin, gray sans-serif type instead of black serif typefaces in so many websites.  Don’t webmasters value readability?

Judging from my own email, there has been a huge spike recently in email scams targeting real estate agents and their clients. For several months I have been getting emails with subject lines such as “Clear to Close” or “Document Delivery Notice,” with links to “View Documents.”

Many of the emails appear to have a PDF attachment, but when you click on the attachment, then you see a link to “open” that PDF.  I worry that some of my colleagues or their clients might fall prey to this or similar scams.

DocuSign is a well-known software for signing real estate documents, and often the email asks me to click on a link to view a DocuSign contract or settlement statement for some transaction it doesn’t identify and that I wasn’t expecting. One should never click on that link. This can be tempting to an unaware agent.

I can’t tell you what exactly the scam is because I haven’t clicked on any of those links. If any of you readers have clicked on such links, I’d like you to share your experience with me.

Another popular scam involves sending an email giving buyers wiring instructions for their down payment. In many cases buyers’ money was lost forever.  These emails might appear to be from your agent or title company, but they aren’t.  Always call your agent or title company to verify any such email.

Our office has a business subscription to Microsoft Office 365, and often my agents and I receive emails aimed at compromising our Office 365 accounts. The subject line is often “Account Login Attempt,” and the text claims that someone knows my login details and has used it to access my email account. The text of the email contains my email address to make it seem authentic. It goes on to say that a lock has been placed on my email account and that I need to click on a link to restore access. Of course I ignore and delete these messages. How many of my colleagues (and readers of this column) have fallen victim to such emails?  I’d like to hear from them/you.

There’s a simple way to identify links you should not click on. Float your cursor over the link (don’t click!) to display the true link address. What you saw in the message is likely not what you would get if you click on it! Often it will be for a web address from a foreign country, whose 2-letter initials take the place of .com.

As I’ve mentioned before, I’m not a mortgage broker — frankly, I don’t think real estate agents should be in that business — but I know enough about VA loans to say that any veteran purchasing a home with a mortgage should ask their lender whether a VA loan might be right for them.

This is particularly true for veterans with a 10% or greater disability, because for them the VA funding fee is waived, making a VA loan an easy choice over a conventional, FHA or even a jumbo loan.

A VA jumbo loan is one that is in excess of the conforming limit, which varies by county (the limit in Jeffco, for example is $493,350). You may think that the VA loan limit is that amount, but that’s merely the limit for 100% financing. You can borrow much more than that amount — up to $1.5 million — as long as you put down at least 25% of the difference between the purchase price and the VA limit.

The following useful information about VA loans was gleaned from the VA’s website:

VA home loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling your lender to provide you with more favorable terms, including:

• No down payment as long as the sales price doesn’t exceed the appraised value.
• No private mortgage insurance premium requirement.
• VA rules limit the amount you can be charged for closing costs.
• Closing costs may be paid by the seller.
• The lender can’t charge you a penalty fee if you pay the loan off early.
• VA may be able to provide you some assistance if you run into difficulty making payments.

You should also know that:

• You don’t have to be a first-time homebuyer.
• You can reuse the benefit.
• VA-backed loans are assumable, as long as the person assuming the loan qualifies.

You must have satisfactory credit [Wells Fargo requires a credit score above 600], sufficient income, and a valid Certificate of Eligibility (COE) to be eligible for a VA-guaranteed home loan. The home must be for your own personal occupancy [not for a rental or investment property]. The eligibility requirements to obtain a COE are listed below for service members, veterans, spouses and other eligible beneficiaries.

VA home loans can be used to:

• Buy a home or a condominium unit in a  VA-approved project
• Build a home
• Simultaneously purchase and improve a home
• Improve a home by installing energy-related features or making energy efficient improvements
• Buy a manufactured home on land
• To refinance an existing VA-guaranteed or direct loan for the purpose of a lower interest rate
•  To refinance an existing mortgage loan or other indebtedness secured by a lien of record on a residence owned and occupied by the veteran as a home.

Fortunately, a VA regional loan center — one of only nine in the country — is located in Lakewood, at 155 Van Gordon Street. They should be able to provide you with the required Certificate of Eligibility.

Eligibility (visit http://benefits.va.gov/homeloans for more information) varies by the type and length of your military service, whether you are disabled or a surviving spouse who has not remarried.

Come to our VA Homebuyer Workshop Tonight!

Whether a VA loan is right for you is not always easy to determine, so Golden Real Estate has partnered with Wells Fargo to host a VA Homebuyer Workshop this Thursday, November 30th, from 6 to 7 pm, at VFW Post 1, 841 Santa Fe Drive, Denver.  RSVP to Bernie Bernfeld at 303-273-6373, or call or text me at 303-525-1851.

Bernie specializes in VA loans for Wells Fargo and would be happy to answer your questions if you can’t attend the workshop.

As an active Realtor, you can imagine how many phone calls and text messages I receive, even while driving.  The iPhone’s “Siri” feature was designed to allow users access to phone, text and other functions – safely – even while driving.  (Yes, I know it’s illegal.)

By turning on “Hey Siri” in Settings, I’m able to leave my iPhone in my breast pocket or on my car’s console. Incoming phone calls are not a problem, because, with Bluetooth activated, I just press a button on my steering wheel to answer. For making calls, all I do (without taking my eyes off the road or hands off the wheel) is say, “Hey, Siri, call so-and-so” or “Hey, Siri, dial [number].” I don’t need to hold the phone near my mouth, as Siri can hear me and respond from across a room!

When I hear my text message alert, I say, “Hey, Siri, read text message.” The iPhone reads the message and asks if I want to reply. If I say “yes,” it takes my dictation, reads it back to me and asks if I’m ready to send it.  I can also say, “Hey, Siri, send a text message to so-and-so.” and the iPhone replies, “What would you like to say to so-and-so?”, takes my dictation, reads it back to me and asks if I’m ready to send it. If I reply “no,” the message is saved for editing and sending later.  All this without taking my eyes off the road or my hands off the steering wheel!  Try it, you’ll like it and be safer.

My bicycle has a phone holder on its handle bars, which allows me to use these same features while bicycling, too.

By JIM SMITH, Realtor®

I’ve written in the past about how winter can be a great time of year to sell a home, as there’s often less competition for buyers’ attention due to lower inventory.  Also, buyers who may have failed to secure a home earlier in the year are still out there, and still getting auto emails with new listings (yours?) that match their search criteria.

But let’s look at winter from the buyer’s perspective for a moment. Here are some reasons that buyers might want to include house hunting in their holiday shopping plans.

First of all, it’s likely you’ll be competing with fewer other buyers, particularly in the weeks leading up to Christmas. This could make it easier to land the home you fall in love with.

Second, homeowners who put their home on the market during December may be a bit more motivated to sell for reasons that may or may not be disclosed.

For example, there could be a job relocation, or they may have tax considerations making them want to consummate the sale before year’s end. Check the days on market for each listing. If the home was listed in the summer or early fall, the seller may be in a position to settle for less now that it’s December.

You, as a buyer, may have tax considerations of  your own. Some of your mortgage closing costs are tax deductible, so you may want to close in December to get those deductions a year earlier.

On the other hand, if you close on a home in January from an elderly seller who has a senior property tax exemption, that tax exemption applies to you, too, for the entire 2018 tax year. (That benefit is based on who owned the house on Jan. 1st.) Weigh this against other tax considerations before deciding whether to close on that house in December versus January.

Perhaps you’ve heard of the ancient Chinese art of Feng Shui (pronounced Fung Shway). As explained at www.dummies.com, “It enhances your environment according to principles of harmony and energy flow. Whether you’re aware of it or not, your environment — and your relationship with it — are constantly affecting you. Consequently, your best bet for a healthy, happy, and successful life is to make your environment work for you through the practice of Feng Shui.”

I have only a passing familiarity with it, and find that some of its principles are, dare I say, a little “woo-woo,” but other principles make eminent sense and I believe that I have benefited from applying them.

For example, it is believed that open drains, including open toilet seats, allow energy (or “chi”) to be drained from your home, so Rita and I are diligent about keeping the lids down on our home’s (and office’s) toilets. Besides, it looks better, don’t you think? I advise sellers to do the same while their home is on the market.

Clutter is a big no-no. I remember when I owned an office building on Capitol Hill in the early 1990s, it had a side yard that was filled with debris and trash. I paid little attention to clearing it out since it wasn’t visible to passers-by, but a Feng Shui consultant urged me to clean it out, and when I did, I was noticeably more successful in attracting tenants.

One principle that makes sense to me, but that I tend not to practice, is that of keeping my desk clear of clutter. I know I feel better when I have cleared my desk. I remember being told during a tour of RE/MAX International’s executive offices that co-founder Gail Liniger had a strict rule that every desk must be cleared before leaving work each night. It’s easy to imagine the psychological effect of that practice, and it sounds as if Gail’s rule might be rooted in Feng Shui principles.