Real Estate – Page 25 – Jim Smith's Blog

Pressure is Building for Potential Home Buyers: Why Now May Be the Best Time to Buy

Roughly 6.5 million homebuyers have taken advantage of ridiculously low interest rates since the beginning of 2021. Low interest rates have allowed them to become first-time homebuyers, to move up to their dream home or to downsize.

Many would-be home purchasers have watched this ‘boom’ from the sidelines and decided that now may not be the best time to buy. Bidding wars and the need to make split second buying decisions over the last few months have reduced their appetite for home buying. It might be time to reconsider that decision.

I asked Jaxzann Riggs about the wisdom of “waiting” to make a move, and the following is based on our conversation.

Rental rates fell in 2020, but nothing could be further from the truth in 2021. While accounts vary, some leasing agents (according to ApartmentList.com) report that rental rates could increase as much as 32.4% in the next 12 months and stats indicate that they are up a shocking 16.5% in the first eight months of 2021.

As rental prices spike, potential homeowners should do a little mortgage math.

A potential homeowner who is paying $2,600 per month for rent, would be able to own a home valued at around $475,000. With a 3% down payment of around $14,279, this renter could turn into a homeowner, allowing them to enjoy the associated tax benefits and the opportunity for appreciation on their new property

Housing inventory is increasing and with the threat posed by rising rental rates, and rising interest rates, there is no better time than today to explore home buying options.

During the Covid-19 pandemic, the Federal Reserve supported lending to households, consumers, and small businesses to stimulate the economy. The Federal Reserve recently signaled that it plans to begin reducing the support it has been providing to the U.S. economy. Long term fixed mortgage rates are driven by the overall economy and inflation, but they are directly influenced by Fed policy.

Once the Federal Reserve starts to slow the pace of bond purchases, mortgage rates will move up. Fed officials indicated that they would begin “tapering” the asset-buying activities that it began last year as early as November. After the announcement, mortgage rates did in fact, show a rising trend. For someone with a $500,000 home loan, a 4-basis point jump will cost them $115 more per month and $41,400.44 more over the life of the loan on a 30-year, fixed-rate mortgage.

Mortgage rates are hovering near 3% and demand remains strong but higher rates are clearly on the horizon. Remember our potential renter? As rates rise, a monthly rent of $2,600 would instead result in a $410,000 house (vs. $475,000), if interest rates move from 3% to 4.5%

Even more incentive to potential homeowners is housing inventory. The inventory of active listings on the market rose by a record monthly amount (according to Denver Metro Association of Realtors). Some potential homebuyers that I am working with report they are waiting for prices to cool off to make offers, but even if that does occur, they are unlikely to see lower monthly house payments because any potential savings in purchase price will be lost to rising interest rates.

Future home buyers are not the only ones affected by higher interest rates. For homeowners who have been procrastinating with their refinance application, now is the time to call a lender. Jaxzann Riggs and I are standing by to make the process as simple as possible.”

If you have lending questions, you can reach Jaxzann, who is the owner of The Mortgage Network, at (303) 990-2992.

We Are Now Witnessing the Transition from a Sellers Market to a Balanced Market

The often heard complaint from homebuyers and their agents during the pandemic was the lack of active listings, which was not due to a lack of new listings but rather the result of those new listings going under contract so quickly that at any given time there were few to choose from.

It became a crazy sellers market which is only now abating except for “special” homes that are priced appropriately.

Looking only at closed listings, you might conclude that we are still in a sellers market. One measure I have used in the past is the median ratio of listing price to closing price, which remains above 100% within the Denver metro area. In September, for closings within 15 miles of downtown Denver, the median was 0.9% above listing price — declining, but still impressive.

However, if you look below the surface — that is, at the homes that haven’t sold, you see a rising inventory of homes that have been active on the MLS for an increasing length of time.

For example, as I write this column on Monday morning for this Thursday’s newspapers, there are 2,542 active listings of single family homes, condos and townhomes within 18 miles of downtown Denver, 760 of which (or 30%) were only listed on REcolorado in the last 7 days.

Despite so many new listings, the median active listing has been on the MLS for 19 days, and 1,024 of them (or 49.9%) have been active 30 days or longer. Another 552 of them (or 21.7%) have been active for 60 days or longer.

Meanwhile, there are 4,949 pending listings within that same 18-mile radius. Of them, only 804 or 16.2% were active more than 30 days before going under contract, and only 319 (or 6.4%) took over 60 days to go under contract. 221 of those currently pending listings went under contract with zero days on the MLS. Another 2,528 of them (over 50%) went under contract in 1 to 7 days.

Meanwhile, if you look at the 3,509 listings in the same 18-mile radius that closed in the last 30 days, only 401 of them (or 11.4%) took over 30 days to go under contract, and only 318 (or 3.4%) took over 60 days to go under contract.

This is what it looks like as we transition from a seller’s market to a balanced market. To reiterate, nearly 22% of active listings within 18 miles of downtown Denver have been on the market over 60 days, but only 3.4% of recently closed listings were active that long before going on the market.

My bottom-line observation is: Buyers who gave up after losing multiple bidding wars will find greater success if they re-enter the market now. As I’ve suggested in the past, you can avoid a bidding war simply by asking your agent to send only listings that have been active on the MLS for at least 10 days. You’re less likely to have competing buyers for them.

The new listings, however, will still get multiple offers if they are unique or special in one way or another.

For example, we recently listed a home in Golden’s coveted 12th Street Historic District. There was a bidding war on it, and it went under contract for more than $100,000 over the listing price. But if you look at all the active listings in Golden proper as I write this, there is only one new listing. The other active listings have been on the MLS between 11 and 102 days, and all but two of them have posted price reductions.

It should begin to sink in among sellers and their listing agents that they need to be less aggressive in pricing their homes when they put them on the market.

Don’t assume that buyers will flock to your listing regardless of price and compete with each other for it. Price it right, and it will sell. Overprice it, and it won’t.

Court Rules That Sending an Email Can Bind You, Even Without Signing It

The real estate industry runs on electronic signatures nowadays. In our market most contracts are created and signed on CTM eContracts. Buyers and sellers can click on “Select Font Signature” and see their name appear in a script font. Then they click “Save” and click “Accept” to show that they accept that the font signature is theirs. That document is considered signed.

In the beginning, I was leery of this technology, insisting that our clients use a stylus or finger to personally sign their name on a touch screen device such as a smartphone. Ultimately I relented, realizing that the closing based on those electronically signed documents does involve a “wet signature” witnessed by a Notary.

Electronic signatures became legal as a result of UETA, the Uniform Electronic Transactions Act, which became law in 1999. It was followed in 2000 by the E-Sign Act, which legalized electronic signatures for interstate and international transactions. The following is from www.BakerMckenzie.com:

UETA provides a framework for states to enact state law concerning the enforceability of e-signatures and the validity of electronic records. Forty-seven states and the District of Columbia, Puerto Rico and the US Virgin Islands have adopted some form of UETA. The only states that have not adopted UETA are New York, Illinois and Washington, but each of these states has enacted legislation similar to UETA to govern how electronic transactions are handled….

UETA and the E-Sign Act provide that: (a) a record or signature may not be denied legal effect or enforceability solely because it is in electronic form; (b) a contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation; (c) if a law requires a record to be in writing, an electronic record satisfies the law; and (d) if a law requires a signature, an electronic signature satisfies the law.

It followed, as a result of this law, that electronic messages (emails) between two parties can constitute a contract if both parties have signed their emails by typing their names. The more detailed the emails (covering terms as well as price) the more likely that a court would deem them enforceable contracts.

A Sept. 28 article on Forbes.com by Joshua Stein carried the headline, Yes, Sending an Email Can Create a Binding Contract. It reported on an appellate court decision in New York State that went further to declare that typing your name on such emails was not necessary, that merely clicking “send” from your email account made any signature “an unnecessary formality.” Here are some key paragraphs from that Forbes article:

This case means that pressing “send” on an email is now potentially equivalent to signing a piece of paper containing whatever statements appeared in the email. An actual typed signature is not necessary….

The moral of the story: before sending an email that could be interpreted as committing to some agreement, consider whether that’s what you really want. If not, make it clear in writing that your email isn’t intended to create any form of binding agreement.

Many standard email disclaimers say exactly that, automatically, on every message that goes out. Careful email senders should not rely on those disclaimers to protect them. If an email sounds like a serious and meaningful agreement to material terms, the courts just might decide that’s what it is, and enforce it accordingly.

Although that was the decision of a New York State appellate court, we should probably consider that Colorado courts or the United States Supreme Court might issue a similar opinion. So, how does this affect buyers and sellers of real estate?

If you’re represented by a real estate agent, you’re not sending emails directly to the other party in a transaction, but if you are unrepresented and you exchange emails with a prospective buyer or investor, you could easily find yourself negotiating and agreeing to terms and price before undertaking the creation of a contract with various other important terms and deadlines. Be careful!

At the very least, when discussing price and terms with a prospective buyer or seller, always add that “this is not a contract, which still needs to be created separately and signed by both parties.”

What Are the Most Common Foundation Problems You Might Encounter in a Home?

Understanding the most common foundation problems and knowing the underlying cause of each will help you make an informed buying decision. Below are the most prevalent foundation problems according to professionals I’ve spoken with.

Every home foundation cracks at some point. Most homes have hairline cracks that formed during the natural settling process of the concrete after the foundation was poured. These appear as very thin fissures running vertically up and down the foundation walls. Generally speaking, these gaps are harmless, although most homeowners choose to seal them to keep water and moisture from seeping in.

Horizontal or stair-step cracks on the basement walls of a home are far more problematic. If you discover these during a walk-through of a property, you should know that you might need to pay for stabilization and repair in the future.

Horizontal cracks on the foundation walls develop when the pressure from the soil outside becomes too intense for the concrete to resist. This is a common occurrence in our area because the soil often contains clay and bentonite, both of which are more absorbent than other types of soil, and expand when they get wet.

We can expect up to 60 inches of snow each year, and when this snow melts, the soil around your home gets saturated. The highly absorbent clay can expand, at which point it puts intense stress on your foundation walls, sometimes causing them to crack.

Stair-step cracks occur most often because of the differential settling which occurs when different parts of the earth beneath a home get wet and dry out at different rates. This is typical in an area like ours, where the soil can expand rapidly even from being introduced to minimal amounts of runoff.

Eventually, an unsupported section of a foundation cracks away from the rest of the home and leaves a step-shaped crack, which usually indicates structural damage.

Concrete is relatively rigid, but an eight-foot wall can flex slightly before cracking under the pressure from the soil outside. If there are signs that they’re bowing inward, the wall is at risk of cracking and losing its structural integrity. Just because a foundation may be slightly out of plumb, however, does not necessarily mean it needs repair.

Although it stands to reason that a bowing wall is easier and more affordable to correct than one that has flexed to the point of cracking, the repair process is roughly the same and just as expensive.

Water intrusion is a pervasive issue. Water can enter the basement through cracks in the concrete or directly through the pores of undamaged concrete. (Because concrete is porous, it’s a common practice during construction to seal the outside of the foundation with a black coating which you may have observed.)

While you’re inspecting a home, pay attention to visible water in the basement, musty odors, visible mold growth, noticeably damp air, and efflorescence on the walls. Efflorescence is a white, powdery substance that gets left behind by intruding water.

When basement walls have been finished, it’s not possible to observe any cracks within a foundation wall. However, there are usually other indicators that may be visible, such as upstairs windows with cracked glass or that are difficult to open and close, interior doors that rub on the frame or will not close, irregular cracking within the walls or ceilings and/or under windows or around door framing, sloped floors, etc.. These are a few conditions that could indicate a foundation issue.

Homes with cinder block, brick or rock foundations are far more susceptible to water damage and/or movement from expansive soils as they are unreinforced.

Also worth inspecting is proper drainage, downspout extensions and inadequately designed or improperly installed gutter systems, vegetation (trees, shrubs, grass, etc.), sprinkler systems and planters, etc. All of the aforementioned could cause cracks in a foundation.

No one should buy a home without hiring a professional inspector, even if you have waived some of your rights to demand repairs. A professional inspector is typically not a structural engineer, but he/she will recognize indicators that you should hire a structural engineer to make a separate assessment of the foundation.

When you’re purchasing a home, you should be confident that it’s structurally sound and won’t end up costing you thousands of dollars in repairs.

Ava Tamber of Regional Foundation Repair and Jim Camp of Metropolitan Home Inspections assisted me in composing this article.

Want to Boost Your Home’s Appeal? What You Should and Shouldn’t Spend Money on

With our ongoing seller’s market in which right-priced homes sell quickly and often for more than the listing price, do you really need to beautify your home to help it sell better?

The short answer is “Yes.” But don’t get carried away. The agents at Golden Real Estate like to tell sellers that they should only address certain cosmetic issues and what we call “eyesores.” Investing in popular big-dollar improvements or updates isn’t likely to return you more than they cost to implement.

Let’s talk cosmetic fixes first. For sure, you’ll want to wash the windows and clean your window wells. In the process, you’ll be removing the window screens. Clean and label those screens and store them in your basement or garage. Don’t reinstall them until you are under contract. They detract from the views out your windows even if the screens themselves are clean.

Curb appeal (aka first impression) is, of course, highly important. If you have a lawn, you can make it greener pretty quickly with one or two Lawn Doctor visits. If your bushes or trees are overgrown, consider having them trimmed. How does your front porch look? If it’s looking worn, an investment in fresh paint or stain will pay dividends. Ditto for that wooden deck in the back.

Speaking of the wooden porch and deck, let’s move on to a discussion of eyesores. An “eyesore” is anything that draws negative attention by the prospective buyer. Rotted and/or broken boards on your porch or deck definitely fit our definition of an eyesore!

Inside your home, there are several potential eyesores that I advise sellers to address. Let’s look at walls, floors, windows and countertops.

If there is damage to the walls, fix it. Our handyman (available only to clients) is an expert at drywall repair, including matching texture. Touch-up and repainting may be called for. Our free staging consultant may advise you specifically about your walls. My current seller in Golden thought their red kitchen should be repainted to a neutral color. I said no, and we still had a bidding war and went under contract in 5 days for $136,000 over asking price.

Plush and berber carpeting in good condition does not need to be replaced, but if there are ripples in it, it should be stretched, which is an easy and affordable fix. Older shag carpets should, in most cases, be replaced. Wall-to-wall carpeting is one of the more affordable improvements.

If the carpeting is covering hardwood floors in good condition, I’d suggest removing the carpet and refinishing the hardwood if it needs it. Hardwood floors that are already exposed but noticeably worn should also be refinished.

Is there hardwood under that old wall-to-wall carpeting? One way to find out is to pull up the far corner of the carpet in a closet. You can push the carpet back down onto the tack strip and no one will be able to tell you had pulled it up. If you have forced air heating vents in the carpet, lift up the vent grate and you’ll be able to see whether there’s hardwood underneath.

If you have old single-pane windows, it’s tempting to replace them, and that might be a good strategy in a buyer’s market, but not in our current seller’s market. In this market, people will buy a home with old windows if it is priced right. I’d want to see them in person before making a final suggestion.

What about countertops? Replacing an old Formica countertops with slab granite, Corian, Silestone, concrete or other popular materials would be very expensive, and I don’t recommend it unless the Formica is chipped or scarred and therefore an “eyesore.” There’s a company Granite Transformations (www.GraniteTransformations.com) that does a remarkable job of covering an existing countertop in place with a granite-based slurry that makes it look like slab granite. I haven’t tried it myself, but I’ve seen homes with their work and was quite impressed.

Window coverings are another cheap fix that can make a big difference. I recently installed cellular blinds I purchased at Home Depot which have no strings — just push up or pull down. You have probably seen them and love them as Rita and I do. They are cut to width (I suggest 1/2 inch narrower than the opening) and come in different lengths. Prices are quite reasonable, and I installed eight of them in my house in just an hour or so with nothing more than an electric screw driver.

Bathrooms offer some potential dressing up. First of all, clean the grout in your tub/shower. Consider a new shower curtain. Other suggestions might arise from a personal visit.

One of my favorite affordable improvements in my current home and the one before was to install sun tunnels in dark areas such as a windowless garage or laundry room, or that dark corridor in the middle of your house. A brand name you’ve probably heard of is Solatube, but we purchased Velux sun tunnels for our houses. They come in 10, 14 and 22-inch diameters because the joists in your ceiling and roof are either 12, 16 or 24 inches on center. The cost fully installed for ours was well under $1,000 each — so much better and less prone to leakage or hail damage than a rectangular skylight. Look into installing sun tunnels for your own pleasure, not just to brighten up your home for selling. The more light you can bring into your home the more appealing it will be.

My broker associates and I are happy to walk through your house with you, even if you aren’t immediately ready to sell your home, to make suggestions regarding things to fix or leave alone. Call 303-302-3636 to be connected with any of us. Call me or one of them for a free consultation.

Why Are Real Estate Agents (except ours) Still Resistant to Shooting Narrated Video Tours?

Narrated video tours of all listings has been a trademark and “value add” for Golden Real Estate since our founding in 2007. Many times in this column I have promoted the value of narrated, live action video tours. Back in 2005 or thereabouts, I even did a presentation at the weekly marketing meeting of the Jefferson County Association of Realtors (since merged into the Denver Metro Association of Realtors) showing my fellow Realtors how easy it is to shoot and edit a narrated video tour.

Yet, 15 years later I still know of only one or two agents outside of Golden Real Estate who create such video tours. Analyzing 100 currently active Jeffco listings on REcolorado, I found that only nine had non-drone video footage (60 were interactive slideshows or just slideshows with or without music). Only two of the nine had walk-through video footage, but they lacked some factors which meet our standards.

Our standards are pretty simple. It has to resemble an actual showing. That means the listing agent begins the shoot in front of the house, giving its address and perhaps panning to show the street and neighboring houses. Then he or she takes you in the front door, talking all the while, pointing out features that may not be obvious in a still photo or slideshow — this is a hickory hardwood floor, this is a gas fireplace, notice the mountain view out this window, this is a quartz countertop and Silestone sink, etc.

We feel it’s important to do a single clip of each floor, not separate clips of each room, so the viewer gets a sense of flow. Our preferred camera (a DJI Osmo Pocket — $1 9 9 on Amazon) has a gimbal stabilizer, so we can walk up and down stairs with Steadicam-like smoothness, but if we make a separate clip of each floor, the first clip ends with a view up the stairs, and the second clip begins with a view down the stairs — again to provide a complete sense of flow for the prospective buyer.

Because our video tours are the digital equivalent of an actual showing, we have sold some of our listings to out-of-state buyers who only saw the home in person when they flew in for the inspection a week later. They felt they knew the listing well enough from the video tour, and none of them terminated after seeing it in person. Isn’t that what an actual video tour should be like? Click here for an example from one of this week’s featured listings.

So the question remains — why aren’t other real estate professionals taking the time to shoot actual narrated walk-throughs of their listings?

One answer may be camera shyness, but all the agent needs to do is to talk, not be on camera. Just imagine you’re showing the home to a buyer! In fact, being on camera detracts from the video. I used to be on camera at the end of my videos, thanking the viewer for touring my listing and inviting them to call their agent or me to see it in person. I no longer do that, now simply putting my phone number and email address on the screen as I speak from behind the camera lens.

Another reason agents may choose not to shoot a video tour is that we are increasingly drawn to out-source our tasks, including shooting the photos (which we, too, out-source) and even putting the sign in the ground.

Typically, the companies which shoot magazine-quality real estate photos will offer to create a video, but they are typically just offering to create a video file such as an .mp4 file consisting only of a slideshow of the very same still photos that are displayed in slideshow form on the MLS itself. If they offer to add narration, it will likely sound inauthentic because the speaker is someone who hasn’t seen the house. In short, such a “video” simply can’t compare to a walk-through of the home with the listing agent, who can describe its not-so-obvious features.

New HOA Flag and Sign Bill Took Effect on Sept. 7

My June 10th column, which you can read at www.JimSmithColumns.com, concerned a “freedom of expression” bill passed by the legislature prohibiting HOAs from restricting the display of flags or signs by homeowners, whether political or other non-commercial signs.

I warned that this could unleash a flood of partisan signs which could be detrimental to the harmony of neighborhoods. The bill was signed by Gov. Polis on July 7th, so it’s now law. I haven’t seen a surge of “Trump Won” or “Black Lives Matter” signs which might have previously been banned by HOAs, but the law only took effect last week, so only time will tell what the effect will be.

HOA rules now have to be “content-neutral.” Only the size and number of signs can be regulated. I’ve seen only one HOA (the Highlands Ranch Community Association) issue new rules consistent with the law. They limit each home to 2 signs up to 18”x24” except during a specified Election Period, when 5 signs up to 3’x4’ are allowed.

Now That the Summer Months Are Behind Us, How’s the Market Shaping Up for Fall?

It has been a wild ride so far in 2021 — and the ride may be slowing, but it is definitely not over.

Below is a chart with some key statistics that I garnered from our MLS, REcolorado.com, for the 13 months ending August 2021, a timespan that allows us to compare this August with last August as well as the months since.

In creating the chart, I limited myself to listings within 15 miles of downtown Denver. That includes the entire metro area except for the city of Boulder.

The headings are pretty self-explanatory except for the last three columns. “Ratio” is the ratio of closed price to listing price at the time of sale, which might, in the case of older listings, be less than the original listing price. “Med. DOM” stands for median days that the listing was “active” on the MLS. Half the listings went under contract in that number of days or less, and half of them went under contract in that number of days or more. “Ave. DOM” stands for average days that listings were active on the MLS, and it’s always higher than median days on the MLS because many listings are overpriced and linger on the market before the price is lowered and the home goes under contract.

There are some numbers that are worth noting, but there are some numbers that are downright remarkable. We all know, for example, that the inventory of active listings is very low, but it’s notable that it is more than 40% lower this August than it was in August 2020. The number of sold listings is also lower by over 4% and the number of new listings is lower by 13%.

However, it’s also notable that the number of listings that expired without selling has plunged by over 43% from a year ago. More hard-to-sell and overpriced homes are selling before expiring.

Lastly, it is notable that the median days before a listing goes under contract has barely risen, and that figure has been under 7 days now for over a year.

Those statistics are notable, but there are two statistics that are remarkable. The first one is the ratio of sold price to listing price, which remains above 100% at 101.4%, although down from June’s high of 104.6%. This is remarkable because it was only this February that the number rose above 100% for the first time, signaling the height of the bidding wars. The August figure indicates that many bidding wars are still happening — due in part, of course, to the limited inventory of active listings — but they are not as numerous or extreme overall.

I emphasize “overall” because bidding wars are still getting extreme in isolated instances where the home is outstanding in some way or is in a highly desirable area with little or no competing listings. We are still seeing some homes sell for 40 to even 50% over their asking prices here and there. That includes in my home town of Golden.

So what, you may be asking, is the outlook for the fall and winter months?

If there is any seasonality left in the real estate business, it is that there are fewer new listings in the winter. You can see that was true last winter, with the low point being December. This makes sense, because few people want to put their home on the market during the holidays. That, however, only serves to keep the inventory of active listings even lower than during the summer time, yet the buying of homes continues year-round, with roughly as many closings happening in December as in November. Notice, in fact, that December was the only month in the last 13 where the number of sold listings exceeded both the number of active listings and new listings.

We should stop thinking of spring and summer as the selling season, but rather as the listing season. Most sellers believe it’s the selling season, when in fact homes sell year round. In fact, winter could be the best time to put your home on the market because there are just as many buyers getting those MLS alerts that I wrote about last week, but there are fewer homes for them to look at.

If you want to sell your home before next spring, you should not wait until next spring to put it on the market — but do take some nice exterior photos of your home now that can be used in the marketing of your home over the winter.

Mortgage rates could start to ease upward in the coming months, but that will only increase the market frenzy as buyers try to get ahead of further increases in interest rates. No one in the industry, however, is projecting a major increase in interest rates over the next 12 months.

Integrity, for the Most Part, Still Rules in Real Estate

We all need to be careful that we are not scammed. We see scams all around us — in our emails, phone calls, text messages, and snail mail. Seniors in particular are targeted by scammers who have no shame about cheating someone out of their life savings.

Title companies warn buyers and sellers about wire fraud. Buyers have been known to get emails purportedly from their agent or title company giving them wiring instructions for their down payment or, in the case of a cash buyer, for the entire purchase price of a property they are buying, only to discover that they wired the money to a scammer on another continent from which it can never be retrieved.

Time shares (or fractional ownership) is another area rife with misrepresentation and deceptive practices that can trap an unwary buyer in the purchase of something they don’t really want and can’t really sell. (I speak from personal experience.)

And, yes, there are a few local real estate professionals who engage in illegal or improper behavior for which they get disciplined by the Colorado Real Estate Commission.

But I have to say that overall I have been very impressed by the level of integrity that I encounter among my fellow professionals.

Ask any Realtor, in particular, and he or she will probably tell you, as I can, that they can hardly recall a time when a fellow professional intentionally lied to them or misrepresented a client, listing or situation.

If, for example, I’m representing a buyer and the listing agent says there are three other offers and they’re all above full price, I’m confident in believing that to be true. I’ve completed hundreds of transactions and can’t recall one where I was told something that turned out not to be true or a fact withheld by the agent. Most sellers, I have found, are also aware of their responsibility to disclose all known defects, and, if not, their agent lets them know.

As an industry, we need to trust our fellow professionals, and I have found little or no reason not to. We are not just “honor bound” to be truthful. Being dishonest puts our very livelihood at risk, since any colleague or member of the public could report us to the Real Estate Commission, our MLS, or our Realtor Association, possibly resulting in a fine or even the loss of our license to practice real estate.

Email Alerts of New Listings Provide a Good Reason for Listing Your Home on the MLS

Yes, it’s a seller’s market, and maybe you think you don’t need to hire an agent to put your home on the MLS, but the opposite is true. Take, for example, the listing which was featured in this space last week. For 7 days it was listed as “Coming Soon” on our MLS, REcolorado, during which time it was not visible to non-mem-bers of the MLS (i.e., buyers). But that listing was emailed to over 250 buyers who had email alerts set up by their agents. One of those buyers tagged the listing as a “favorite” and another six tagged it as a “possibility.”

Those numbers, however, only reflect buyers who had included “coming soon” among the criteria that would trigger an alert. After the listing changed from “coming soon” to “active” on the MLS, the number of buyers who were alerted jumped to 720 and two more buyers tagged it as a “favorite.” When a buyer tags a listing as either a “favorite” or a “possibility,” the buyer’s agent gets an email letting him or her know which client liked the listing and may want to see it when it’s “active” and showings are allowed.

These numbers don’t include the buyers who set up their own alerts on Zillow or other consumer-facing sites, including Redfin. Also, those websites don’t display “coming soon” listings until they have been changed to “active.” Thus, buyers who had agents include “coming soon” as a criterion benefited from a 1-week earlier notice of that listing than did any of those buyers who were setting up alerts on their own.

For buyers wanting the earliest alerts of new listings matching their search criteria, please make this a reason to have an agent set up alerts for you instead of setting up alerts on your own.

Knowing the power of MLS alerts should cause any seller to have second thoughts about selling without an agent. It used to be that sellers could hire a “limited service” agent who would put their home on the MLS for a flat fee (say, $300) without performing any other service, but that is now illegal. The Colorado Real Estate Commission has ruled that there are certain minimum services which must be performed by all listing agents. Those services include exercising “reasonable skill and care,” receiving and presenting all offers, disclosing any known material facts about the buyer (such as their ability to close), referring their client to legal and other specialists on topics about which the agent is not qualified, accounting for the receipt of earnest money, and keeping the seller fully informed throughout the transaction.

Failure to perform those minimum services could subject the agent to discipline up to and including loss of license, which has caused “limited service” listings to disappear. If an agent offers such service to you, you should report them to the Division of Real Estate.

By the way, the Colorado Real Estate Commission has also ruled that it is the duty of all licensees to report known wrong-doing by other licensees, which their competitors are happy to do. We can be disciplined for not performing that duty.

Studies have shown that homes which are listed “for sale by owner” (FSBO) sell for less than ones which are listed by an agent on the MLS, and you can see why, because the more exposure your home has to prospective buyers, the more showings and offers you are likely to receive. And that difference in bottom line proceeds can far exceed the commission you are likely to pay.

Consider this: whether or not you hire a listing agent, you’re still likely to pay the “co-op” commission to the buyer’s agent, which is typically 2.8%. The average listing commission (which includes that co-op commission) is now around 5.5%, not the 6% everyone tells you. As a result, the savings you might experience from not hiring a listing agent could be about 2.7%, and that is likely less than the increased selling price you might get from listing your home on the MLS with a true “full-service” agent such as my broker associates and myself.

Note: Some brokerages mislead you by promoting a 1% listing commission, but when they get into your home to sign you up, they disclose that the 1% is in addition to the 2.8% that they recommend as the co-op commission and is increased further if they don’t earn a co-op commission on the purchase of your replacement home. It is also increased if they double-end the sale of your home, meaning that they don’t have to pay that 2.8% co-op commission to the buyer’s agent.

Such deceptive advertising, to me, is reason enough not to hire such a brokerage, but it may be hard for some people to say “no” to an agent they invited into their home with contract in hand.

Unlike such a brokerage, Golden Real Estate tells you upfront that we reduce our listing commission when we double-end the transaction, and we discount it further when you allow us to earn a commission on the purchase of your replacement home.

That said, our final commission might be only 1% or so higher than what you might pay to a discount brokerage, and our version of “full service” is much more complete than theirs. For starters, we produce narrated videos tours on every listing. Our video tours are not just slideshows with music or un-narrated interactive tours which can be dizzying and annoying. Our narrated tours resemble an actual showing, where the listing agent is walking you through the house, talking all the time, pointing out this or that feature which may not be obvious otherwise. Are those quartz countertops? Are there slide-outs in those base cabinets? Is that a wood-burning or gas fireplace? We have sold listings to out-of-towners who only “toured” the home on video, not seeing it in person until they flew into town for the inspection. That’s the power of narrated video tours.