Category: Real Estate

The Crackdown on Hispanic Immigration Is Hurting the Construction Trades

Like any homeowner who has lived in Colorado for a long time, I have experienced roof replacements due to a hail storm more than once, and have observed that the roofing industry, like many construction trades, is particularly dependent on Mexicans and other Hispanics for their work force.

So I’ve been wondering how the President’s unrelenting (and increasing) crackdown on immigration from Central American countries has been affecting construction trades, including roofing.

Fortunately, my last big hail storm requiring roof replacement was in May 2017, before the crackdown on such immigrants had matured into what we are seeing today.

Googling the topic and surveying the many roofing companies with which I’ve dealt over the years, I find that what I suspected is indeed the case.  Roughly 20% of that industry’s work force has been lost directly or indirectly. It makes me wonder how we will fare in the event of another widespread hail disaster.

The problem is that few non-immigrants jump at the offer of earning minimum or higher wages climbing on roofs in the hot sun and doing the back-breaking work of removing and replacing a roof.  The same is true in the farming industry where migrant labor has been essential to getting seasonal work done.

I remember Elliot Eisenberg, the “Bowtie Economist,” telling Realtors at a 2017 event that immigration is essential to growing the economy, and that we need at least 1 million immigrants every year to achieve the kind of growth which President Trump was promising. (He also pointed out that cutting taxes while the economy is doing as well as it was in 2017 was not smart and could only have a short-lived effect, which is now evident.)

I was reminded of all this on Sunday night, watching a 60 Minutes segment on the Japanese economy hurting because of its historic limitation on immigration in addition to its declining birth rate.

Immigration is good, and it’s necessary to maintain and grow our economy.  The effect of restricting immigration and terrorizing immigrants by raiding businesses with immigrant work forces ends up hurting us all.

According to one website I Googled,

> A U.S. Department of Labor study prepared by the Bush Administration noted that the perception that immigrants take jobs away from American workers is “the most persistent fallacy about immigration in popular thought” because it is based on the mistaken assumption that there is only a fixed number of jobs in the economy.    

> Experts note that immigrants are blamed for unemployment because Americans can see the jobs immigrants fill but not the jobs they create through productivity, capital formation and demand for goods and services.  

> Immigrants pay more than $90 billion in taxes every year and receive only $5 billion in welfare. Without their contributions to the public treasury, the economy would suffer enormous losses. 

Personally, I think we should welcome, not shun, immigrants.

Golden Real Estate Has Opening for 1 or 2 More Realtors

Do you know a Realtor who would be a good “fit” at our brokerage?  Due to a couple departures we have openings for 1 or 2 experienced agents who share our values of integrity and sustainability. Candidates should call Jim Smith at 303-525-1851.

Inspection: The Most Important Step in Homebuying

A key element of every contract to buy a home is the inspection contingency, giving the buyer the opportunity to inspect the home for hidden or not-so-hidden defects.

The process begins with a general inspector, who looks at every component of the house. Expect to pay $300 or so, depending on house size. This inspector will typically…

> Run all the appliances—washer, dryer, disposal, dishwasher, cooktop burners, ovens, hood fan, etc.

> Fill, then drain, all sinks and tubs and run all showers, searching for leaks.

> Test the garage door opener, including checking to see if it has working sensors which reverse the closing door if something is detected or if it will reverse upon hitting an obstruction.

> Check the garage for holes in the fire break (drywall) and if the door between the garage and home is fire rated and has a working door closer.

> Use a moisture meter to detect moisture within or behind the drywall.

> Operate all electrical switches to see if they are working.

> Check a sampling of (or all) electrical outlets for correct polarity, and all outlets within 5 feet of water sources (and in the garage or outdoors) for ground-fault protection.

> Open the breaker box, checking for proper wiring and no double-tapping of individual breakers. Note whether the breaker box in Federal Pacific or Zinsco, which lost their UL approval due to fire risk.

> Determine whether to recommend a secondary inspection for asbestos (such as for popcorn ceiling), mold (if moisture has been detected), sewer scoping (if the home might have clay sewer pipes), or a more thorough electrical or plumbing inspection based on observations made by the inspector.

> Look for foundation problems.

> Check all windows and doors for operability and for missing or damaged screens.

That’s just the beginning! Your agent can recommended a trusted inspector.

Regulation of Inspectors Nixed by Sunrise Review

Home inspectors are the last remaining professional in the real estate transaction process who is not regulated by the State of Colorado. I have long recommended that they be regulated.

Typically, home inspectors are given the lockbox code to enter a home, since the buyer’s real estate agent may not be there to provide access. That alone should justify the regulation, including criminal background check, of inspectors by the Division of Real Estate. 

However, Colorado will remain one of the few states that doesn’t register or regulate home inspectors, based on a “sunrise review” by the Colorado Office of Policy, Research & Regulatory Reform.

Before Putting Your Home on the Market, Take Care of the ‘Little’ Things!

I show a lot of homes to a lot of buyers each week, and I’m shocked at some of the conditions I see, many of which could have been taken care of at little or no cost. Here’s a list of the “Dirty Dozen.” Do any of them ring a bell for you?

1. Windows need washing. No home should be put on the market without washing the windows inside and out. I’ve seen homes with great views, but the dirty windows left a bigger impression than the views!

2. Screens are damaged. With our strong winds and sun, window screens don’t last forever. As they age, the damage from wind and sun really gets the attention of buyers, even more than those dirty windows. And replacing screen material is less expensive than you might think. I’ve taken mine to Ace Hardware and had them rescreened at low cost.

After rescreening your weather-beaten screens, I suggest removing and labeling them (with masking tape), and storing them in the basement or garage. Even if screens are not damaged, removing them is as effective as washing your windows.

3. The home is cluttered.  We all have too much “stuff” in our homes, so selling your home is a great time to thin out your possessions. Rita and I aren’t thinking of selling our home, but she’s on a decluttering kick, which I love and support!  Most things go to Goodwill or the Christian Action Guild or the Habitat ReStore. Others go on Nextdoor.com as giveaways or “for sale.” (On a personal note, call or email me if you’d like some great wooden shelves which cost $600 new but which we want to give away now that we have donated most of our books to a book drive.)

Some things, of course, go in the trash can or get added to our box truck the next time we do a dump run for a client.

5. The yard needs clean-up.  We all have bushes that need trimming or seasonal cutting back, or weeds in our gravel areas that need pulling or killing. This is especially important in the front yard, where they can make a bad first impression. If your yard needs a large-scale fall cleanup, I recommend the  Vietnamese family which performs that service for Rita and me.  It costs more, but it’s worth it!

6. Wall-to-wall carpeting needs stretching.  This is a task for which you need to hire a vendor , but nothing generates a bad impression quite like ripples in wall-to-wall carpeting.  It will set you back a few hundred dollars, but it’s money well spent.  If the carpet itself is old and worn and terribly out of style, consider replacing it. The few thousand dollars you spend has a good payback in that your home will actually sell instead of sitting on the market turning off visitors! We recommend buying neutral color berber carpet.

7. The home is dark.  A bright, well-lit home sells!  I applaud you for replacing your incandescent bulbs with compact fluorescent bulbs, but CFLs are obsolete now that LED bulbs are available and inexpensive.  Last week I went to Batteries + Bulbs, and they were having a special on 60-watt equivalent LEDs. I left with 12 LED soft-white bulbs (same shape as traditional bulbs) for $4! Even if you pay more at Lowe’s or Home Depot, go ahead and splurge. I replaced all my home bulbs with LEDs, including the can lights in my vaulted ceilings. LEDs last forever, so it’s nice to know I won’t have to pull out my 8-foot ladder again anytime soon!  Many LED bulbs are now dimmable, too, unlike CFLs.

CFLs take a while to reach their full brightness, but LEDs are instant on.  In my garage I’m replacing two 8-foot fluorescent fixtures (drawing 300 watts) with a couple 2’ x 2’ flush mount LED fixtures which draw 9.2 watts each and provide equivalent lighting. I splurged on a motion sensor, so every time I enter the garage, the lights turn on until five minutes after I leave. Sweet!

Also, open your drapes and shades to maximize sunlight.

8. There are too many personal things.  This is rule #1 of staging a home for sale. Your family pictures, snapshots and refrigerator notes may make your house a home for you, but they create a distraction for visitors. Take them down.

9. There’s too much furniture. I showed a home last Sunday where the furniture had been thinned — but it was crammed into the garage. We couldn’t even enter the garage. Looking through the door, my buyer muttered “small garage.” In fact it just looked small because it was so full. (This is a basic principle of staging — a full closet, book shelves or whatever conveys a lack of space, whereas a partially full closet, etc., conveys abundant space.)  The stuff that you know you’ll take with you could go in a storage unit or into a POD. For the rest, see item #3 above. Note: I know a storage place that gives the first month free without requiring a contract, if they have vacancies.

10. The toilet lids are open. Closing your toilet lids is easy! It’s good Feng Shui, too.

11. Plug-in odor devices are in use. Every time I see one of these, it makes me wonder what the seller is covering up. Smoke? Cat smell? The “pleasant” smell is also unpleasant to many, myself included, so why use them?

12. The alarm system is armed. Some showing instructions include disarming and re-arming an alarm system. Do you want buyers to think your street has a burglary problem? In most cases, it doesn’t, so why raise the question?

Sunset Review Recommends HOA Dispute Resolution Function

Advocates of homeowner rights (like myself) were disappointed when Gov. Polis vetoed the bill that would have retained licensing of Community Association Managers. Now, the Colorado Office of Policy, Research and Regulatory Reform (COPRRR) has released its 2019 Sunset Review Report concerning the HOA Information and Resource Center.

COPRRR recommended continuing the HOA Information and Resource Center through 2025 and directing the Center to implement a dispute resolution process for HOA complaints, which it lacks now. A bill to that effect would have to be passed and signed by Gov. Polis.

Have You Noticed How Many Homes Are Selling for Over $1 Million? Here Are the Stats.

We Realtors are as surprised as anyone at the increase in home values, especially of the most expensive homes. The charts below speak for themselves. Not only are sales of million-dollar homes in Denver and Jefferson County increasing, but the time it takes such homes to go under contract has continued to go down.

Not shown in these charts is 2019, since we’re only 9 months into the year, but the number of sales for both counties thus far in 2019 is already about to surpass the sales for all of 2018, and the median days on market (DOM) is about the same as last year. Evidently, the number of sales over $1 million will continue to increase, while the days-on-market line may level off.

The number of sales of Denver homes over $1 million thus far in 2019 is 739, vs. 746 for all of 2018.  The yearly increase in million-dollar closings has ranged from 9.2% to 40% over the past 5 years.

Those are the statistics for all of Denver. The figures for Denver’s four quadrants (divided from each other by Colfax and Broadway) present differing market trends, as follows:

It’s worth noting that two of the quadrants — northwest and southwest Denver — have already recorded a big increase in sales for 2019 over all of last year. And the other two quadrants are likely to top last year’s sales, since there are currently enough homes under contract to make that happen. At press time there were 125 Denver homes over $1 million under contract — 78 in southeast Denver and 13 in northeast Denver, most of which can be expected to close in coming weeks. There are another 323 active Denver listings over $1 million, many of which could also sell by year’s end.

The number of Jefferson County homes over $1 million sold in 2019 through press time was 235, vs. 242 for all of 2018.  The yearly increase in million-dollar closings has ranged from 21% to 53% over the past 5 years. Those, however, are the statistics for all of Jefferson County. The figures for the four biggest Jeffco cities present differing market trends, as follows (Note: Golden stats are within city limits only):

Only Wheat Ridge is lagging in this trend of massively increased sales of Jeffco homes for over $1 million.  The other three cities are beating the county trend. The days on market for these four cities varied significantly from each other and from the Jefferson County statistics. 

For example, those five sales last year of million-dollar homes in Wheat Ridge had a median DOM of 298, while the 20 homes that sold last year in Lakewood had a median DOM of 25 and the 5 homes that sold in Golden had a median DOM of 89. The Arvada homes had a median DOM of 21 days.  The 15 Arvada homes that have sold thus far in 2019 have a median DOM of just 14 days.

While the market for lower-priced homes does show signs of slowing, the market for homes over $1 million seems only to be strengthening. This may be a reflection of the Trump tax cuts which are known to have helped the ultra rich more than those in lower income brackets. That discrepancy has also evidenced itself in the rates for jumbo loans, which have been lower in recent years than the rates for conventional mortgages. When I checked on Sunday, Wells Fargo was quoting jumbo loans at 3.5% and conventional loans at 3.625%.

There’s a lot of uncertainty in the world right now, especially in the Middle East and on the domestic political scene, and I’m frankly surprised that the markets remain so stable.  It will be interesting to see how things shake out in the coming months and how that impacts the real estate market.

Golden Real Estate’s Agents Featured on RatedAgent.com

The website RatedAgent.com stands out from other websites which provide agent ratings, because it only surveys actual past clients shortly after the closing of real estate transactions. Because of that, there are no phony reviews or reviews by people who haven’t actually done business with the agent in question.

Not all brokerages pay the company that operates that website to survey its buyers and sellers, but we’ve been doing so for nearly a decade. That provides a lot of data which you can trust for each of our broker associates.

You can use the website to search for agents by name or to look for agents in specific cities.  It’s the first place I go when asked to recommend an agent for a buyer or seller outside our primary service area of Metro Denver.

If, for example, you search “Golden CO” on their website, you’ll see that all nine Golden Real Estate agents appear in the top 15 agents.  If you search other cities, some of us also show up.  (I myself am listed first in Golden, and second in Arvada.)

Check it out! It’s a valuable resource. It will give you comfort in asking any Golden Real Estate agent to help you buy or sell.

Cars Have Titles Which Are Transferred Upon Sale. Homes Do Not. So, What’s a ‘Deed’?

One of my sellers whose closing is fast approaching called me in a panic last week because she couldn’t find the deed to her house, which she thought she’d need to bring to closing.

I explained to her that a deed is not the same thing as a title, and that all she needs to bring to closing is her driver’s license or similar ID to prove who she is.

In fact, there is no “title” to her house. A deed is a legal document which transfers property. It is not proof of ownership. When a deed is recorded by the county clerk, it results in the county changing its records to reflect the new owner’s name, and the deed, once recorded in the clerk & recorder’s database, is then mailed back to the new owner. At that point, it doesn’t matter if you lose or misplace your deed, because the county has the proof of your ownership.

This is different from how motor vehicles are transferred, where you have a title to your car and must sign it over to the new owner when you sell your car. If you lose your title, there’s a procedure for replacing it, but you need that physical title to sell your car.  Not so with real estate.

Many people share my seller’s misunderstanding about deeds And there are different kinds of deeds. The deed used most often is a “warranty deed,” meaning that the seller warrants that they are the owner of the property and, with that deed, transfer it to the buyer.

There are “general” and “special” warranty deeds. I won’t go into the difference here, since the purpose of title insurance is to provide the buyer with a guarantee (regardless of the type of deed) that they are receiving the property free and clear of any claims of ownership or indebtedness by anyone other than the seller.

When a property being sold is in the estate of a deceased seller, it is sold by the “personal representative” of the estate (called an “executor” in other states), and the property is transferred via a “personal representative’s deed.” If the property is purchased at a foreclosure auction conducted by the Public Trustee (who enforces the “deed of trust” securing the mortgage for the lender), then the transfer is via a “trustee’s deed.” 

Whichever kind of deed is used, the fact remains that the deed only exists as evidence of the sale, and it does not need to be presented ever again.

I am not a lawyer, and I am providing this information as I understand it from real estate classes and from my experience as a real estate professional. You’ll want to engage a lawyer if you require further explanation, and I, like any real estate licensee, can refer you to one or more real estate lawyers.

Nothing Would Spur the Real Estate Market More Than Relief of Student Debt

A recurring idea among many of the Democratic presidential candidates is the payoff of student debt combined with making public universities and colleges tuition-free.

If that were to be done, I think we’d see an amazing increase in home purchases by those who are currently saddled with tens of thousands of dollars in debt. Freeing them from monthly payments of that debt could unleash a lot of buying power, and not just for real estate. Dollar-for-dollar, there is probably no investment the government could make of equal scope that would have as great a stimulating effect on the economy.

According to the Center for Responsible Lending, “Student loan debt has topped $1.5 trillion in recent years, making it the largest type of consumer debt outstanding other than mortgages. The average student loan borrower graduates with nearly $30,000 in debt.”

Moreover, according to the Center, The CFPB estimates that over a quarter of borrowers are delinquent or have defaulted on their student loan debt. Such defaults wreak havoc on the borrower’s credit rating, making home financing impossible rather than just difficult.

It’s hard to imagine the impact of having literally millions of home buyers entering the market if this were to happen. It may, in fact, prove to be too much stimulation of an already tight housing market. Meanwhile, the rental market could have the depressing impact of so many renters vacating rental units to buy their own condos and homes.

Speaking of the economy, I read an article last week that the RV industry is experiencing a 20% decline in sales, and that it’s considered a leading indicator of recessions. In my Sept. 5th column I wrote about fears of recession stoking a reduction in home buying activity, although market statistics don’t yet show that happening .

However, the article on declining RV sales got me to thinking. What makes it a leading indicator of a coming recession is that RVs are an extreme example of discretionary spending, the kind that is reduced when consumers fear for their financial future.

Well, real estate purchases are often discretionary, too. People don’t always have to sell their current home or leave their rental to purchase a home. If they are in fear of economic pain, it’s understandable that they would postpone such a purchase.

So, although the statistics don’t yet reflect such a slowdown in real estate activity, I think the prospect of that slowdown is quite real, and I’ll be watching for statistical evidence of it.

If indeed a recession is looming, relief of student debt could have a strong countervailing effect on the economy as a whole, and not just the real estate market.

Note: Some readers of this column got the impression that I supported the forgiveness of student debt. I still need to be convinced that it would be a good thing to do. The point of this column was merely to speculate on the market effect if that idea were to be implemented.

What Is a ‘Variable Commission’ and Why Should Home Sellers Demand It?

This week’s column is intended to help those who might benefit from a better understanding of how real estate brokers are paid.  If you’re already well versed in this, please bear with me while I share some information with those who aren’t as well informed.

Before I explain what a variable commission is, let me explain who pays — and who receives — the commissions in the typical real estate transaction.

Normally, sellers pay the full commission to the listing agent, who then compensates the agent representing the buyer. How commissions are paid and shared is the primary purpose of the Multi-List Service, or “MLS” — to provide a system of  “cooperation and compensation.” If you’re a member of an MLS (a must if you want to do more than just word-of-mouth real estate), you commit to putting all your listings on it so that other MLS members can show and sell them. MLS listings disclose how much the “cooperating” broker will be compensated by the listing agent for procuring the buyer. 

Real estate firms may not dictate, share or discuss the commission rates that their agents charge sellers. To do so would constitute price fixing, a federal offense under the Sherman Anti-Trust Act of 1890. Brokerages may, however, dictate the amount each agent offers to other agents who sell their listings. At Golden Real Estate, we, like most brokerages, require that our broker associates offer a minimum 2.8%  “co-op” commission.  Offering less could result, I’ve found, in fewer showings by other MLS members.

There’s some history behind that 2.8% co-op commission.  Before the Justice Department forbade  the real estate industry from engaging in the fixing of real estate commissions, the Denver Board of Realtors fixed the rate at 7% and pegged the co-op commission at 40% of that, which is 2.8%. Listing commissions began falling due to competition once Realtors could no longer tell sellers there was a “standard” commission, but the  co-op commission remained at 2.8% to assure their listings got shown by agents.  As a result, it’s not uncommon now for listing agents to receive less at closing than buyers’ agents, even though they absorb all the costs of listing a home — signs, advertising, photos, video tours, showing service, staging consultations, etc.

Perhaps you’ve seen ads offering a “1% listing commission.” Such ads conceal (except in their fine print) the fact that an additional 2.8% is added to compensate the buyer’s agent.  As noted above, the listing commission includes what the listing agent will pay the buyer’s agent, so promoting a “1% listing commission” is, quite simply, misleading or deceptive advertising.

That said, let me now explain what a “variable commission” is and why sellers should demand it.

A variable commission is one which is reduced when the listing agent does not have to compensate a buyer’s agent — in other words when the listing agent sells a listing to his own buyer or to an unrepresented buyer, such as an open house visitor. Listing agents like to “double-end” a listing, because doing so can double what they earn on a given transaction.

Sellers certainly want their listing agent to be motivated to sell their own listings, but when that happens,  should the agent share his good fortune with the seller?  That’s the purpose of the variable commission.

Typically, I list a home for 5.6%, committing half of that (2.8%) to paying a co-op commission, but I reduce my commission to 4.6% when I sell the home myself. That way, I still earn more, but my seller pays less.  I want it to be a win/win.

MLS rules requires that each listing disclose the existence of a variable commission, so that brokers representing buyers know what they are up against in the event their buyer must compete with another buyer who doesn’t have his own agent.

Before submitting an offer, buyers’ agents typically ask the listing agent if there are other offers in hand. If the MLS indicates that there is a variable commission, the buyer’s agent will want to know whether any of the offers are from unrepresented buyers and, if so, the amount of the variable commission differential.  If the differential (as with my listings) is 1%, then the buyer’s agent knows that his client’s offer has to be 1% higher than an unrepresented buyer’s offer in order to be of equal monetary value to the seller.

Likewise, when meeting with unrepresented buyers, the listing agent can advise them that the variable commission makes their offer worth 1% more if they don’t engage an agent to represent them.

At Golden Real Estate, we have other rewards we can offer the unrepresented buyer, including “totally free moving” — free use of our moving trucks, free moving labor, gas and packing materials — if they choose to work with us instead of hiring a buyer’s agent.

As a matter of principle, I believe that a variable commission should be part of every listing agreement. However, my own research of sold listing on the MLS found that less than 20% of them indicated a variable commission.  In other words, more than 80% of sellers signed a listing agreement that allows their agent to keep 100% of their commission if they double-end the sale.

My research has also shown that roughly 7% of all real estate sales are double-ended. Thus about 7% of that 80% missed out on a multi-thousand-dollar discount in their real estate commission that they might have enjoyed by listing with, say, a Golden Real Estate agent.

Many homes are sold before they are made active on the MLS. Some, but not all, are put on the MLS after closing, showing zero days on market. I mentioned above that 7% of MLS sales overall are double-ended, but that percentage jumps to roughly 31% for MLS sales with zero days on market. Of those, 70% did not indicate a variable commission.  Many of those sellers, one can surmise, not only did not get as high a price for their home as they might have if it had been put on the MLS as an active listing, but also lost out on a discounted commission.

It should be noted that while the MLS considers a variable commission worthy of having its own data field, the standard listing contract lacks any place to specify a variable commission. If the contract had a section to enter that information, more sellers might ask about it before signing. Instead, unless your agent offers it proactively, as we do, you may not think to ask about including it as an additional provision.