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

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

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

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

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

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

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

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

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

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

1 Day on Market  =  102.0%

2 Days on Market  =  102.2%

3 Days on Market  =  102.2%

4 Days on Market  =  102.3%

5 Days on Market  =  102.2%

6 Days on Market  =  101.5%

7 Days on Market  =  100.5%

8 Days on Market  =  100.0%

9 Days or longer  =  Under 100%.

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Price Reduced on Golden Home Backing to Greenbelt

15318 W EllsworthThis large home at 15318 W. Ellsworth Drive backs to one of the greenbelts in Mesa View Estates, far from the noise of US 6 and Interstate 70. It is only a mile, however, to the Indiana Street/US 6 interchange, making it convenient to both Denver and the mountains. With 5 bedrooms and 4½ baths on three levels and its oversized 4-car garage, it can accommodate even the largest family!  Features include a main-floor master suite that opens to a 10’x24’ wood deck with stairs down to the backyard. (There’s a $10,000 allowance for replacing deck, which is showing its age.) There are three gas fireplaces, too. In the basement bathroom is a wide 2-headed shower and a sauna. On the second floor are 3 bedrooms, one with a private bathroom and two sharing a Jack-and-Jill bathroom. The gourmet kitchen has hardwood flooring and gorgeous slab granite countertops and stainless steel appliances, which are all included, as are the high efficiency washer and dryer in the main-floor laundry room. See pictures and a narrated video tour at www.MesaViewEstates.info. Open Sunday, June 10th, 1-3 pm.

 

5-BR Brick Ranch Offers Great Sweat Equity Opportunity

Front view 2This Hutchinson ranch with finished basement at 6757 Lee Street is an excellent value in the quiet Arvada West neighborhood. It has an updated kitchen, and covered front and back porches that will be a joy in all seasons.  Landscaping is mature and affords a sense of privacy in this desirable neighborhood close to parks, rec centers, shopping and excellent schools. The home is in need of carpet, paint, updating, etc., but it’s priced to be a great opportunity for sweat equity or a fix-and-flip. See more pictures and take a narrated video tour of this home online at www.ArvadaRanch.info, then come to our open house on Saturday, June 9th, 9am to 1 pm.  Call your agent or broker associate Debbi Hysmith at 720-936-2443 to arrange a private showing.  Listed at $400,000.

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

2-BR Lakewood Townhome Just Listed by Andrew Lesko

Front of Unit.JPGThis 2-story, 840-sq.-ft. townhome at 7373 W. Florida Ave #2-G, in the quiet Florida Park subdivision, presents a great opportunity for first-time home buyers!  Bring your design ideas and make this home yours. This is currently the lowest priced townhome in all of Lakewood! Features include a main-level living room with wood-burning fireplace, dining area and kitchen space. The entrance is accessed through a fenced patio — great for summertime BBQ’s! Two spacious bedrooms upstairs share a full bath with separated vanity. There is a half bath on the main floor, along with washer and dryer hook-ups. This townhome is move-in ready. Community amenities include a swimming pool and adjoining Lakewood city park with playground and basketball half-court. The Florida Park community is just south of the Belmar shopping and dining district, close to trails and parks. This is a great starter home in a great location, and it has been priced to sell quickly! View more pictures and a narrated video tour at www.LakewoodTownhome.info, then call your agent or Andrew Lesko at 720-710-1000 for a private showing. Andrew will be holding an open house at this townhome on Saturday,  June 2nd, 11am to 3pm.  We won’t sell it before then, but get your offers in!

 

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

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

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

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

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

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

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

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

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