With Prices So High, Many Homeowners Are Wondering If It’s Time to Cash Out  

Rita and I are both 74 years old, and, although I have no plans to retire at this time, we have decided for various reasons to sell our home and move into a 55-plus community. Knowing that many of my readers are seniors, I’ve decided to share some of our thinking.

When you’re our age, you can’t predict when you might have to sell, so I have always recommended that seniors do it while they can instead of waiting until they have to. It is also kinder to your heirs to downsize possessions yourself rather than leave that task to them after you die.

The run-up in home prices has been breathtaking, hasn’t it? It’s difficult to predict how much longer it will last, but Rita and I do know that we can be satisfied with the proceeds we will get from selling our home now. The income from those proceeds in a TransAmerica fund that guarantees a certain return despite market fluctuations would help pay the rent for our new apartment. And, since I’m not retiring yet, I’ll continue to have an income on top of that.

Social Security, Medicare and appropriate long-term care policies for each of us can provide additional peace of mind regarding our medical needs as we age.

Our decision to move into a 55-plus community also relieved us of the biggest dilemma facing homeowners who want to capitalize on selling their current home — how to find a place to buy in a very difficult market for buyers.

While it’s nearly impossible and highly frustrating to buy in this crazed seller’s market, and while the renter’s market is also extremely tight and expensive, there are many 55-plus communities like the one we chose that have units available. In addition, it’s the nature of these places that openings become available as other residents die or move into assisted living facilities.

You’ll want a professional to help you evaluate the different 55-plus communities that exist and that are opening every year. Some, like the one we chose, are straight rentals, but others require a 6-figure “buy-in” which can eat up the proceeds from the sale of your home. I suggest hiring Jenn Gomer, who is in the business of helping seniors find the community which is a right “fit” for their specific needs. You don’t pay Jenn for that service — she receives a fee from the community you select.

The dilemma mentioned above is solved by waiting until you have signed a lease on your rental (ours starts on April 1st), then putting your home on the market with a closing date 15 days after your lease begins. That way you have a reasonable amount of time to move into your rental (using Golden Real Estate’s free moving truck, free moving boxes and affordable laborers, if you listed with us). It also gives you time to dispose of your excess “stuff.”

It has been an interesting if exhausting process to let go of the family heirlooms, mementos, and other possessions that have slowly filled our unfinished basement over the years — stuff that we have lugged from one house to the next.

The Marshall fire had a psychological impact on us, too.  We imagined if our own home were to be consumed by fire unexpectedly and we had to start over, losing everything we enjoy daily as well as all that stuff in our basement that we have been dragging along each time we bought a new home. Would we miss it? Of course, but we could live without it, couldn’t we?

There’s a freedom to be gained by releasing the past and living solely in the present. It felt good giving away things to Goodwill and other charities as well as to friends and relatives.

For example, since acquiring an electric bicycle several years ago, the three conventional bicycles we owned had been sitting unused in our basement and were never likely to see the light of day again. So we donated them, along with bicycle parts and accessories such as paniers and pumps, to the “Bicycle Recycle” program of the Golden Optimists Club, which refurbishes bicycles and donates them to low-income people. Making that donation felt great, on top of the feeling we got from clearing them and other stuff from our basement.

We thought about giving most of our furniture to victims of the Marshall fire, but realized that an estate sale was more practical and then we could donate money instead. Except for a few pieces, we’ve decided to purchase all-new furniture for our 2-bedroom/2-bath apartment at Avenida Lakewood.

It’s amazing how many papers were in boxes in our basement. I found tax returns going back to the 1980s which needed to be shredded. We also had the closed transactions of Golden Real Estate going back well beyond the number of years we’re required to retain them, and we were able to move the more recent transactions to the company’s new office in downtown Golden.

We had carpet remnants for carpeting that no longer existed at home and office. Bye-bye! We took multiple carloads of nice things that we didn’t need to Goodwill, which thankfully accepted all of it.

The wheelbarrows and gas generator that we never used but lent to Habitat for Humanity for its pumpkin patch each October are now in that organization’s own storage facility, not in our basement. 

Anyone want to buy our really sweet upright piano?

‘Buy Before You Sell’ Is Being Offered by Some Companies, But at What Cost?  

Unless you’re wealthy, you probably aren’t in a position to purchase your next home without the proceeds from selling your current home. And in this hot seller’s market, it’s hard to win a bidding war when your offer needs to be contingent on the sale of your current home.

There are several companies that offer to solve this problem in one way or another. You’ve probably seen the TV commercials by Orchard saying they allow you to buy a home before selling your own, and perhaps you’re wondering whether you should work with them. Since I’m often asked what I think of such companies, I decided to make it the topic of this week’s column.

It’s not obvious from Orchard’s website exactly how they work, so I clicked on their website’s link for 260 reviews curated by Trustpilot. I like Trustpilot, because it allows you to view only the one-star reviews, which can be more informative than their five-star reviews.

From what I read, it appears that they make an “offer” of a “guaranteed price” for your home, giving you the impression that they will buy the home, but the reviews I read gave me the impression that they actually put your home on the market after you move into your new home. Under one of their three programs, they charge you rent on your new home, because Orchard Investments buys the home and flips it to you when your current home sells.

Some of the negative reviews complained of poor customer service, unreturned calls, and reassignment of the agent serving the client.  (You may speak to your listing agent, but you don’t meet him/her.)

I posed as a seller/buyer on Orchard’s website to get some of my questions answered. Two unlicensed employees screened me for my intentions and to learn about my home before I got to speak with a licensed agent about their buy-before-you-sell program. All three conversations were on Zoom, including the evaluation of my home for valuation purposes. That session was on my phone so I could walk that employee through my home showing him its features.

My third Zoom meeting, which was with licensee Toni Thompson (who recognized me as a fellow broker), included a PowerPoint presentation describing Orchard’s 6% “Move First” program. In that program, you buy and move into your replacement home with Orchard, bringing up to 85% of the equity in your current home to the closing on your replacement home, and you borrow the rest from a mortgage lender of your choice (which could be Orchard’s own mortgage company).

Then they put your vacant home on the market after doing what you agree would help it sell better, such as painting, flooring improvements, etc. These costs will be deducted from your proceeds. If you choose not to use all your 85% equity on the purchase of your new home, you can get the balance at your closing.  When your current home sells, you get the remaining proceeds minus their 6% commission and expenses.

Orchard’s third program is a conventional sell-then-buy program for which you’re required to use them on your purchase.

Now I’d like to describe some of the ways one can get around the problem which Orchard’s first two programs are designed to solve.

For starters, if you own your current home free and clear or with a low-balance mortgage, you can apply for a Home Equity Line of Credit (HELOC) for up to 80% of its current value at a credit union, bank or using a mortgage broker such a Wendy Renee of Fairway Independent Mortgage who has her office inside Golden Real Estate’s storefront. I also recommend Jaxzann Riggs of The Mortgage Network, who is the source for my column on home financing that is published on page 2 of YourHub on the third Thursday of each month.

A HELOC is like a mortgage (or second mortgage), but it’s only a line of credit, so you pay no interest on the funds until you draw them. You can’t get a HELOC when your home is on the market, but this strategy is assuming that you won’t put your home on the market until you’re under contract for your new home, and you don’t draw the funds from your HELOC until the closing of the home you’re buying. Thus, at most you’ll only pay one or two months’ interest on the HELOC funds while you go about listing and selling your current home.  The HELOC, like your primary mortgage, is paid off at the closing of your current home.

Bridge loans are another option, but they carry a higher interest rate.

If you’re okay with selling your home before you start house hunting, I have a strategy for that. In this seller’s market you have the ability (if you price your home to get competing offers) to dictate the closing terms on the sale of your home.

For example, you could demand and get a 60-day closing and a 60-day post-closing occupancy agreement (PCOA). That’s a total of 120 days from when you go under contract for the sale of your current home until you close on your replacement home. Most contracts that fall do so based on inspection, which typically is scheduled 7 to 10 days after going under contract.  Once you are under contract and “past inspection,” your contingent offer is almost as welcome as a non-contingent offer.

The 60-day limit on the PCOA is due to lenders’ requirement that you take possession of your new home within 60 days to qualify for the owner-occupant interest rate instead of the higher investor interest rate. There is a totally legal way to go beyond that 60-day limit while still having the PCOA specify a 60-day term. The PCOA has a paragraph in which a per diem penalty is specified for failing to give possession to the buyer. If that penalty is, say, $100 per day, that’s $3,000 “rent” for another 30 days’ occupancy. If, as is typical, the 60 days was rent-free, then paying $3,000 for a 3rd month feels even more reasonable.

Under the terms of the PCOA, the buyer can evict you and sue for damages, but if you have discussed this possibility ahead of time, it may grant you that needed 5th month to close on your replacement home.

Do you have experience with Orchard or another such company? Call me at 303-525-1851 or email me at Jim@GoldenRealEstate.com to share your experience and maybe I’ll have a follow-up on this concept in a future column.

55+ Communities Get More Attractive With Age  

Rita and I recently decided to sell our home and move into Avenida Lakewood, a two-year-old community near Colfax and Quail which boasts “Resort Inspired Living” for people 55 or older. (Actually, a spouse can be under 55.)

We were also looking at Vita Littleton, but Avenida is closer to Golden Real Estate’s office, and I’m not retiring.

But that’s the point. You don’t have to retire for living in a 55+ community to make sense. The rent for our two-bedroom, two-bathroom apartment with 4th floor mountain views is competitive with a comparable apartment with none of Avenida’s many amenities and activities which drew us to sign a one-year lease.  And there’s no 6-figure buy-in or “entry fee” as there is with many 55+ communities.

Jenn Gomer of CarePatrol specializes in helping seniors like us find the community which best fits our needs, and she recommended Avenida to us. (We hadn’t heard of it.)  If you’re in our demographic, I suggest you call her office at 720-675-8308 and discuss what might be best for you. Such communities vary greatly, with some, unlike Avenida, providing “continuity of care,” meaning that you don’t have to move if your health deteriorates and you require assisted living, nursing home or hospice care.

The 2.8% Co-op Commission Is Becoming Less & Less Common  

There’s a term in journalism called “the buried lead,” meaning that the key point of an article doesn’t appear until several paragraphs into it.

Well, last week’s column had a buried lead. You may recall that the headline spoke about the myth of the 6% listing commission. The point of the column was that it’s common for prospective sellers to think there’s a “standard” 6% commission that’s charged by most listing agents. In fact, as I explained, the listing commission is negotiable and has declined over the last 40 years from a 7% commission dictated by the Denver Board of Realtors to listing commissions averaging, according to surveys by the National Association of Realtors (NAR), in the mid-5% range.

What has slowed the decline of the listing commission is the more resilient “co-op” commission paid to buyer’s agents from the listing commission.

Until recently, 2.8% was almost universally offered to buyers’ agents. If listing agents offered less, they ran the risk of limiting the number of showings and contracts they would receive, since the amount of the co-op commission was prominently displayed on the MLS.

What’s now allowing listing commissions to drop to (or even below) 5% has been the freedom that listing agents now feel to offer a smaller co-op commission.

It has been my own practice to list homes for 5.6% because I felt it necessary to offer half of it — 2.8% — to the agent who represents the buyer. With a 2.5% co-op becoming more common (as I showed in last week’s column and as evidenced in the chart below), I’m more comfortable now listing homes, especially higher priced homes, for 5% instead of 5.6%. I believe next year’s survey by NAR will show a big drop in listing commissions, and it will be because of the lowering of co-op commissions.

In addition to being good news for sellers, this is not bad news for listing agents because of the increase in selling prices of listings. Getting 2.5% on a $700,000 transaction pays $3,500 more than getting 2.8% on that same listing when it sold for $500,000 a few years ago.

No Firm Experimented More With Co-op Commissions Than Trelora  

Trelora began as an outspoken anti-Realtor brokerage that also was against paying buyer’s agents a co-op commission. (The name “Trelora” was derived from a scrambling of the word “Realtor.”)  However, Trelora has made an about-face in the last couple of years and is now both a Realtor brokerage and a brokerage that offers 2.5% to 2.8% co-op commissions on its listings.

When it started as a non-Realtor brokerage in 2010, its first 96 listings all advertised a co-op commission of $2.80, an apparent play on the common co-op of 2.80%. Perhaps they wanted buyer agents to misread the co-op on the MLS and only realize later that they had worked for free. 

By April 2013, Trelora had adopted the practice of recommending to sellers a flat co-op of $3,000, although it wasn’t universal because many buyers felt their listings might not get shown if they were too miserly in their compensation offer.  I myself was paid 3% on a listing during this time because the seller told me that he wanted buyer agents to show and sell it knowing they’d earn a commission equivalent to a million-dollar listing. 

Also, during this time, one of my broker associates spoke to a Trelora agent who encouraged him to put into the listing contract that the buyer would pay 2.8% instead of $3,000, and that indeed worked for him, although I’ve been advised since then that inserting an additional provision related to broker compensation was inappropriate.

In mid-2019, Trelora created a separate Realtor firm that operated side-by-side with their original non-Realtor firm for about two years. That non-Realtor firm appears now to have been phased out. Meanwhile, the Realtor firm has listed over 500 homes and has closed 450 of them. Of its first 50 listings, 33 offered 2.8% co-ops, three offered 3% co-ops, and seven offered 2.5% co-ops. Only three of the 50 offered less than 2%. 

The 50 most recent closings reflected the same shift I reported on last week: Only 13 offered 2.8%, 34 offered 2.5%, and none offered less than 2%.

My fellow Realtors will be less surprised by the change in co-op compensation than by Trelora becoming a Realtor brokerage, given its original animus toward Realtors.

56% of Americans Say They’d Live in a Tiny Home  

Treehugger.com is an interesting website which was brought to my attention because of a Dec. 28 posting entitled, “2021 in Review: The Year in Tiny Living.” 

The article contains 10 stories about tiny homes that make great reading and may inspire you to consider building your own tiny home. The headline above was item #1.  Here’s an excerpt from it:

“…Oft-cited factors behind the appeal of tiny houses include efficiency, eco-friendliness, the minimalist lifestyle, the ability to downsize, with the top motive being affordability, as 65 percent of respondents indicate. Of those surveyed, 61 percent say they would spend $40,000 or less on a tiny home, compared to 16 percent who would spend more than $70,000. Seventy-nine percent say they would be able to outright buy or finance a tiny home, rather than a traditional starter home.”

Here are the titles of the other nine articles. Click on them to read the full article:

> Young Biologist Builds Her Own Tiny House for $30,000

> This Steel-Clad Tubular Cabin in the Woods Is Built Like a Ship

> Couple’s Extra Wide Tiny Home Features Mudroom & Ergonomic Kitchen

> Family’s Fabulous Bus Conversion Has Play Loft and Roof Deck

> Adaptable Furniture & Mirrored Walls Enlarge a Compact Apartment

> This Ambulance Conversion Is a 4×4 Overland Rig With Shower, Toilet and Hot Tub

> Young Couple Builds Sprinter Van Home for $8,000

> A Shipping Container Home That Makes Sense.

> Small Parisian Apartment Revamped With Clever Space-Saving Staircase:

The Hidden (But Very High) Cost of Waiting to Buy Your Home  

It seems almost impossible to open a newspaper or listen to a news broadcast without being reminded that mortgage loan rates are on the rise. I asked Jaxzann Riggs, owner of The Mortgage Network, for her thoughts on how rising rates will affect our market. Here is what she told me.

Borrowers are being impacted on two levels right now. In the Denver metro area, the median price for a single-family home has increased by 19.3% in the past 12 months, according to the Denver Post. That means a home that you could have bought for $502,775 in January 2021, would cost $599,900 now.

Let’s assume that you agreed to purchase that home in January 2021 for $502,775. At that time, interest rates were hovering around 2.75%. If you made a 20% down payment, your expected monthly principal and interest payment would be approximately $1,642. If, on the other hand, you waited until January 2022 to buy that same home, your purchase price would be $599,810 and your interest rate would have risen to 4.087% and you would be paying $2,315 per month in principal and interest. That’s an increase of $673 per month.

Underwriters qualify borrowers for a maximum monthly payment based upon their income and other monthly liabilities. Underwriters refer to this as the borrower’s “debt to income” ratio, or DTI ratio, a term that you may have heard before. The maximum allowable monthly payment is then translated to a loan amount based upon current interest rates.

Rising rates make the maximum loan amount that a borrower can afford a moving target. By most accounts, The Federal Reserve is likely to increase the federal funds discount rates 3 to 5 times this year, with an increase certain to occur on March 16th. There is no direct correlation between the fed funds discount rate and long-term mortgage rates, but the trend for both is up. Jaxzann believes that the March 16th increase has already been factored into the cost of 30-year mortgage money by Fannie Mae and Freddie Mac, but expects rates as high as 4.75% by the year’s end. The mortgage market is resilient, changing daily, and we are beginning to see a variety of loan products (for example, adjustable-rate mortgages and interest-only loans) being offered by conventional lenders that will offset some of the damage done by increasing rates.

 While prospective purchasers can’t control real estate prices or mortgage rates, they do have some small measure of control when it comes to the price they pay for a loan while they are actively shopping for a home. Many of our lending partners have begun to offer a feature that allows the borrower to obtain a preliminary loan approval (without finding a property) and to “lock in” an interest rate, while shopping for a new home. Some lenders will lock in an interest rate for up to 120 days while their clients shop, but the most common term is 90 days. The lender charges a small premium to hold the consumers’ rate for a set timeframe and typically will also offer the borrower the ability to “roll down” the rate if interest rates drop by a preset amount during the lock period. Borrowers wishing to execute the roll down feature will pay a small fee, but it ensures that they will still be able to qualify for a specific loan amount, when they finally go under contract.

What does this mean for future homeowners? The cost of waiting is just too high. Don’t allow rising home prices and mortgage rates to price you out of the market. If you are currently house hunting and would like to learn more about locking in an interest rate, call Jaxzann at (303) 990-2992.

There’s a Persistent Myth That the “Standard” Real Estate Commission Is 6 Percent  

I barely remember the one time that I charged 6% to list a home, but I think it was over a decade ago and it was for a condo priced under $100,000.

Agents who have been in this business longer than I have may recall when the Denver Board of Realtors dictated a 7% listing commission with 2.8% of that going to the cooperating (i.e., buyer’s) agent as a “co-op” commission..  If the listing agent sold the listing himself, he would keep the entire 7%.

Times have certainly changed. The Sherman Anti-Trust Act of  1890 wasn’t deemed to apply to the setting of real estate commissions until the 1980 Supreme Court decision in McLain v. Real Estate Board of New Orleans, Inc. It took until then for the Court to rule that the brokering of real estate transactions involved enough elements of interstate commerce for the local practice of real estate to be reason-ably subject to that federal law.

As a result of that decision, the Denver Board of Realtors abandoned the dictating of commissions. Commission rates have been declining ever since, although listing commissions still average in the mid-5% range, largely because few brokerages or their agents have been willing to offer less that 2.8%   co-op commissions lest their listings not get shown and sold by other agents. But even that is changing now. With real estate prices skyrocketing, there is increasing free market pressure to reduce both the listing commission and the portion of that commission offered to cooperating brokers.

In real estate school it was drummed into us that there is no such thing as a “standard” commission, that listing commissions are negotiable. We were also told that we should never discuss with fellow agents what we charge. Even to suggest that there is a standard commission or discuss commissions with others would be a violation of anti-trust laws.

Years ago, I experimented with offering 2.5% co-op commissions on my listings and I found that they got fewer showings and no offers, so I went back to offering 2.8%.  Nowadays, however, because of higher home prices, lower co-op commissions are less of an impediment. I am back to offering a 2.5% co-op commission on higher-priced listings so I can charge a lower listing commission, and they’re still selling immediately.

I did some research to quantify the effect of the lower co-op commissions and found that 30% of the homes which sold in one day were offering between 2% and 2.6% co-op commission, with a 2.5% co-op being the most common. The homes that took 10 to 12 days to sell had twice as many showing lower co-ops, so lower co-op offers appear to have slowed sales, but the homes still sold relatively quickly.

It seems only right to me that higher priced homes should carry lower listing commissions and lower co-op offers, so I did some research on that, too. The MLS does not reveal listing commissions, but I was able to research co-op commissions which, to a certain extent, should reflect the listing commission, since agents are reluctant to give away more than half their listing commission to buyers’ agents.

What I found surprised me. Of homes that closed in the last 30 days, I found that 46% of the closings under $450,000 offered less than 2.8% co-ops. Only 26% of home which sold between $1 million and $1.3 million offered less than 2.8% co-op.  And most shocking of all, only 16% of the homes that sold for $3.4 million or more offered less than 2.8% co-op.

There’s currently a listing in the foothills above Golden for $25.7 million that is offering 2.8% co-op commission. The lucky broker who sells that listing will earn a commission of $770,000 for writing that contract. And, of course, the listing agent is getting about that much for putting it in the MLS. That seems excessive to me.

That brings up the topic of whether real estate agents generally are over compensated — a belief that generates considerable antagonism toward my colleagues and myself.

Here, too, the myth of the 6% commission is at play. Since the commission is typically lower than 6% and is split between the agents on each side of the transaction, a broker typically earns between 2.5% and 2.8% on each closing, not 6%. In most brokerages, the agent only gets a percentage of that commission and what’s earned is pre-expense income — referred to as Gross Commission Income or GCI.

The National Association of Realtors has reported that its members had a median GCI of $43,330 in 2020. Deduct expenses such as MLS fees, E&O insurance, cell phone and car expenses, computers and their software, plus licensing fees, and we are not a highly compensated industry on average. Keep in mind that only half of licensed brokers are Realtors, because NAR dues cost about $500 per year.   Licensees who won’t pay the dues to be Realtors likely earn even less.

The 80/20 rule applies in real estate as it does everywhere. Twenty percent of agents do 80% of the business and earn 80% of the commissions. Golden Real Estate’s brokers are all in that 20%. We attribute our success to the fact that we give back, spending far more money, for example, on publishing this educational column than we do on all other expenses related to the real estate business.

I believe we earn our commissions and offer a great “value proposition.”  See our list of services below.  I hope you agree.

Why Aren’t More Homes Going on the MLS Amid This Record Shortage of Listings?  

This January, only 3,237 non-builder homes were entered for sale on the Denver MLS within 25 miles of downtown Denver, the lowest number of new resale listings in that area for any January in at least 10 years. That’s a big drop from January of 2020 (pre-pandemic), which saw 4,171 new listings of non-builder homes for sale.

I find these statistics surprising, given what an ideal time it is to sell one’s home. We’ve had a seller’s market throughout the pandemic, but this month it became a sellers market on steroids, partly because of the Marshall Fire, which destroyed over 1,000 homes, putting even more pressure on the limited supply of homes for rent and for sale.

Of January’s 3,237 new listings, 2,611 went under contract before month’s end, and the median time on market before they went under contract was a mere 4 days. Only 214 (8.2%) of them were active more than a week before going under contract.

Of those listings which went under contract before the month’s end, 284 of them closed in January, 227 selling for more than the listing price, with the median listing selling for 5.2% over listing.  More than 1 in 9 sold for at least 15% over the listing price. Obviously, most of the homes that went under contract were the subject of bidding wars, and the thing to remember about a bidding war is that there are losers — many losers who are still in the market, possibly interested in your home. Except for the small number who get totally discouraged and quit looking, they are still on the lookout for a home to buy.

Any new listing, if priced appropriately, should sell quickly and, frankly, for more than it will appraise for — but appraising is not generally a problem because, as we all know, a home is worth what a willing buyer will pay. We’re not seeing problems with homes appraising, especially when the listing agent can show the appraiser multiple arm’s length offers for close to the same price.

Even so, it is common practice now for winning bidders to waive appraisal objection, meaning they agree to bring additional cash to the closing if their lender won’t lend them the contracted amount because of a low appraisal.

Buyers are incentivized to purchase now more than they were last year (or even last month), because it’s quite clear that mortgage interest rates, which have hovered around 3% for a year or longer, have started rising. By the end of 2022, we may see interest rates for mortgages in the 4% range. On a $500,000 loan, a 1% higher interest rate equates to an additional $417 per month on your mortgage payment. That’s a strong incentive to buy now.

With the ranks of buyers swelling because of these and other factors, why aren’t homeowners putting their homes on the market?

The number one reason I encounter is that would-be sellers dread being a buyer in this market. Being a buyer is very frustrating, and although sellers know they will be able to sell quickly, they worry about being able to buy a replacement home. They understandably don’t want to end up homeless.

This problem is mitigated when a seller can make an offer that is not contingent on the sale of their current home, something that might be more possible than you think.

For example, if you have a lot of equity in your current home — say, for example, you owe $50,000 on your existing home, but it’s worth $700,000 — you can probably get a credit union to give you a Home Equity Line of Credit (HELOC) for 80% of your equity minus what you owe. In the above example, that would be about $500,000. 

The nice thing about a HELOC vs. a regular mortgage is that you don’t pay any interest until you draw on that line of credit, such as at the closing on the home you’re buying. Then you put your current home on the market, sell it quickly, and pay off the HELOC at closing, having paid as little as one month’s interest on that $500,000 loan.

I like credit unions because they are non-profit member organizations, and the closing costs are typically less than with other lenders. If the line of credit is small enough — say, 50% of your equity — credit unions have been known to waive a full appraisal, saving you several hundred dollars.

If you have a lot of money tied up in stocks that you don’t want to sell, you can borrow against them, then pay off the borrowed amount when you sell your current home.

If you have a large balance in an IRA, you can withdraw money from it and not pay any penalty for early withdrawal if you re-deposit the withdrawn amount within 60 days, which is possible since you’ll be selling your current home within that time period.

Another highly effective approach is to sell your home requiring a 60-day closing and a 60-day free rent-back, which gives you 120 days after going under contract to find and close on a replacement home as a cash buyer (if you’ll be netting enough from the sale).  You could also make the penalty for overstaying the free rent-back period be a reasonable rental amount such as $100 to $150 per day.  The seller still has the ability to evict you but may be open to this arrangement as long as you’re making a good faith effort to buy and move.

Sometimes a would-be seller tells me that they don’t want to buy while prices are so high. I point out that if you are selling and buying in the same market, it doesn’t matter what prices are, because you benefit in the same way on the sale of your current home.  The same applies in a depressed market.  Don’t want to sell because you won’t get what you’d like for your current home? If you’re buying in the same market, you won’t pay as much for your replacement home.

My broker associates and I are happy to arrange an in-person or phone conversation with you about selling your current home and/or buying a replacement home. Our phone numbers are below.

Jim Smith, Broker/Owner, 303-525-1851

Broker Associates:

Jim Swanson, 303-929-2727

Chuck Brown, 303-885-7855

David Dlugasch, 303-908-4835

Ty Scrable, 720-281-6783

Anapaula Schock, 303-917-1749

Houston Builder Specializes in Net Zero Homes Built of Concrete

A reader who has been following my columns about fire resistant home construction, including concrete, sent me information about a Houston TX builder, Everlasting Homes Building Group LLC, which uses RSG 3-D structural concrete insulated panels to build homes which are not only fire resistant but also meet “extraordinary levels of excellence in energy and performance.”

At the top of its excellent home page, EverlastingHomesGroup.com, is the following statement: “Our vision is to design and build the most comfortable, healthy, resilient & sustainable living spaces dedicated to creating the best net zero energy homes and communities for our future.” They promise to build homes “resistant to hurricanes, tornados & floods, extreme cold / hot weather, earthquakes & fires, wood-destroying insects, and allergens, pollens, molds & dust.”