In Real Estate, Truth Matters, Unlike in Politics and the Legal Profession

I was brought up to respect the truth by always telling the truth and expecting others to tell the truth. My father drummed this into me, as did the private schools that I attended. My boarding school, Choate, had an honor code (and still does) that required students to handwrite on every test or paper submitted, “I pledge this paper on my honor,” which we knew was shorthand for the following longer statement, “I pledge upon my honor as a gentleman that I have neither given nor received help on this paper.” (The phrasing has changed a little since the school went coed, but I’m told by the school that it’s still used and is, in fact, framed on the wall in every classroom and academic space: “On my honor, I have neither given nor received unauthorized aid.” In language classes, it’s posted in the language being taught – even in Latin!)

To this day, it upsets me when someone knowingly lies, and it pains me that some of America’s leaders, who serve as role models, have made lying in the face of clear evidence acceptable instead of condemned, as it should be.

So, I’m glad that I ended up in the real estate profession, where truth is important and is still honored. The National Association of Realtors, to which we agents are required to belong if we join any major and most minor brokerages, has a Code of Ethics to which we swear allegiance upon induction as members. In the preamble to the Code, the word “integrity” appears twice, including in this paragraph:

“The term REALTOR® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal.”

The Code of Ethics even commands Realtors to take action when they find another Realtor violating the Code. I myself have filed (and won) an ethics complaint against another Realtor who advertised that he was selling “4 homes every week,” violating the article which says members shall not misrepresent their level of success. That agent was ordered to stop making that claim in his advertising.

With the bidding wars of recent years, buyer clients have understandably wondered whether other agents were telling the truth when claiming multiple above-listing-price offers on a listing. I am pleased to tell them, and to state here, that I don’t recall ever being lied to by another Realtor, although I do worry on occasion when the agent on the other side of a transaction is a non-Realtor. Agents who are not NAR members don’t have a code of ethics to which they subscribe, which is why NAR advertising has often urged consumers to “make sure your agent is a Realtor.”

State laws regarding real estate do impose requirements of an ethical nature that aren’t imposed on other professions such as car sales. When you buy a used car (or anything else), it’s usually without any disclosure of past or current defects, but state law, like the Realtor Code of Ethics, requires that sellers of existing homes disclose all known past or current defects, and we can be disciplined even to the extent of losing our real estate license if we, as listing agents, fail to disclose a defect, past or present, of which we are aware.

Since every brokerage is also responsible for the actions of its agents (another term for the managing broker is “responsible broker”), every brokerage should instruct its broker associates to refuse to list any property where the owner is unwilling to fully disclose all problems or defects with the home. I’m happy to report that I have never had a seller who didn’t recognize and accept his or her obligation to disclose known defects. 

One of the standard forms for every listing is the “Seller’s Property Disclosure” (SPD). The document itself is voluntary, but (1) I’ve never had a seller who refused to complete it, and (2) failure to complete it does not relieve the seller and his/her listing agent of their responsibility to disclose all known defects or problems.

The SPD is very thorough in the questions it asks, but one shortcoming is when it asks about unpermitted renovations. It only asks the seller to disclose renovations done without a permit in the last 12 months. This creates a loophole which can be exploited by an unscrupulous buyer after closing.

Consider the following scenario: the seller does not disclose a basement that was finished decades earlier because it was done professionally — and the SPD didn’t ask about it. A few weeks after closing there’s a plumbing leak in the renovation. The buyer hires a lawyer who takes the seller into mediation (required by the contract), where the lawyer asserts that the seller told a neighbor, “There’s a plumbing problem, but we’ll let the buyer take care of it.” The lawyer had requested separate rooms for the mediation, so there is no way to confront the buyer or lawyer on what the seller knows is a totally bogus assertion. The seller would have to reject mediation and go to trial, at great expense, to make the buyer produce the false claim from a neighbor. So the seller agrees to settle for a 5-figure amount, plus his already high legal fees.

To me, this is legal bullying, but such tactics are sadly a tool that some lawyers are willing to utilize.

Minneapolis Ends Single-Family Zoning — But Why?

I was surprised to read that Minneapolis has “become the first major U.S. city to end single-family zoning, a policy that has done as much as any to entrench segregation, high housing costs, and sprawl as the American urban paradigm over the past century.”

The premise that single-family zoning was actually intended as a tool of de jure racial segregation was news to me, but that’s what the article said.

Influencing the Minneapolis action was a 2017 book, The Color of Law, by Richard Rosenstein. The book’s subtitle is “A Forgotten History of How Our Government Segregated America.”

I’m not saying that I agree with the premise, but I find the argument both interesting and somewhat compelling.

The Dec. 7, 2018, article in Slate said, “Opening up Minneapolis’ wealthiest, most exclusive districts to triplexes, the theory goes, will create new opportunities for people to move for schools or a job, provide a way for aging residents to downsize without leaving their neighborhoods, help ease the affordability crunch citywide, and stem the displacement of lower-income residents in gentrifying areas.”

Slate describes Minneapolis as a “staunchly liberal” city, so this may be an isolated action, not likely to be replicated elsewhere, including here.

Some Favorite Home Improvements When Purchasing a New-to-Me Home

Who doesn’t want to make some improvements on a home they have just purchased?  Here are some of my personal favorites.

Energy efficiency is very important to Rita and me, so the first thing we do is pay for an energy audit by someone like Andrew Sams of Alpine Building Performance to identify opportunities for making the home more air-tight. This would likely include blowing more insulation into walls or ceilings and caulking around windows. It might also include installing an energy recovery ventilator (ERV) to bring fresh air into the home. This device warms cold outside air in the winter and cools hot outside air in the summer by means of a heat exchanger.

I love bringing sunlight into a home, not with traditional skylights but with sun tunnels. Most people are familiar with the Solatube brand, but I prefer the Velux brand. I had Mark Lundquist of Design Skylights install a 22-inch Velux sun tunnel in my windowless garage and a 14-inch sun tunnel in my windowless laundry room — and four large Velux sun tunnels in the Golden Real Estate office. Ah, sunlight!

Speaking of sunlight, we replaced every light bulb is our house with LEDs which are “daylight” color (like sunlight), not cool white or warm white. CFLs and incandescent bulbs are so 2010!

Installing solar photovoltaic panels is a no-brainer for us, especially now that the cost has dropped so much. Your roof doesn’t have to face due south. Southeast and southwest are good enough. (That’s our situation.) Since you might be driving an electric car someday, install as much PV as Xcel Energy allows to cover that future load.  If you have just purchased an EV, Xcel will allow you to install more panels based on anticipated future use.

Don’t you hate climbing a curb to enter your driveway? Developers install those mountable curbs the entire length of the streets in new subdivisions, not knowing exactly where each driveway will be. One of the first things I would do (and have done) is to hire a concrete company to replace the mountable curb with a smooth entrance. It cost over $2,000 for our 3-car-wide driveway, but I love it every time I enter from the street! Caution: the sidewalk will now be sloped slightly and pedestrians could more easily slip on ice, so be prepared to salt your sidewalk to eliminate icing!

When your gas forced air furnace needs replacing, consider replacing it with a heat-pump furnace or mini-splits. And when your gas water heater needs replacing, I suggest buying a heat-pump water heater. The cost is about the same, and, by converting to electricity for both, you will have eliminated the most common sources of carbon monoxide poisoning in your home.

Other improvements I’d consider include: Replacing carpeting with  tile in bathrooms; and replacing regular glass with Low-E glass on south-facing windows to reduce the harmful effects of sunlight on furniture, hardwood floors and artwork.

With His Veto of HB-1212, Gov. Polis Ended the Licensing of HOA Managers

Governor Polis surprised everyone with his May 31st veto of House Bill 1212, which would have extended the  licensing of Community Association Managers (CAMs).

CAM licensing began in 2015 but was subject to renewal in 2018, under its “sunset” provision. Accordingly, the Colorado Department of Regulatory Agencies (DORA) conducted a sunset review recommending renewal of CAM licensing. The Democratically controlled House of Representatives passed a 2018 bill renewing CAM licensing, but the Republican controlled Senate killed it, thereby requiring DORA to enter into a  year-long wind-down of the program, with July 1, 2019, as the total ending of CAM licensing.

With the Democrats taking control of both houses of the General Assembly and the governorship this year, observers expected that a bill continuing CAM licensing would be passed by both houses (which it was) and signed by the Governor in time to save the program — but it wasn’t. As a result, when July 1 arrived this month, all CAM licensing ended more abruptly than was anticipated at the end of the legislative session. Gov. Polis’ signature on HB 1212 would have prevented that from happening.

HB 1212 had been weakened somewhat due to aggressive lobbying by the Community Association Institute (CAI) whose membership consists primarily of HOA management companies. Efforts by Stan Hrincevich, an outspoken homeowner advocate and president of the Colorado HOA Forum, to include more protections for homeowners were unsuccessful, and that may have been a factor in the Governor’s veto, but Stan (and I) were stunned that the Governor allowed CAM licensing to end, albeit while ordering DORA to gather stakeholder input on the subject in coming months. Sessions for that purpose have been scheduled for Aug. 14 and 29, Sept. 12, and Oct. 8 at DORA’s Denver offices. You can register to attend in person or by webinar. I have registered to attend by webinar.

The now-ended licensing of HOA managers provided a channel for homeowners to file complaints when they felt cheated or mistreated by their HOA or their HOA’s management company — and there were plenty of complaints, which the CAM office at DORA tracked. Without such an office, homeowners have no path other than taking legal action to get redress of their grievances.

Following the passage of the original CAM licensing law in 2015, managers had to pass background checks, get certified, pay a fee, and pass a state exam in order to be licensed. There were also continuing education requirements.

Starting this month, anyone, including a felon straight out of prison, can be hired as a community manager. HOA management will once again be the only profession in Colorado where unlicensed personnel can function in a fiduciary capacity, managing millions of dollars of other people’s money without oversight.

Video Is Finding Its Way Into Buyer Inspection Reports to Illustrate Issues

Video has been a great listing tool at Golden Real Estate for a decade, but it is finding its way into other aspects of real estate, too. For example, we will often shoot a rough-cut video tour of a listing for an out-of-town buyer who has asked us to preview a property for them.

At a closing last Wednesday, the wife of the out-of-state buyer told me that she saw the listing for the first time in person during the final walk-through. The husband had seen it in person, but she said our narrated video tour was enough for her to agree with her husband to submit an offer..

So, yes, narrated videos like ours are a great listing and selling tool.

But last week, a home inspector came to our office seeking our patronage and said he includes videos in his inspection reports.  What a great idea!

I had been so used to getting printed inspection reports (PDFs) that it hadn’t occurred to me that reports could include video.  But an increasingly common delivery method for inspection reports is to have the report “in the cloud” and provide a link to it.  That approach opens up the possibility of having video clips and not just still photos.  I will recommend that inspector to a future buyer, but you can be sure that I also got on the phone and shared that idea with the inspectors I’ve been referring heretofore, some of them for over a decade.

I’ve received inspection reports that were in the cloud before, but none of them contained links to video clips, which could really help to illustrate some of the defects which inspectors uncover.

I hope this idea takes off and becomes a standard in the inspection industry.  Now that every cell phone and every digital camera has video capability, it would require no additional hardware for an inspector to shoot video instead of still photos when a video would do a better job of illustrating the issue or defect being described.

One of the advantages of videos is that they include sound. It’s a great way, for example, to illustrate an overly noisy fan motor or garage door opener or the sound as well as the motion of water under a plastic vapor barrier.

With narration by the inspector, a video can also provide more context to a problem, such as its location.

Have You Used an iBuyer Firm? Tell Us About Your Experience

Perhaps you have heard about this new trend in real estate. Best known for this are Zillow Offers and OpenDoor. 

I’ll be writing about this topic in the near future, and I’d like to hear from readers who have any experience with this new real estate business model.

I already have an example. One of my current sellers (now under contract)  entered into a listing agreement with OpenDoor but had second thoughts about it, got out of the agreement and called me to list their home.

I’d like to have more input before I write about this topic.

Digital Editions & Email Newsletters Are the Future of Newspapers

Are you taking advantage of the “Digital Replica Edition” of the Denver Post? You will not only be able to page through today’s paper, including every YourHub section, but also 30 days of past issues. 

As you page through the digital replica of each section, you can single click on any article or ad to make it larger, or double-click on it for more features including printing. On articles, you can enlarge type size for readability.

As subscription prices rise and the circulation of newspapers keeps declining, digital editions are becoming more and more popular. The Denver Post, like other daily newspapers and magazines (and the Denver Business Journal), charges for access to its digital edition, but it is free with any print subscription, even if you pay for less than 7-day home delivery.

Email newsletters and alerts are another digital frontier for newspapers. They contain links that take you to the full articles on their websites. Digital is increasingly how news will be delivered and how newspapers will survive.

If you’re dropping your print subscriptions to newspapers, remember that you can receive my “Real Estate Today” column by email, too.  Send your request to me at Jim@GoldenRealEstate.com!

Renovate Your Home for Your Own Enjoyment, Not to Help It Sell Better

Sellers often ask whether they should renovate prior to putting their home on the market. The short answer is “no.”  Unless you’re fixing an eyesore, you will be wasting your money.

So, what’s an “eyesore”?  I use the term to define something that draws a buyer’s immediate attention in a negative way — a torn carpet, a damaged countertop, a broken window, a weathered and peeling front door, etc.

The closer an eyesore is to the home’s entrance, the more important it will be to fix. If the eyesore is in a far-flung bedroom or the basement, I’m less concerned, so long as the main part of the house is really attractive. By the time a buyer gets to that eyesore, they will either have fallen in love with the house or not. If they have fallen in love by then, the buyer’s response will be more forgiving — “Oh, that’s easy to fix.”

Eliminating eyesores is worth every penny. Other improvements, such as updating a bathroom or kitchen that’s not an eyesore, may return some or much of what you spend, but probably not all. On such improvements, consider the condition of the real estate market.  If there’s a shortage of homes like yours — say, a ranch-style home in a desirable neighborhood — then you could probably minimize even the eyesore fixes. If your home will have lots of competition, fixing those eyesores becomes far more important. This is a topic on which you benefit from speaking with a Realtor, given our ready access to such data. 

Committed as we at Golden Real Estate are to sustainability, I hate to say it, but installing solar panels produces about the lowest return on investment when it comes to selling your home. You should only invest in solar if you intend to stay in your home for at least five years. You will get your return on investment from the reduced energy bills, not in a higher sale price for your home. In our case, we installed 10 kilowatts of solar at our home, but that was seven years ago, and we don’t plan to sell anytime soon.  If you make the same decision, please buy solar instead of leasing. Selling a home with a leased solar system is not as attractive to buyers.

As stated in the headline, make improvements that you want to live with and enjoy, and make them now,  not when you’re about to sell.  It matters little to Rita and me whether our wonderful new kitchen will return the $40,000 we spent on renovating it, since we will have enjoyed it ourselves for many years. And if you know you’re going to sell eventually, but not soon, spend the money now and enjoy the improvement!

Some of the other improvements Rita and I made soon after buying our home and continue to appreciate over 7 years later include installing Solatubes (to bring sunlight into our windowless garage and laundry room) and an energy audit followed by weatherization improvements. We had acacia hardwood flooring installed, and retrofitted the south-facing windows with Low-E glass. A hybrid gas furnace/heat pump system heats and cools our home.  We also installed a hot water recirculation line to provide instant hot water at all faucets.

How to Research Potential Listing Agents

A shortcut that I created,  www.Find DenverRealtors.com, takes you to the page on Denver’s MLS for searching agents by name. Note: If you don’t find the agent you’re looking for right away, try entering only their last name, since they may use a nickname or have an initial you didn’t enter. When the agent’s name appears, click on his/her name to go to another web page where you can read his or her profile (assuming they created one) and see current and sold listings, unless they have none.

Click on their listings to see how the agent described each home on the MLS. Did they list all the rooms, not just bedrooms and bathrooms, providing dimensions, or just enter the mandatory fields? Keep in mind that the best indicator of how listing agents will serve you is how they have served previous sellers.

Looking at those listings will answer the most important questions which you’d ask in person, but you won’t have to take their word — the truth is right there in front of you. You’ll learn, for example, whether they did point-and-shoot pictures or had a professional photographer shoot magazine quality photos, and whether they created a real narrated video tour, as we do, or merely a slide show with music.