You can view view 45-minute video at https://youtu.be/koJwQuBD0-k
This Thursday, January 17th, is the first of Golden Real Estate’s 6-part Sustainability Series. The topic this week is home insulation. Allow me to introduce the presenters and to share some of what I myself have learned from insulating my own homes and office, and from 17 years of selling homes and being active in the sustainability arena.
We have two great presenters at this month’s session. One is Steve Stevens, whose passion since retiring from Bell Labs has been the conversion of an energy-wasting 1970s brick ranch into a showpiece of sustainability through solar power, energy efficiency and super insulation. In addition to having insulation blown into his attic and walls, he had layers of poly-iso and structural insulated panels added to his exterior walls. Then he went so far as to dig out and expose his home’s foundation walls so poly-iso insulation could be applied to them. He also constructed “air locks” on all entrances, and built a greenhouse on his south-facing exposure — both extremely effective insulating techniques.
Several years ago when Steve’s home was on the Golden Solar Tour, I shot a 40-minute video in which Steve described his home’s sustainability features — by far the longest of all the videos I have ever created for homes on that annual tour. A link to the video is at JimSmithColumns.com.
The other presenter is Dennis Brachfield of About Saving Heat. I’ve known Dennis for over 25 years. His company insulated an office building I owned in Denver as well as a couple homes I have owned. Dennis is bringing a blower door to this evening’s session in order to demonstrate its function. Using a fan to depressurize a home, a blower door helps to identify the location and extent of air leaks in a building. Another tool Dennis will illustrate is an infrared camera. By pointing it toward ceilings and exterior walls, the camera shows the difference in surface temperatures, indicating areas that could benefit from air sealing and/or additional insulation.
I’ll never forget the time 15 years ago when Dennis blew insulation into the exterior walls of a 1945 wood-frame bungalow I had purchased. The home’s gas forced-air furnace kept the ambient temperature at 70 degrees easily enough, but occupants still felt cold. Dennis pointed out that even if there was insulation in the walls, voids surely existed, due to a combination of sub-par installation and years of settling. I was amazed at how much more comfortable the house was after having insulation blown in to fill all those voids. What I learned from that experience was that cold walls radiate coldness just as effectively as warm walls radiate warmth. Thus, a room with 70-degree air but cold walls feels cold in comparison to a room with the same air temperature but with walls that aren’t cold.
My current home was super-insulated by Bill Lucas-Brown of GB3 Energy. I invited Bill to join us tonight, but he had a previous commitment. On www.GB3Energy.com, you can watch a Golden Solar Tour video I shot in which Bill describes his weatherization work, which included insulating the crawl space and the rim joist area. It’s very informative.
Here’s a simple way to determine how well insulated your home is. When you go to bed on a cold winter night and turn your thermostat down — let’s say from 71 to 67 — look to see how quickly the home cools to that lower setting, triggering the furnace. If it’s less than a couple of hours, you could probably benefit from improved insulation of your home. I’ve started turning our thermostat down an hour or more before bedtime and I’ve found that the temperature doesn’t drop enough to trigger the furnace until 3 a.m. or later.
When your home is that “tight” it’s important to ensure the introduction of enough fresh air to maintain good indoor air quality. For that, consider installing an “energy recovery ventilator,” or ERV. This device replaces a standard vent fan with a heat exchanger that warms incoming fresh air by extracting heat from the interior air that is being exhausted.
The ERV’s function will be explained in our session — or you can Google “energy recovery ventilation.”
Perhaps you’ve heard the expression, “A lawyer who represents himself has a fool for a client.” Most lawyers respect that truism, which is why you see lawyers hiring other lawyers when they are sued or criminally charged..
The same truism can be applied to real estate. Just this week I received a contract to buy one of my listings from a couple who are both real estate agents, but the offer was written by another agent. (I suspect he will share his 2.8% co-op commission with the buyers.)
There are also many buyers and sellers who aren’t agents but who are sufficiently experienced at buying and selling real estate to be considered “sophisticated” buyers or sellers. These persons may understandably think that they don’t need professional representation, saving themselves (if they’re selling) 3% or so on a listing commission. If they are buying without representation, they may think they can negotiate a lower purchase price by sparing the seller the 2.8% co-op commission typically paid to a buyer’s agent.
Let me debunk some misconceptions about each scenario separately — first for buyers.
Buyers typically pay nothing for professional representation, since buyers’ agents are universally compensated by the listing agent at a rate spelled out in the multi-list service (or “MLS”) to which all agents belong. Our Denver metro MLS is called REcolorado. Its website is www.REcolorado.com, which has both a consumer-facing and agent-facing side.
If you’re a buyer, you can go to that website and see all the listings which are currently available for purchase, and you can click on a link to email or call the agent for each listing. After that listing agent has determined that you don’t have an agency agreement with another agent, he or she will be delighted to help you buy his (or her) listing because he won’t have to give away half his commission to another agent. And he’ll probably ask you to hire him as a buyer’s agent if his own listing is not what you choose to buy, in which case he could earn 2.8% on that purchase.
If you, as a buyer, work with the listing agent, he or she will not, by law, be working in your best interest. At best, he’ll be a transaction broker, advising neither you nor his seller in the transaction. He won’t be able to advise you on the true value of the home or what you should offer, or how to respond to a counterproposal from the seller. He also won’t be able to advise you on inspection or other issues that arise during the transaction. You’re on your own — literally helpless.
Moreover, the chances are that you’re not saving the seller any money by being unrepresented, since the listing agent gets to keep the entire commission when he doesn’t have to share it with a buyer’s agent. My own research has shown that only 15% of listing agreements have a provision in which the commission is reduced if the agent doesn’t have to share his commission with a buyer’s agent. I know this to be true, because the MLS requires listing agents to disclose the existence of a “variable commission” in their listings. That’s one of the fields that is not displayed on the consumer-facing side of the MLS.
There are additional reasons why a buyer (in my opinion) should hire an agent instead of working directly with a listing agent — except when it’s a Golden Real Estate listing, as I’ll explain below. The most important reason is that a buyer’s agent, in addition to being your advocate in a transaction, has more access to information about listings than you have as a consumer.
For starters, agents have valuation software not available to consumers and can create a spreadsheet of comparable sales, so you’ll know whether a home’s listing price is reasonable. Zillow’s famed “zestimates,” by themselves, are not a dependable indicator of a property’s value.
Second, agents can do searches using any field on the MLS, not just the fields that are available to you as a consumer. Do you require a main-floor master? A second master suite? A fenced yard for your dog? An unfinished (or finished) basement? An agent can set up MLS searches on virtually any criterion that is important to you, and the system will notify you and your agent within 15 minutes of a new listing matching your specific search criteria.
As a buyer working with Golden Real Estate, you’ll enjoy added advantages to having representation, up to totally free moving using our own moving trucks, boxes and packing materials. With our focus on sustainability, one of my favorite closing gifts to buyers is a free energy audit of your new home — a $350 value. And if you have a home to sell, we reduce our commission on selling your current home. These benefits also apply when you’re buying one of our listings without your own agent. Call us for details.
Now let’s look at why sellers need to have professional representation.
Understandably, sellers have a huge incentive not to use an agent — they pay the commission for both agents in a transaction, which they assume (wrongly) is fixed at 6%. That would be a violation of federal antitrust laws. All commissions are negotiable. My personal rate is 5.6%, which I reduce to 4.6% if I don’t have to give 2.8% to a buyer’s agent. And I reduce those figures by another 1% if I earn a commission on the purchase of your replacement home. Because of federal laws against price fixing, I can’t dictate (or even discuss) what our other agents charge.
That’s still a lot of money, so you need to know what you’re getting for it.
At Golden Real Estate, sellers enjoy a free staging consultation, magazine quality still photos and professional quality narrated video tours which are posted on YouTube, the MLS, consumer real estate websites and on the custom website which we create for each listing. (Visit www.GRElistings.com to see the custom websites for our current active listings.)
We also provide free use of our moving trucks and moving boxes both to our sellers and to whoever buys our listings, even if their agent is with another brokerage. And, of course, all listings are featured in this column, which appears in eight editions of newspapers throughout both Denver and Jefferson counties.
We also have a proven track record of getting the highest possible prices for our sellers because of our skill at negotiating with buyers and their agents. Most agents will not reveal the offers they have in hand when they get multiple offers. We treat that situation like an auction, where everyone knows the highest current offer, and we regularly bid up the purchase price for our sellers — and the buyers and their agents appreciate not losing out in a blind bidding situation.
With the new year upon us, many of us are thinking about taxes. While it’s too late to strategize for 2018, let’s look at tax strategies going forward.
Owners of duplex, triplex and small multi-unit properties sell their properties for many reasons. Sometimes an owner wants to leverage equity into another property with better upside potential or a higher return on their investment or into multiple income producing properties.
Perhaps a duplex property was inherited but the responsibility of being a landlord has become overly burdensome. Whatever the situation, there are times when selling a multi-unit rental property and transferring the equity into an alternative “hands-off” type of investment makes sense. You can defer your capital gains tax obligations and keep your pre-tax capital growing for you by utilizing one of these IRS-approved options.
1031 Real Estate Exchange: The 1031 real estate exchange is a tax-deferral strategy that applies to investors who have sold or are about to sell investment real estate. This strategy allows a client to defer capital gains tax on all sales proceeds that are reinvested into other investment real estate properties, as long as the seller:
1) does not take “constructive receipt” of the funds within the exchange transaction. This means that the proceeds must go directly to a “qualified intermediary” and not at any point be in the seller’s own bank account.
2) meets all requirements outlined in the Internal Revenue Code.
721 Exchange: Less well-known than the 1031 exchange, the 721 exchange is another tax-deferral strategy which applies to investors who have sold or are about to sell investment real estate. This strategy is similar to the 1031 exchange but allows an investor to exchange his property for an interest in a diversified real estate portfolio known as a Real Estate Investment Trust (REIT). As with the 1031 exchange, the seller must not take constructive receipt of the sales proceeds within the transaction.
Delaware Statutory Trust is offered as replacement property for those seeking to defer capital gains taxes via a 1031 exchange. The DST allows for fractional interest ownership in various managed commercial properties with other investors, as individual owners within a Trust. Each owner receives a share of the cash flow income, tax benefits, and appreciation of an entire property. There is potential for annual appreciation and depreciation. Investments begin at $100,000 and allow investors to diversify into several properties.
Deferred Sales Trust is a tax-deferral strategy that applies to many different capital gains situations. These include the sale of a business, real estate, stocks, or bonds, as well as the maturity of principal on a note or carry-back, and even applies in certain debt forgiveness situations. The Deferred Sales Trust is different from the 1031 and 721 exchanges in that it does not require any reinvestment of the sales proceeds into real estate. It is similar to 1031 and 721 exchanges insofar as an investor cannot take constructive receipt of the funds within the transaction.
For expanded, detailed information on each of these tax strategies, visit www.DuplexAlerts.com and click on the “Sellers” tab in the main menu.
Always consult with your tax or wealth management professional when considering the sale or purchase of an investment property.
A quick caveat: Neither I nor any agent at Golden Real Estate is a CPA or tax advisor. Broker associate Andrew Lesko did the research for this article. Email Andrew at Andrew@GoldenRealEstate.com or 720-710-1000 with your questions or comments.
As you may already know, Golden Real Estate is a leader in sustainability, as expressed in the value statement printed on all our yard signs: “Promoting and Modeling Environmental Responsibility.” And most of our agents, including myself, are Certified EcoBrokers, having taken extra training in all aspects of sustainability as it applies to real estate.
We’d like to share what we’ve learned with you, so we’re launching a Sustainability Series that will take place on the third Thursday of every month in our office. We can accommodate 20 or more attendees in our office, but we will move it elsewhere if the demand exceeds our capacity, so please RSVP. You can do so now for all sessions.
Each meeting will focus on a single aspect of sustainability. Here’s the schedule for the first six meetings (subject to change):
Jan. 17th — Home Insulation — Walls, windows, foundations, crawl spaces, attics. (This is a bigger topic than you might think, but it’s also the cheapest and most effective path to reducing energy consumption.)
Feb. 21st — Home Heating Methods — Forced air, heat pumps, radiant floor, solar thermal, and other technologies.
Mar. 21st — Solar Power — Rooftop and ground-mounted photovoltaic, solar gardens, solar panels vs. solar roof tiles, and home battery storage/backup.
Apr. 18th — Electric Vehicles — What’s here now and what’s coming soon in cars, trucks, motorcycles and more.
May 16th — Sustainable Renovation — What are the more sustainable and popular materials and designs?
June 20th — Water Conservation — The latest concepts and products for conserving water use, both indoors and outdoors.
All sessions are 1 hour long and begin at 5 p.m. in our Golden office or nearby if a larger space is needed based on the number of reservations received. The sessions will be led by experts in the field, although you can count on me to add my own comments!
Go ahead and reserve your seat for any or all sustainability sessions now by sending an email to Jim@GoldenRealEstate.com. We look forward to producing this informative series!
Golden Real Estate’s Sustainable Practices
1) Our office produces more energy than it consumes. With our 20 kW of solar panels, we heat, cool and power our office and charge our six electric cars. We also provide free EV charging to the general public, yet our Xcel Energy bill is only $11.26/month. At our request, Xcel removed our natural gas meter.
2) We accept polystyrene from the public in our “Styrofoam Corral,” keeping over 200 cubic yards of the material out of the landfill every year.
3) We use only LED light fixtures and have four “sun tunnels” (skylights) for naturally lighting our office.
Click here to read about our transition to “Net Zero” in our Jan. 4, 2018, column, “Promoting & Modeling Environmental Responsibility.”
This secluded ranch home at 7050 W. 61st Avenue sits on a cul-de-sac just minutes from downtown Arvada. The 0.97-acre lot has a 900 square foot detached garage, a large out building previously used to raise geese, and a shed for extra storage. Ditch water is used for irrigation. There is a holding pond and pump system installed for irrigating the lot. The home was recently painted and new gutters and roof were installed. The garden level basement was recently finished, including upgraded electrical and new carpeting. You can take a room-by-room narrated video tour (including drone footage) at www.ArvadaRanch.info. Contact your agent or listing agent Jim Swanson at 303-929-2727 for a private showing. Just listed at $589,000.
Nestled in Golden’s Beverly Heights with mountain views, just uphill from the Colorado School of Mines campus, this one-owner, ranch-style, 5-bedroom/3-bath brick ranch is move-in ready! With over 4,000 finished square feet, 2 wood-burning fireplaces, studio, flex space and walkout basement, this home is a must see! Sellers have remodeled the home with new paint, doors, walls, trim, outlets, switches and lighting. If you have previously toured the home, take a second look. The clean, modern feel of the home is sure to impress! The private backyard oasis is great for relaxing as paragliders float peacefully overhead with the famous “M” on Mt. Zion as your backdrop. Buyers can add their personal touch to the kitchen and bathrooms to create their forever Golden home. There’s RV parking, too! More pix and info at http://www.BeverlyHeightsHome.info. Listed at $770,000 by Kristi Brunel. Call her at 303-525-2520 for a private showing.