Some real estate professionals may take offense at that statement, but I don’t say it to demean them in any way. I myself once had a “real estate coach” and I’ve been to a couple “superstar summits,” and the focus was always on prospecting and marketing and getting clients to hire you, not someone else.
In fact, I owe my facial appearance to one such coach, Tom Ferry, who said at his Palm Springs superstar event in 2003 that “people don’t trust agents with facial hair.” I didn’t believe him, but the next week I asked a seller why he chose another agent to list his home, and he said, “Frankly, I didn’t trust you.” My mustache was gone that evening!
It makes absolute sense that agents, especially new ones, need to be coached on how to sell themselves as the “right” agent for buyers and sellers. I don’t disagree. But for most agents, that’s 90% of their selling effort. Once hired, they really don’t “sell” real estate, they advise, consult and coach buyers on the relative merits of the homes they choose to see.
The buyer counts on us to share our expertise, to identify features or defects that they might not notice, and to construct a winning offer, coach them on inspection issues, and guide them through to a successful closing.
The agents at Golden Real Estate don’t expend their time or money on prospecting. Yes, we network when we’re at the gym or elsewhere, but we don’t do mailings, cold calling and such because most of our clients have been reading this column for a decade or longer and are pre-sold on hiring us.
It’s a luxury we relish — spending most of our time on developing expertise instead of on selling ourselves to people who haven’t heard of us.
Taxpayers (like me) appreciate the capital gains exemption on the sale of one’s primary residence, but not everyone is familiar with how it works. A single person enjoys a $250,000 exemption and married couples (filing jointly) enjoy a $500,000 exemption on the profit they make on the sale of their home, providing they have owned and occupied it for two of the five years preceding its date of sale.
Given the runaway appreciation of homes that you and I have seen in 2020 and 2021, more homeowners are thinking of “cashing out” and wondering how much capital gains tax they may have to pay on the sale of their home.
The exemption applies to the gain over your home’s “basis,” not to the sales price. That basis begins with what you paid for your home but is increased by the amount of any improvements you have made to the home as well as the cost of selling it.
Thus, if you paid $200,000 for your home but you made, say, $50,000 in improvements (not repairs), your basis jumps to $250,000. Then add the cost of selling your home (commissions plus title insurance and other closing costs), which should amount to 5 or 6% of the sales price. If you sell your house for, say, $500,000, your basis would be increased by another $25-30,000.
Because your gain, in that example, would be under $250,000, your entire proceeds on the sale of your home would be tax-free, whether you’re single or married. For many sellers, however, the taxable gain could be well in excess of $250,000 or even $500,000.
If your spouse died less than two years prior to the closing and you haven’t remarried, you can still enjoy the full $500,000 tax exemption. Also, your basis is “stepped up” for your spouse’s half of the home, whether or not you owned your home as “joint tenants.”
Also, if you were deployed at least 50 miles from your home, you can pause the 2-out-of-the-last-5-years rule by up to 10 years.
As with any IRS rule, it’s complicated, so you’ll want to visit www.irs.gov/publications/p523to read IRS Publication 523. Reading it will be worth your time.
A recent survey of the moving industry (at www.movebuddha.com) found the following:
71% of moving companies report experiencing delays in 2021 that exceed what is normal for the peak moving season.
67% of moving companies do not have enough drivers to cover demand, which many attribute at least partially to pandemic-related job loss.
Nearly half of moving companies are booked out at least three weeks further than in previous seasons.
Customer complaints about cancellations have risen 250% this season compared with 2019.
The survey dealt with both in-state and interstate moves. While we can’t help you with interstate, we can help you with in-state moves. If you buy or sell a home using one of Golden Real Estate’s agents, you get free use of our moving truck (similar to a large U-Haul) and access to our moving personnel at $25/man-hour. And if you use Golden Real Estate to sell your current home and buy your new home, we will even cover the labor and fuel costs. In either case, we provide free moving boxes (including those expensive wardrobe boxes), packing paper and bubble wrap. You just pack and unpack!
Prior to listing sellers appreciate having the use of our truck for transporting stuff to relatives, storage, charities or the dump.
Apparently U-Haul is having trouble meeting demand, too. I know because recently a non-client asked to rent our truck.
This 3-bedroom, 2⅓-bath home sits on a 0.45-acre lot atop the hill behind Colorado Mills at 13400 W. 10th Avenue, Golden. Built in 1937, it has a country feel to it, with its gravel driveway circling an old tree and its split-rail fencing. Every room has either birch or walnut wood paneling — not synthetic paneling, but real wood paneling, in-cluding on the slanted ceilings upstairs! The kitchen cabinets are not factory built, but built to fit from birch wood by the now-deceased master craftsman who lived here. The living room fireplace is set in a wall of Silver Plume granite, with a walnut mantel. Built-in cabinetry abounds, and there are even built-in desks and shelving (of birch) in the upstairs bedrooms. Originally on well and septic, the home is now on public water. The grounds include multiple fruit trees — pear, apple, apricot and walnut — and all the trees are maintained by Schulhoff under a yearly contract. I love this house, and you will too! To fully appreciate it, watch my narrated video tour at http://www.WideAcresHome.com, or just click on this photo thumbnail:
Last November, the National Association of Realtors (NAR) board of directors voted into existence a “Clear Cooperation Policy” (see below). The rule required all MLSs in the country to implement the policy by May 1st of 2021. Although there were some technical delays, the rule is in full force now and our MLS, REcolorado, is enforcing it with substantial fines for violations. (I know because I’m on the Rules & Regulations Committee.) Many MLS members have already received fines starting at $1,500, with only one warning notice given.
The rule basically says that there can be no advertising of any kind for a listing without making the listing active on the MLS so that all members of the MLS have the opportunity to show and sell it. If a “for sale” sign is put on a listing or there is a social media ad for it, or any other kind of public promotion of the listing, the agent must put it on the MLS within one business day. Currently that means that if the sign or advertising appears in the morning, it must be on the MLS by 6:30 pm the same day. If it is promoted in the afternoon, it should be on the MLS the following morning.
A listing can be listed on the MLS as “Coming Soon,” but that means no showing by anyone including the listing agent. Once a showing takes place, it must be changed to “Active” immediately, making it available to other MLS members. Also, if it’s “Coming Soon” on the MLS, there must be a Coming Soon sign rider on the yard sign.
Most NAR rules only apply to NAR members (aka “Realtors”), but since NAR requires all MLSs to implement the rule, it does apply to the thousands of agents who do not belong to a Realtor brokerage.
The policy was intended to reduce the number of “pocket listings.” A pocket listing is one which an agent withholds from the MLS (i.e., keeps in his pocket) in hopes of selling it himself or herself and thereby not sharing the commission with another agent.
With such stringent enforcement of the rule — other MLS violations carry penalties as small as $25 — you’d think there would be a widespread shift away from agents selling their listings before they are shared on the MLS.
To see if that was the case, I did some analysis of my own, counting the number of closings entered on REcolorado showing zero days on the MLS. I fully expected to see a drop in the number of such closings.
The first day that a listing is on the MLS, it is shown as 0 days in the MLS. If it is changed to pending (or closed) the same day, one can assume that the listing was not active on the MLS long enough for other agents to set a showing and submit an offer.
Much to my surprise, the number of homes listed as closed with zero days on the MLS has only increased over the last 24 months, as shown by the chart below. In fact, the highest number of such closings has occurred since the rule went into effect.
So what gives? This harsh penalty does not appear to be having the desired effect, but maybe some more publicity about it will create more awareness and more compliance. Agents can be suspended from membership in the MLS after enough violations, basically putting them out of business.
After three violations within the same brokerage, the brokerage itself starts getting penalized, with the fine starting at $5,000, so that should certainly increase the in-house training about the rule. I have made sure that my own broker associates are aware of the rule.
Homeowners can, of course, make their own private deals with a buyer and then call upon an agent to handle the paperwork, which is fine, since there’s no advertising or promotion of the listing by the agent.
Also, there’s a “brokerage exclusion” which allows an agent in a large brokerage to tell other agents within that brokerage about the listing, but that cannot include posting it on social media where other buyers could learn about it. These two work-arounds could explain many of the homes contributing to the chart’s high numbers.
Why Is It Called ‘Clear Cooperation Policy’?
The real estate industry is unlike any other industry I know. Through our many Multi-List Services or MLSs, we members agree to “cooperation and compensation.” In other words, each member agrees to share his/her listings with every other member, allowing them to sell that listing to a buyer, and to be compensated by the listing agent by an amount displayed on the MLS.
I like to compare our industry to the new car business. Imagine if you went to a Chevy dealer and described the kind of car you wanted, and the salesman said, “I think the Ford Explorer would be perfect for you.” The salesman takes you to the Ford dealer, gets the keys, and then joins you on a test drive. If you like it, the salesman writes up the contract and presents it to a Ford salesman, who then gives the Chevy salesman half his commission (which the Chevy salesman then splits with his dealership).
That’s how it works in real estate. The commission earned by a buyer’s agent (who is the selling agent) is called the co-op commission, short for cooperation.
The MLSs have rules requiring a member to put all their listings on the MLS, typically within 3 business days. NAR’s “Clear Cooperation Policy” tightens that rule to say that any agent who promotes a listing to prospective buyers in any way (including with a sign in the yard or a social media post) must put the listing on the MLS within one business day.
The NAR policy — now an MLS rule — was instigated by members upset that other members were withholding their listings from the MLS until they were sold, further frustrating both the agents and their buyers looking for homes to buy at a time of especially low inventory.
Come see this beautiful ranch home at 15820 W. 3rd Ave. with 3 bedrooms and 1½ updated bathrooms in a quiet location. It was just listed by David Dlugasch for $498,000.
The living room and hallway have newer hardwood floors and the bedrooms have wood-like COREtec vinyl flooring. A bay window with mountain views and a wood-burning stove make the living room very bright and cozy. The rest of the home has double-pane windows, a 4-year-old roof and new Hardie Board siding, newer furnace and water heater. The spacious family kitchen has maple cabinets and stainless steel appliances. The master bedroom has a double and single closet plus its own half bath. In addition to the carport, there is room for additional cars or an RV through the double gate into the backyard. The large backyard has a deck with canopy, a fire pit and a 10’x16′ custom Tuff Shed. From the elevated rear of the yard you get a great view of the mountains. Nearby 6th Ave. Expressway can get you to downtown Denver in 15 minutes or downtown Golden in 10 minutes. Or take I-70 up to the mountains. The basement has a workshop, is framed out and ready for a new bedroom, 3/4 bathroom, game room, home theater, or whatever you can imagine. Take a narrated video tour by clicking on the thumbnail below, or visit www.SouthGoldenHome.com, then come to the open house on Saturday, August 7, 11am to 2pm. Or call David at 303-908-4835 for a private showing.
In my June 17th column (which is archived at JimSmithColumns.com), I wrote about “title lock” insurance, which is being widely advertised. The headline for that column said it all: “Don’t Fall for ‘Title Lock’ Services. They Are a Waste of Money and Don’t Provide Much Protection.” Unfortunately, some readers thought I was referring to title insurance and asked me if it was really necessary.
Yes, any purchase or sale of real estate should include the purchase of an “owner’s title policy,” typically paid for by the seller. This policy in unlike other insurance policies, in that it is a one-time premium issued by a title insurance underwriter and sold either directly by the underwriter or by a title agency. It insures the buyer of the real estate against any liens against the property recorded with the county clerk and recorder.
If the purchase is being financed by a lender, that lender will require a “piggy-back” lender’s policy (paid by the buyer) from the same underwriter covering the lender against such claims up to the amount of the loan. (The owner’s policy covers the buyer up to the full purchase price.) Title insurance should provide all the protection a buyer needs.
I also recommend requesting a credit freeze from the three credit bureaus. It costs nothing, and it prevents anyone from taking out a loan in your name and disappearing with the proceeds.
Every year you should get a notification of value from your county assessor. If you didn’t get one this year, you can look up your address on the county assessor’s website to make sure your home is still in your name.
In Jefferson County, you can visit http://assessor.jeffco.us. Use Google to find other county assessor sites.
Last week I did my regular update on the state of the bidding wars, but it left me unsatisfied because I knew that the market was slowing, yet the bidding wars seemed just as real, especially in the under-$500,000 price range.
The problem with my analysis was that I only looked at the homes which sold in 1 to 6 days because those are the listings which likely had bidding wars.
This week, I looked at the bigger picture but still limiting my analysis to residential listings on REcolorado that are within 15 miles of downtown Denver.
A chart containing some key statistics over the last 11 months is shown below. Here are my observations, which you can follow by looking at the chart’s columns from left to right.
First, it’s clear that the bidding wars started in earnest in February, when the ratio of closing price to listing price went above 100% for the first time. That ratio peaked in June and fell significantly in July, but is still far above 100%.
The number of active listings is still unseasonably low, but higher than it has been since last November. The number of listings under contract (pending) is lower than it was in May and June, but still higher than any of the other months on the chart.
The number of July closings is probably a bit higher than shown in the chart since I did this analysis on August 1st, and not all July closings had been reported, but it is clearly lower than June’s number, while higher than any other month since last October.
The number of new listings in July was higher than any other month except June, which reinforces what I’ve said for months, namely that the lack of inventory is not due to sellers keeping their homes off the market. Rather, homes sell so quickly that the number of active listings remains low.
The median days active in the MLS (DIM) has not risen, but the drop in average days in the MLS is very telling. The drop to 10 days is stunning and shows that even the homes that don’t sell immediately are selling faster than ever. Last July the number was 21 and in July 2019 the number was 23. In the past five years the average days in the MLS never fell below 16 until this April.
The last column shows that the inventory (in months) of homes for sale hasn’t been above one month since January, although it is the highest it has been since February.
The bottom line, then, is that, yes, the market is slowing but is still crazy hot. The trend, if there is one, is toward a gradual easing of the seller’s market in the Denver metro area, but it is well short of becoming a “balanced” market.
Will the end of the eviction moratorium have a big effect on the market? My guess is that it may increase the number of new listings as landlords, especially small landlords, decide to sell rather than replace their evicted tenants. The opportunity to cash in on their properties’ increased value may be too much for some to resist, and the risk of continued lost income too great for some landlords.
There will not, I believe, be an increase in foreclosures or short sales, because very few property owners are likely to owe more than their property is worth. Because of that, they will simply sell.
This is my regular update on the real estate bidding wars.This week I chose to analyze the closings that occurred last Thursday, July 22nd, to see how the bidding wars have evolved over the past few weeks. As before, the source for this monthly analysis is REcolorado.com.
As I did in previous months, I limited my analysis to sales within a 15-mile radius of downtown Denver. I limited my search to listings that were active on our MLS at least one day and not more than 6 days before going under contract. Those are the homes that likely had bidding wars.
On July 22nd there were 36 closings up to $500,000, compared to 55 closings on June 28th. The median home sold for 6.3% over its asking price, compared to 5.4% on June 28th. The highest ratio this time was 18.5% for a home in SW Denver, compared to 20.8% on June 28th for a townhome in Littleton. Three listings sold for the asking price, and three sold for less than listing price, compared to four and six respectively on June 28th.
There were 48 homes that closed on July 22nd for more than $500,000, compared to 53 homes on June 28th.The median home in that group sold for 3.2% over its listing price, compared to 8.7% on June 28th. Only six sold for the listing price, and six sold for less than the listing price. The highest overbid in this group was 18% for a home north of Denver’s City Park, compared to 32% on June 28th.
To have a statistically significant number of closings over $1 million, I analyzed the 87 such closings that occurred from July 12 to 26. The median closing for those high-end homes was 5.4% over listing price, compared to 6.6% from late June. Nine homes sold for the listing price and 8 homes sold for less than the listing price, compared to 12 and 6 respectively in late June. The highest overbid was 24.8% for a bungalow in the Hilltop neighborhood, which was listed at $950,000 and sold in three days for $1,186,000. Of those 87 homes, 24 were listed under $1 million. Last month four million-dollar homes sold for more than 30% over their listing price.
Other than for a flat tire, you’ll almost never see an electric car on the side of the road awaiting a service vehicle or tow truck. That’s because an EV will never need any of the following expensive repairs — the parts simply don’t exist on an EV:
Transmission
Timing belt
Fuel pump
Muffler or stolen catalytic converter
Water pump
Fan belt
Power steering pump
Power brakes pump
Radiator leak/anti-freeze
Engine work of any kind
Spark plugs/points
There’s no “check engine” light because there’s no engine, so you won’t pay to “pull codes” and reset it. And no emissions testing. The electric motors in EVs, like those in other devices, are dependable, only failing if they are worked too hard, and the computers in Teslas (and presumably other EVs) don’t let that happen.
EVs have Battery Management Systems (BMS) which are critical to maintaining battery health and performance. In Teslas, there is a sealed coolant system which maintains the battery at its optimum performance temperature (70° F) year-round, including cooling it when it is being supercharged or when it sends a high level of power to the electric motor(s).
Lithium batteries, unlike lead acid batteries, do not fail abruptly, but rather degrade over time. The reason lead acid batteries fail abruptly, I’m told, is that they consume the lead when they are charged and discharged. Lithium ion batteries don’t consume the lithium. The rate of degradation has been estimated at 1% per year, so a battery with 300 miles of range might degrade to 270 miles of range in 10 years. That matches my experience.
As people wait for the purchase price of EVs to equal that of a gas-powered car — which has largely happened — they shouldn’t overlook the lower cost of fuel (3 to 4 cents per mile vs.10 cents and higher) and the dramatically lower cost of maintenance and repair. And fleet buyers won’t have to buy 12 EVs in order to always have 10 on the road because of how rarely EVs will be in the shop.
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