Home selling – Golden Real Estate's Blog

‘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.

Email Alerts of New Listings Provide a Good Reason for Listing Your Home on the MLS

Yes, it’s a seller’s market, and maybe you think you don’t need to hire an agent to put your home on the MLS, but the opposite is true. Take, for example, the listing which was featured in this space last week. For 7 days it was listed as “Coming Soon” on our MLS, REcolorado, during which time it was not visible to non-mem-bers of the MLS (i.e., buyers). But that listing was emailed to over 250 buyers who had email alerts set up by their agents. One of those buyers tagged the listing as a “favorite” and another six tagged it as a “possibility.”

Those numbers, however, only reflect buyers who had included “coming soon” among the criteria that would trigger an alert. After the listing changed from “coming soon” to “active” on the MLS, the number of buyers who were alerted jumped to 720 and two more buyers tagged it as a “favorite.” When a buyer tags a listing as either a “favorite” or a “possibility,” the buyer’s agent gets an email letting him or her know which client liked the listing and may want to see it when it’s “active” and showings are allowed.

These numbers don’t include the buyers who set up their own alerts on Zillow or other consumer-facing sites, including Redfin. Also, those websites don’t display “coming soon” listings until they have been changed to “active.” Thus, buyers who had agents include “coming soon” as a criterion benefited from a 1-week earlier notice of that listing than did any of those buyers who were setting up alerts on their own.

For buyers wanting the earliest alerts of new listings matching their search criteria, please make this a reason to have an agent set up alerts for you instead of setting up alerts on your own.

Knowing the power of MLS alerts should cause any seller to have second thoughts about selling without an agent. It used to be that sellers could hire a “limited service” agent who would put their home on the MLS for a flat fee (say, $300) without performing any other service, but that is now illegal. The Colorado Real Estate Commission has ruled that there are certain minimum services which must be performed by all listing agents. Those services include exercising “reasonable skill and care,” receiving and presenting all offers, disclosing any known material facts about the buyer (such as their ability to close), referring their client to legal and other specialists on topics about which the agent is not qualified, accounting for the receipt of earnest money, and keeping the seller fully informed throughout the transaction.

Failure to perform those minimum services could subject the agent to discipline up to and including loss of license, which has caused “limited service” listings to disappear. If an agent offers such service to you, you should report them to the Division of Real Estate.

By the way, the Colorado Real Estate Commission has also ruled that it is the duty of all licensees to report known wrong-doing by other licensees, which their competitors are happy to do. We can be disciplined for not performing that duty.

Studies have shown that homes which are listed “for sale by owner” (FSBO) sell for less than ones which are listed by an agent on the MLS, and you can see why, because the more exposure your home has to prospective buyers, the more showings and offers you are likely to receive. And that difference in bottom line proceeds can far exceed the commission you are likely to pay.

Consider this: whether or not you hire a listing agent, you’re still likely to pay the “co-op” commission to the buyer’s agent, which is typically 2.8%. The average listing commission (which includes that co-op commission) is now around 5.5%, not the 6% everyone tells you. As a result, the savings you might experience from not hiring a listing agent could be about 2.7%, and that is likely less than the increased selling price you might get from listing your home on the MLS with a true “full-service” agent such as my broker associates and myself.

Note: Some brokerages mislead you by promoting a 1% listing commission, but when they get into your home to sign you up, they disclose that the 1% is in addition to the 2.8% that they recommend as the co-op commission and is increased further if they don’t earn a co-op commission on the purchase of your replacement home. It is also increased if they double-end the sale of your home, meaning that they don’t have to pay that 2.8% co-op commission to the buyer’s agent.

Such deceptive advertising, to me, is reason enough not to hire such a brokerage, but it may be hard for some people to say “no” to an agent they invited into their home with contract in hand.

Unlike such a brokerage, Golden Real Estate tells you upfront that we reduce our listing commission when we double-end the transaction, and we discount it further when you allow us to earn a commission on the purchase of your replacement home.

That said, our final commission might be only 1% or so higher than what you might pay to a discount brokerage, and our version of “full service” is much more complete than theirs. For starters, we produce narrated videos tours on every listing. Our video tours are not just slideshows with music or un-narrated interactive tours which can be dizzying and annoying. Our narrated tours resemble an actual showing, where the listing agent is walking you through the house, talking all the time, pointing out this or that feature which may not be obvious otherwise. Are those quartz countertops? Are there slide-outs in those base cabinets? Is that a wood-burning or gas fireplace? We have sold listings to out-of-towners who only “toured” the home on video, not seeing it in person until they flew into town for the inspection. That’s the power of narrated video tours.

What Should You Fix or Improve Before Putting Your Home on the Market?

One of the most common questions we are asked during our first meetings with prospective sellers is, “What should I fix or improve before I put my home on the market?” I’ve written about this topic before, but the subject is worth revisiting, given the current market.

My advice has always been that you should only fix the “eyesores” and not make many of the repairs or improvements that you might make in a more balanced market.

So, what’s an eyesore? Simply put, an eyesore is something that draws negative attention from a buyer. But some eyesores are more important than others — specifically ones which help form a buyer’s first impression of your home.

In other words, your front yard, the front façade, your porch, front door and the first few rooms a buyer sees are more important than the condition of inner rooms or the basement. By the time buyers are deep inside your house, they either love it or they don’t, and if they love it, they’ll be more forgiving about a stain on the carpet or a loose railing that they see later in their visit. So definitely work on cleaning up your front yard, staining or repairing your front porch and front door (if it needs it), and address any eyesores inside the front door. If the paint on your siding or trim visible from the street is aged, dirty, or peeling, you’ll want to take care of that, too.

Further inside the house, fixing eyesores is still important, just not as important. New wall-to-wall carpeting is more affordable than refinishing hardwood flooring, but a wood floor that is in dire need of refinishing is definitely an eyesore. If a hardwood floor could use refinishing, but isn’t in dire need of it, I don’t recommend it. Re-staining a wood deck is an affordable task that eliminates the eyesore of a deck which sorely needs it.

Should you replace a Formica kitchen counter with slab granite, quartz or Corian? Not if the Formica is in good shape and is not hot pink. If it has peeling edges or burn scars, yes, replace it.

One of the smartest things you should do before putting your home on the market is to wash the windows inside and out. Since that requires removing window screens, I recommend washing and labeling your window screens and putting them in your garage or store room. The window screens can be reinstalled after you’re under contract and prior to inspection, because missing screens will definitely be an inspection issue.

When you invite one of us to see your home, you’ll want to know what fixes or improvements we suggest, and we will usually come down on the side of not making any repairs or improvements which aren’t necessary to get your home under contract.

The reason you don’t want to make unnecessary repairs or improvements — for example, replacing a 20-year-old furnace that works fine, or mitigating radon if a home test reveals it is needed — is that you need to retain those as bargaining chips.

Let’s say, for example, that your buyer’s inspection objection lists a dozen items including replacing the furnace and mitigating radon. You could agree to doing those two repairs but not the other ten items, and that would probably satisfy the buyer. If you’ve already replaced your furnace and mitigated radon, you don’t have those as bargaining chips and would have to address those other items.

Interior painting is another common issue. Let’s say your son painted his bedroom ceiling black, or your daughter has a cute mural with giraffes and trees covering one or two walls in her bedroom. Should your repaint those rooms? Maybe the black ceiling, but leave the mural — assuming it’s well done, of course!

These are merely general guidelines, and every house is different. My broker associates (below) and I are happy, of course, to meet with you in your home to discuss what to fix or not fix.

The best thing you can do before putting your home on the market is neither a fix nor an improvement. It’s decluttering. We all have too much stuff, don’t we? Some of it should be taken to Goodwill or the Salvation Army (using our free truck, of course!). Other items should be put in storage, and we can usually get our clients the first month free at a local mini-storage facility.

Once we’ve agreed on what to do, you may be concerned about how to pay for it. Our clients have access to our handyman at the client-only rate of $25/hour. For bigger repairs, we can help you with obtaining financing that could be paid off from your proceeds at closing. Ask one of our broker associates or me for details.

Fewer Sellers Are Trying “For Sale By Owner” — Here Are Some Reasons Why

There will always be people who are comfortable with selling their home without the assistance of a real estate professional. In 2019, 8% of sellers chose the For Sale By Owner approach. That’s an increased from 2018’s record low of 7%.

Here are some of the things with which you need to be comfortable if you choose the FSBO approach to selling your home.

Commissions: You will save on commissions, but not as much as you probably think. Listing commissions are negotiable, and the average commission is below the 6% you may think it is, and the listing commission includes the “co-op” commission paid to the buyer’s agent. In our market, that co-op commission is typically 2.8%.

Since most buyers choose to be represented by a buyer’s broker, you can expect that you won’t be able to save more than about 3% on commissions. Then you need to calculate whether selling without professional representation of your own is worth that reduced savings.

Net proceeds: It’s possible that you won’t get as high a price for your home without the marketing advantage of being listed on the MLS, which could attract multiple offers and even a bidding war.

Putting aside that bottom-line calculation, here are some other elements to be considered by the unrepresented seller.

Showings: How will you handle showings, including screening those who will be walking through your home? This is handled nicely by ShowingTime, the service utilized by virtually all agents in the Denver market. They make sure that only licensed agents are approved for showings. All licensed agents have been fingerprinted and passed a background check. In two decades of listing homes, I’ve never had an incident of theft or other crime associated with an agent showing of my listings.

Your time: Another consideration is the convenience of showings. Yes, you could purchase a lockbox and allow agent showings when you aren’t home, but you don’t want to give the lockbox code to buyers who don’t have an agent. Someone has to let them in.

Feedback: Another service provided by the showing service (only available to agents) is obtaining feedback after each showing and forwarding it to both seller and agent.

Disclosures: There are strict rules regarding disclosures of “adverse material conditions,” which real estate agents know well. If your home was built before 1978, there’s a 5-figure fine associated with failure to disclose possible lead-based paint hazards in your house, even if the disclosure would say there are no such hazards.

Pricing: Even in a seller’s market, an overpriced home can sit on the market for a long time and end up selling for less than if it were priced correctly in the beginning. Priced correctly, your home may attract competing offers, and an experienced agent (like us at Golden Real Estate) knows how to play those buyers against each other to get you the highest possible price.

“But it’s a seller’s market”: Yes, it’s easier in our long-running seller’s market to sell a single-family home (condos are stalling because of Covid-19), but that makes it all the more important to get your home in front of the full market to stimulate competition, which only a listing agent with access to the MLS can do for you. It’s no surprise that the number of FSBOs has fallen, not risen, because of this dynamic. Your net proceeds, even with a higher commission expense, could be much higher.

If You Don’t Put Your Home on the MLS, You May Not Get What Your Home Is Worth

A reader wrote me last week complaining that some homes in her subdivision are being sold privately for less than they should, without putting them on the MLS. It bothered her because doing so creates lower comps that could affect what she is able to get for her own home when she sells.

Just as important, there are buyers who would like to move into her neighborhood who are frustrated when a home is sold before they can submit their own offer for it. And, of course, sellers are not getting the highest possible price for their home, as I’ll explain below.

Among the culprits are fix-and-flippers and “iBuyers” such as Open Door and Zillow Offers, who convince sellers to take a cash offer, claiming to save them the cost and inconvenience of listing their home on the MLS. More about them below, as well. (See my Jan. 2, 2019 and my Aug. 22, 2019 columns about iBuyers.)

If anyone offers to buy your home for cash without listing it, there’s one thing you can be certain of: they’re going to pay you a price that leaves lots of room for profit. That is money that could be yours if only you exposed your home to the full market by putting it on the MLS.

The worst thing you can do in a “sellers market,” which is what we have now, is to sell your home off the MLS. The next worse thing you can do is, after putting your home on the MLS, to sell it to a buyer who quickly offers you full price. If someone offers you full price on day one, you can be sure that there are other buyers who’d be happy to pay even more. Four days should do it.

But there is something worse than both those scenarios, and that is to put your home on the market at a price which does not attract any offers. I tell my sellers that they can overprice their home, but they can’t underprice it, because a low price can trigger a bidding war. An experienced Realtor like myself can help you set the perfect listing price. Just remember not to accept the first offer — unless that offer comes long after you put your home on the market, because you overpriced it.

What I see all too often is sellers putting their home on the market at a wished-for price, then lowering the price reluctantly over several weeks, and ending up getting only one offer, not multiple offers, at a price that’s lower than what they might have gotten if they had priced the home right initially.

It’s tempting, I know, to accept an unsolicited offer to sell a home without paying 6% commission, but I can’t even remember the last time I charged 6% commission. Remember, 2.8% of any listing commission goes to the buyer’s agent. Typically, sellers who try to sell “by owner” end up paying that 2.8%, so they only save the difference between 2.8% and the full listing commission, which is 5.6% on average. At least that is what I charge, and I reduce it if I sell the home myself, and I reduce it further when I earn a commission on the purchase of the seller’s replacement home.

If you factor in the totally free moving which I provide (locally, of course) when you sell and buy with me, it’s hard to justify not putting your home on the MLS with Golden Real Estate, thereby exposing it to all those bidders in this still-hot seller’s market.

Our Denver MLS, REcolorado, is now enforcing a new rule called “Clear Cooperation,” which was voted into being by the National Association of Realtors last November. It requires MLS members to put their listings on the MLS within 24 hours of promoting their listings in any way.

The rule is very simple: If a listing agent promotes his or her listing in any way — with a yard sign, tweet, Facebook post, or newspaper article, etc. — the listing must be on the MLS, either as “Coming Soon” or “Active.” If it’s “Coming Soon,” the sign must say so, and it can’t be shown, even by the listing agent himself. Once shown, it must be changed immediately to Active status, making it available for showings by all members of the MLS. Prior to Sept. 1st, REcolorado only issued warnings, but fines are now being levied for violations.

So, yes, there can be off-MLS sales, but not involving an MLS member unless there was no marketing at all, not even emails to his/her clients. With “pocket listings” now banned, the focus now turns to the iBuyers, companies like Open Door, Zillow Offers and others which directly solicit homeowners to purchase their homes, charging a 7% “service fee,” with the intention of flipping the home for a profit.

Only time will tell whether this new rule, with fines being levied, will make a big difference, but it surely will make some difference.

New Brokerage Offers to Help You Buy Before You Sell

Perhaps you’ve wondered about those TV commercials by a new brokerage called Orchard offering to help you buy your replacement home without selling your current home first. Golden Real Estate has been successful at that, too, although not using the same business model. (See my previous columns on April 25, 2019 and May 11, 2017 and Sept. 17, 2015 and Mar. 12, 2015.)

The company, which came to Denver in January and has closed 14 purchases and 17 sales so far, was formerly called Perch. If you scroll to the bottom at Orchard.com, there’s a link to their reviews, which I suggest clicking on. The 7 negative reviews give an insight that the positive reviews don’t provide.

Basically, the company, based in New York, is “vertically integrated,” meaning that they have their own mortgage company, title company, etc. They are backed by a venture capital firm which provides the working capital to purchase your home if they don’t sell it first.

They operate like the iBuyers I wrote about in two previous columns (Jan. 2, 2020 and August 22, 2019 ). They make a market-based offer to purchase your home, then reduce that offer based on inspection, and they charge a 6% fee (in lieu of a commission).

Also, you pay rent for your new home, which you don’t actually buy until after your home closes. If it doesn’t close in 90 days, Orchard will buy it at their low-ball price. Note: Their agents work on salary, not commission, which is unattractive to the really successful agents.

The Number of New Listings Remains Low, But They’re Selling Fast

Each week I have been checking the MLS to see how many homes are being listed afresh and how many are going under contract as the Covid-19 stay-at-home order remains in place.

In last week’s column I reported that during the 7-day period from Sunday April 5th to Saturday April 11th, a total of 819 homes within 25 miles of downtown Denver were entered on Denver’s MLS, This past week — from Sunday April 12th to Saturday April 18th — that number dropped slightly to 799. Of those, 23 had already been sold privately, compared to 22 the previous week, so there were only 776 new active listings last week. Amazingly, 114 of those went under contract by Saturday, compared to 124 the previous week, despite stricter enforcement of the “no-showings” guidance from the Division of Real Estate. Another 74 of those new listings went under contract by Tuesday evening, April 21st.

Bottom line? The roughly 50% drop in listings from previous years which we saw last week has become the “new normal” for the current situation in which in-person showings are not allowed until a buyer has signed a contract to buy a home.

This is actually a great time to list your home! The fact that so many buyers are still submitting offers without even seeing a home in person should inspire more sellers to offer their homes for sale. Just be sure you do it with a narrated video tour like we do for all Golden Real Estate listings.

Some Practical Advice on Preparing Your Home to Show Its Best and Sell With Ease

Submitted by Suzie Wilson of HappierHome.net

Whether you’re moving because of a job, family expansion or retirement, you’ll have to roll up your sleeves and get to work if you want your property to appeal to the most buyers. Before you start packing, however, there are a few minor home improvements you should tackle, which will speed up the process and get you on the road.

Start with aesthetics

No matter how short a time you’ve lived in your home, there are likely lots of little things that you’ve learned to overlook. The vast majority of these will be minor aesthetic imperfections that are cheap and easy to rectify. ProfessionalStaging.com notes that buyers are on the lookout for issues and will notice every little crack, stain, or chipped tile. Here are a few DIY projects that will reduce the lived-in look of your home:

Replace moldy or damaged caulk in the bathtub and shower
Clean or stain grout in the kitchen and bathroom
Fill nail holes in the wall and gaps around the trim
Plant colorful flowers by the mailbox and entryway
Organize storage spaces (buyers love to look in closets, under the stairs, and in the garage and attic)
Paint rooms that don’t already have a neutral color scheme
Install functional smoke and carbon monoxide alarms
Pull weeds and add a layer of fresh mulch to flower beds
Repair brown spots on the lawn
Replace outdated bronze and brass doorknobs, handles, and drawer pulls

Manage major malfunctions

There are plenty of small things you can tackle on your own, but you’ll also need to invest time and money making sure there are no major defects that may derail your home sale at inspection time. These include:

Foundation problems (Homes.com estimates this can devalue your property by up to $100,000)
HVAC issues
Mold
Leaks in the roof/missing shingles
Major plumbing problems, such as a clogged mainline
Outdated electrical panel
Windows that won’t open up or lock
Musty/animal smell
Rotted wood behind walls – most likely in the kitchen or bath
Damp basement

Small issues won’t necessarily be deal-breaker for most of your buyers but the less work they have to do the more likely they will be to give your home a second look. Large issues such as a crumbling foundation may designate your home as a fixer-upper, which won’t attract “everyday” buyers who want to move in immediately.

What do buyers want?

Buyers in different demographics will seek out home features that appeal to their lifestyles. There are, however, a few universal want-list items you can play up in your listing to cast as wide a net as possible. According to American Home Shield, the features homebuyers want are:

Separate laundry room
Energy-efficient appliances and windows
Exterior lighting
Outdoor entertainment space
Ceiling fan
Full bathroom on the main level
Hardwood flooring
Proper insulation
Garage storage
Eat-in kitchen

When it’s time

Once you’ve completed these repairs and renovations, there are a few finishing touches that will put the icing on the cake and sweeten the deal for your buyers. First, you should declutter, so that buyers can see more of the house and less of what you own. Before you declutter, though, it’s a good idea to buy an air filter. Since digging through those items is going to stir up a lot of dust, it’s important to keep the air clean for you and home buyers. [Note: Golden Real Estate provides its sellers with a free staging consultation.]

After you declutter, deep clean the entire home and weed out any belongings or furniture that don’t look quite right. To get your home sparkling clean, spend a little money on a housekeeping service. For an average of $166 a visit in Golden, housekeepers can help you keep up with laundry, mopping, sweeping, vacuuming, and straightening. Just keep in mind that the more you request from the housekeeping service, the more you’ll ultimately pay for the privilege.

Also, staging and investing in high-quality professional listing photos (a real estate photographer usually charges between $110 and $300 for a shoot, depending on your location) will give online searchers a reason to pay your house a visit. [Note: Golden Real Estate pays for professional photography and shoots a narrated video tour for all its listings. See examples at www.GRElistings.com.]

Perhaps most importantly, you’ll need to choose the best listing agent. Interview multiple individuals and ask about their recent local sales history and how many current listings they manage. A good agent will encourage you to price your home competitively and will go above and beyond simply listing on the MLS to promote the property. [Call 303-525-1851 for a free market analysis by broker/owner Jim Smith.]

Click here for a list of all the free services which Golden Real Estate provides to its sellers.

The Rule Against Showings and Open Houses Shouldn’t Hamper Home-Buying…

…that is, if the listing agent does what Golden Real Estate has done for over 13 years — create a narrated walk-through video of each listing.

Our narrated video tours are just like a showing. They are live action videos which start in front of the house (just like a real showing) and then go through the house and into the back yard, pointing out features as we go.

Check out the video tours for any of our current listings at www.GRElistings.com to see what I mean. They really are like an in-person showing with the listing agent. For example, the video camera points down to the floor and up to the ceiling as I describe the hardwood floor or the sun tunnels which bring natural light into the home’s interior.

But, you say, you’re not going to buy a home that you can’t see in person. Right? You don’t have to, because the rules allow for inspection once the buyer has signed a purchase contract. Your visit (presumably with an agent) the very next day constitutes an inspection. That can be before you even have to deliver your earnest money check, since you may not even be under contract yet. The guidance from the Division of Real Estate says, “home inspections and final walkthroughs after a buyer has signed a purchase contract (emphasis added)… is also considered to be an essential part of the real estate transaction.” The buyer is not under contract simply by signing a contract that has not also been signed or countered by the seller.

That “guidance” from the Division of Real Estate was issued on April 9th and has not been updated as of April 18th, which is when I am updating this blog post.

Scott Peterson’s April 15, 2020 “Legal Bite”

However, Scott Peterson, general counsel for the Colorado Association of Realtors, maintains in a video recorded from quarantine on April 15th that the governor’s executive order prohibits any “marketing” that involves entry into a property – no photos, no video, nothing at all – without a contract in place. If that’s true, however, why isn’t it reflected in the April 9th guidance and why hasn’t that guidance been updated?

I tried Googling the governor’s executive orders and looked at his web page on www.colorado.gov/governor and saw only two executive orders on other matters and no link for all his executive orders. So, for now, I lack evidence of Scott Peterson’s claim and am relying on the April 9th guidance, which I keep checking for updates.

Therefore, a visit to the home by a buyer immediately after signing an offer to purchase the home does, in my opinion as a broker, comply with guidance currently in effect from the Division of Real Estate. Then, if the buyer is able to get under contract with the seller, he or she can schedule a second inspection by a professional inspector.

So, here’s a possible scenario: You look at the video tour of the patio home or the ranch-style luxury which you found at www.GRElistings.com. I guarantee you’ll have a pretty good sense of the home from viewing that video. You’ll experience the flow from kitchen to dining room, to family room, to back yard, etc., because you are being walked through the home. It is not a slideshow of different rooms, giving no indication of flow from one room to the next.

Let’s say you call me or your agent to submit a contract and let’s say that it is accepted by the seller. You’re under contract! The typical contract has a 7- to 10-day inspection period. You schedule your personal inspection with your agent (or me, if you don’t have one) the next day, before delivering your earnest money check, which is typically due in 3 days. You can terminate immediately if you have buyer’s remorse, and go back to looking at other houses.

If you don’t terminate, you still have a week to hire a professional inspector and submit a detailed inspection objection.

What if you’re a buyer, and there’s no such video for a house that interests you, but you don’t want to sign a purchase contract? I believe you’ve got three choices here. One, your agent (me, for example) could ask the listing agent to create and provide a narrated walk-through video. Second, I could preview the home for you since the guidance make no mention of banning previews, and shoot my own rough-cut video tour of the home, post it as an “unlisted” video on YouTube and send you the link. Or, third and perhaps best, we could use Facetime, Zoom, or another app to have you see what I’m seeing as I walk you through the house. (NOTE: Scott Peterson believes that previews and videos shot by anyone other than the seller are not allowed. I just don’t have any documentation supporting that position.)

Therefore, while it may be inconvenient not to have an in-person showing of a listed home, there are work-arounds that can make it possible to get under contract and confirm your interest in the property before you are fully committed to it or put down any earnest money.

Finally, I’d like to note that many listings are empty and vacant. I see no reason why in-person showings of those listings should not be allowed. I know that builders are letting buyers view their empty homes. Again, Scott Peterson maintains that empty homes cannot be visited either. Show us the actual orders from the Governor or guidance from the Division of Real Estate, Scott!

What Does ‘Open and Transparent’ Look Like in Real Estate?

For some reason I’ve never understood, most listing agents believe that they should not be open and transparent with buyers’ agents regarding the disclosure of offers in hand when there’s a bidding war for their listing.

At Golden Real Estate, we believe in being open and transparent. Here’s what that looks like.

Rule number one is to always tell the truth. We never mislead a colleague about offers in hand. If we don’t have competing offers, we’ll never represent that we do. This is a matter of ethics. The Realtor Code of Ethics, to which every Realtor swears allegiance, requires no misrepresentation about anything, whether it’s how successful we are or whether we have competing offers.

Agents from other brokerages, however, typically won’t disclose the price or nature of the offers they have for their listings. At Golden Real Estate, we not only disclose the price and terms of offers received, but we will let each agent know if their offer is surpassed by a better offer. We don’t want any buyer or their agent to have the experience of being blindsided.

This is good for both buyer and seller, and buyers’ agents invariably thank me when I explain this policy. After all, how would you as a buyer like to learn later that if you had only offered $2,000 more (which you were willing to do), you would have won that bidding war?

Similarly, how would you as a seller, like to learn that you could have gotten $2,000 more for your house?

Although this process essentially operates like an auction, where everyone in the room knows what they’re bidding against and chooses on their own when to drop out of the bidding, it doesn’t mean that we let the bidding go on forever.

After the buyers have raised their bids twice, it’s time to ask for a final bid, without offering to return if it’s not the winning bid. While this is our policy, the seller, of course, is the final authority on how long to continue the back and forth. By that time, however, they tend to be quite happy with the highest bid and agree to cut it off. To do otherwise risks antagonizing the buyers and their agents.

It’s important to us as professionals that we leave each party in a bidding war happy that we were transparent enough that they felt they had a fair chance to win a coveted listing.

This approach takes more work on our part than doing what other agents typically do when multiple offer situations arise, which is to inform agents that they have multiple offers and ask buyers’ agents to submit their “highest and best.” Then the seller accepts the best offer and other buyers are upset and angry that they weren’t allowed to raise their offer.

We feel, however, that our approach is not only fairer to buyers’ agents but also produces the best price for our sellers. We wish that other listing agents would adopt this practice.

Transparency, however, does not extend to disclosing the price at which a home is under contract prior to closing. The reason for that is that if the contract falls, we don’t want the next buyer to know what the seller was willing to accept. That’s because we have an ethical and legal obligation to work in our seller’s best interest.

The only time I would disclose the price at which one of my listings is under contract is when an appraiser needing comps calls me. If we are cleared to close — past inspection, appraisal and other contingencies — I’m willing to help that appraiser know the price so he can do his or her job in appraising a comparable listing for a different seller.

Thanks to this practice, Golden Real Estate has a better-than-average track record when it comes to closing price vs. listing price. In some cases this has resulted in our sellers netting their full listing price even after subtracting commissions and the other costs of selling.

Call me or one of our broker associates at 303-302-3636 if you like how we operate and would like a no-obligation market analysis of your home.