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. The7 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.
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, 114of 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 narratedvideo tour like we do for all Golden Real Estate listings.
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 andwill 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)
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:
Major plumbing problems, such as a clogged mainline
Outdated electrical panel
Windows that won’t open up or lock
Rotted wood behind walls – most likely in the kitchen or bath
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, thefeatures homebuyers want are:
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.]
…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.
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!
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.
About this time of year I like to remind readers why winter can be the besttime of year to put their home on the market.
First of all, there is less competition because, frankly, most sellers don’t know that homes sell well year-round. If your agent says you should wait until spring, get an agent who understands this!
Second, buyers continue to get alerts of new listings year-round. You know this yourself if you’ve been looking at listings. Nowadays every serious home buyer has asked their agent to set up an MLS alert matching their search criteria, or done it themselves on Zillow, and these alerts are generated 24/7/365 — even on Christmas morning!
This is a change from years past, when buyers depended on their agent to monitor the market and find listings that matched their buyers’ needs and wants. No more! Buyers do their own searching, even if it’s on Zillow, and call their agent when they want to see a listing which appears to meet their needs and wants.
Third, you won’t be bothered by lookie-loos. Only serious buyers, ready to make an offer, will be asking to see your home in the winter. The buyers who just like looking at other peoples’ homes are less inclined to go out at this time of year.
Fourth, you’ll have your agent’s and mortgage broker’s full attention. With less traffic in the winter, these professionals can give you their undivided attention. Others, including title officers and home inspectors, are also less busy in the winter, which is to your advantage.
Fifth, you can light your fireplace. I love going into a warm, cozy home when it’s cold outside. Unless your home is drafty and cold, this makes for great staging! And if you have a wood-burning fireplace, it’s even better. I love the smell of a wood-burning fireplace, don’t you? Also, put some cider on the stove, with cinnamon sticks in it and have a ladle and cups next to it with freshly baked cookies, and you’ve made my day! Your visitors will feel like they are in their new home!
Sixth, holiday decorations are good staging, too. Most stagers will urge you to depersonalize your home, including removal of crucifixes or other religious symbols, but this is Colorado, and people of all religions enjoy our Christmas holiday decorations. Again, like the fireplace and hot cider, holiday decorations can add a welcoming, homey feeling to your home.
Remember, buyers need to move year round. The concept of selling during the children’s summer vacation may be valid for a limited segment of the population, but even in that case many families move locally, and the MLS allows us to set up searches based on school district or even specific elementary, middle or high school service areas. Other moves are triggered by job changes, health changes or seniors moving to be closer to grandchildren, and these needs arise year-round.
Call any of us at Golden Real Estate — our phone numbers are below — if you’d like a free market analysis of your home or for any other reason.
Have you faced this dilemma? You want to buy a home that better fits your family’s needs, but you are stymied by the need to sell your current home to pay for the next one. So you stay put in a home that doesn’t quite meet your needs.
There are several ways to tackle the challenge of buying a home when it depends on selling your current home. Let’s look at different scenarios based, first of all, on the amount of equity you have in your current home.
If you own your home “free and clear” and are downsizing to a lesser priced home, the easiest path is to take out a home equity line of credit (or HELOC) on your current home. This kind of loan is easier to obtain than a standard mortgage, especially when done through a credit union. Note: You must do this before going on the market.
When I obtained a HELOC from a credit union, they didn’t even charge for title insurance and did only a “drive-by” appraisal, and the closing took place at the loan officer’s desk with no closing fee. It couldn’t have been easier.
If you have a mortgage on your home but still have substantial equity, a HELOC can provide the cash you need for a 20% down payment, which is what’s required to get the most favorable interest rate on the mortgage for the home you’re buying. You would no longer be a cash buyer for your new home, and the mortgage lender for your home purchase may make the sale of your current home a condition for approving the loan on your new home, depending on the size of your income and the ratio of your debts to your income. But that doesn’t mean you can’t succeed in buying the new home.
Under the right circumstances, a seller and his/her listing agent will consider an offer that is contingent on the sale of the buyer’s current home. I have succeeded in this process as a buyer’s agent by showing that the buyer’s home is ready to be listed immediately and will be priced to sell quickly based on a market analysis.
Don’t expect, however, to win a bidding war against non-contingent buyers. You can avoid bidding wars and succeed with a contingent offer by looking only at homes that have been on the market over two weeks. Your agent can set up an email alert with that being one of the search criteria. Then be sure to include in the contract the price that you are going to list your home and submit with it a market analysis demonstrating that it is priced to sell quickly. That market analysis should include a spreadsheet of comparable homes sold in the last six months, showing days on market, and a price per square foot that is higher than the price per square foot of your home at the listing price specified in your offer. Your agent could even enter the home on the MLS as an “incoming” (not yet active) listing, complete with high quality photos, showing that you’re ready to “pull the trigger” immediately after your contract is accepted on the new home.
The contract to purchase your new home could have a closing date of 45 to 60 days, and if you have priced your current home correctly, you should get multiple offers and be under contract within, say, four days with a buyer who has agreed to match the closing date on your new home.
One of the deadlines in a contract to buy a home is the contingency deadline, after which you would lose your earnest money if you fail to close on your purchase. That date should not be the day of closing but maybe a week earlier. If the contract to purchase your current home has the same date for that last opportunity for your buyer to terminate and get their earnest money back, you can have some peace of mind about everything working out well.
When I write a contingent contract, I like to add a provision that the seller can terminate if my buyer’s home is not under contract within, say, a week or 10 days after going under contract. That increases the likelihood of acceptance.
(I’ll write about the challenges facing renters who want to become home owners in next week’s column.)