Friday, December 19, 2014

Pressure Drop [Bidding Wars and YOU]

by Osman Parvez

It's hard to believe that a listing in December could generate five offers and go under contract less than 24 hours after hitting the market, but that's precisely what happened yesterday. 
We Expected This to Happen

We did everything right.  My client and I saw the house the same day it was listed.  They decided they wanted it, so we wrote an offer and sprinted to the finish line.  

Our offer featured a shiny cover letter highlighting its competitive strengths.  Our lender letter was from a well known, local credit union. My strongest Additional Provisions were in place, designed to keep us at the bidding table.  Our offer was above asking and featured an escalation clause, fifty percent down, short closing date, limited inspection, and optional increased buyer liability for default. We delivered it by the submission deadline.   

But it didn't happen.  


Instead, This Happened
Yesterday afternoon, I got the "sorry, let's just be friends" call.  

According to the listing agent, all five offers were similar in price and terms.   The sellers accepted the first offer at the table without countering and without checking to see how high my buyer was willing to go.   

I know.  It doesn't make sense.   

Why would the sellers leave money on the table?  I have my suspicions.  I can read between the lines.  I could speculate but instead, let's stay positive and focus on the future.  


Best Practices for Bidding Wars
When a hot property hits the market, it's time to drop everything else.  In my mind's eye, it's like being in the Situation Room.    Every single moment counts. 

The pressure is intense.  All that pressure has dropped on you. 

Do you know the intrinsic value of the property?   How high should you go? What's the price trend in this neighborhood?   What's the depth of market for a property of this value in this location?  What contractual contingencies should you waive and which ones should you keep?  Have you done your homework and do you fully understand the contract?   Strategy - are you going to choose "highest and best" and risk money left on the table or will you use an escalation clause?   What other strategies exist?

The time to discuss market value and negotiation strategy is NOT when you're in the house.   You should have done it weeks earlier.    Agents often use second (and third) offers to the table as leverage to improve the first offer.   Sadly, speed to submission is a competitive advantage.   


I like the pressure to perform and frankly, I get emotionally invested in the outcome.   I want to do my absolute best for my client.  As you can probably guess, I also HATE losing.   

The inventory shortage took hold (three years ago), and bidding wars are now the norm for desirable, well priced properties. After dozens of competitive negotiations, most of which were successful,  it's time to talk about best practices for buyers and sellers.   It's time to revive our Meetups. 



Want to Learn Best Practices for Bidding Wars?

Step 1:  Sign up for the Boulder Real Estate Meetup. Click HERE.  

Step 2:  Watch for an announcement in early January for our Meetup Date.  You'll see it here and on our Facebook page

Step 3:  Attend.  

I promise, you won't be disappointed.   This is what your agent isn't telling you.

OK, Toots. Sing it.  




image:  Philo Nordlund and Grey World
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Like this analysis?    Subscribe to my research.          Ready to buy or sell?  Click HERE to schedule an appointment or call 303.746.6896.

As always, your referrals are deeply appreciated.  


The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

Tuesday, December 16, 2014

Affordable Housing Shenanigans

by Osman Parvez

The City's Affordable Housing Program ignited a firestorm of criticism yesterday. You can read about the games people play in the comment section of Boulder, is Affordable Housing Working?

I've helped people buy affordable housing in Boulder. I've also sat down with Jeff Yegian, the head of Boulder's Housing Division to discuss pros and cons of the program.   

Osman's Key Takeaways: 

1. Right now, my affordable housing clients have more selection than market rate clients. These properties are also generally in better condition and in better locations. Buyers have a level playing field, unlike the rest of the market.    

2.  For most buyers, it's a good deal but for a young professional or a single person who might couple up in the future, it's a killer deal. If you qualify, you can lock in a low cost of home ownership in one of the most desirable cities in the country. As your income rises, you can invest in other assets - including a mansion if you want. If you buy affordable housing, you are never forced to sell it because your income rises, ever. Plus, nothing forces you to offer potential roommates affordable rent. In other words, take on a roommate and that sucker they will effectively be paying most of your mortgage. There are restrictions on renting the whole place out to a tenant however, you also lose out on market rate appreciation. Frankly - your house should never be your primary investment vehicle for the simple reason that you have to sell it in order to realize the gain. 


3. For the larger community, it's not such a great economic deal.   Developers are business people. They will always maximize profit for investors. Every penny of cost will be passed on to the point that the market will bear. This dramatically increases the price of market rate homes, and accelerates the process of turning our city into a mix of haves and have-nots. In other words, affordable housing is a regulatory mechanism to squeeze the balloon and push out the middle class.   It's a gas pedal for Aspenization. 

4.  The trade off to squeezing the balloon is that affordable housing allows people with lower incomes a chance to live here. This enhances diversity, and i'm not just talking about skin color. Many professions don't pay well but add tremendous value to our community. We want artists, teachers, and start up employees in our community. We want these people living here. 

5. The comments in the article (linked above) suggest a number of Affordable Housing properties are ending up as shady short-term rentals on VRBO or AirBNB. For owners who are tempted, keep in mind the city has recently hired more full time enforcement staffers. You're on their radar. 

6.  I'm happy to work with affordable housing buyers and sellers. At the same time, it's not without cost. I earn about a quarter of what I would in a normal market rate deal and these transactions are often more challenging and time consuming. However, they're still worth it. I look at it as a contribution to our community, while still acknowledging the programs flaws. My client benefits, the community pays and in some ways also benefits.     

P.S. I couldn't afford to live here if all of my clients were affordable housing.  Thank you, market rate clients.  


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Like this analysis?    Subscribe to my research.          Ready to buy or sell?  Click HERE to schedule an appointment or call 303.746.6896.

As always, your referrals are deeply appreciated.  


The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

Wednesday, December 10, 2014

What's it Worth? [Bidding Wars]

by Osman Parvez

Psst... armchair Boulder real estate analysts. Are you ready to play What's it Worth?

Yesterday, I took a buyer to see 5325 Hickory Ave. My client was running late (sick kid) and while I waited, no fewer than EIGHT people saw the house. It was like watching ants devour a piece of candy. It's hard to believe it's mid December. 


The first group had clipboards and measuring tape. They looked like architects or possibly employees of a design-build firm. The second group came in fancy pickup trucks with out of town plates. I chatted with them while they waited for their Realtor to show up. They too were planning a quick speculative flip. 

The smell of money was in the air. Expect a bidding war.     

After some back of the envelope analysis and discussion, my client decided he isn't interested in writing an offer. Given the lack of support in this location for higher end real estate, it doesn't make sense for his investment objectives. So... we decided to play a game.   

Standing on the sidewalk, we made educated guesses as to the eventual sale price. Whoever more closely guesses the final closing value earns two rounds of beer at the Southern Sun.    

Want to Play a Game?
"The only winning move is not to play."
For fun - I'm opening up our little game to you, dear blog reader.   Guess the sale price and I'll buy you beer at the Southern Sun. If nobody guesses correctly, the closest guess wins. You can revise your guess until midnight on 12/14/14. Offers are being considered on 12/15/14. 

Key Details:  
- Essentially one owner since the home was built in the 1960's. Some transaction history but appears to be within the family. 

- Horribly dated inside, needs windows, a whole new kitchen (including appliances), new bathrooms, a new roof, and more. Other Realtors like to call this "having potential." I'm going to call it "horribly dated." You can see the interior pictures HERE.    

- Tons of deferred maintenance but my professional opinion is that it has good bones. Signs of water leaks in the roof and efflorescence in the basement.   Read the Seller's Property Disclosure for info regarding the condition of the property.

- Giant lot, south facing structure. Includes an irrigation well (rare). Decent layout once you knock down the kitchen wall.  

- Traffic noise from Foothills is not currently an issue at the ground level but could be annoying if you raise the height of the structure for the top level rooms.

- Due diligence: Only three houses have EVER sold above $1MM in this location, one of which was a farm-like estate (unicorn). In short, be cautious on the spec potential. There is no depth of market for $1MM+ real estate in this neighborhood. You're also East of Foothills and North of Baseline. In my opinion, the buyer for this house is going to update/build it out for their personal residence (i.e. not for spec).  

- The roof line has some visible sag and there's a structural engineer's report floating around. I'll update this post with that report if I can get my hands on it, but we didn't see anything wrong with the foundation. This is not an inspection or an endorsement. If you're a buyer for this house, get professional advice and don't forget to read the SPD (linked above).  
    
- Zillow says it's worth $609,972 (LINK).  Asking is $597,700 (LINK). Tax Assessor says $507,200.

What Do You Say?    
Remember, there's no guarantee of a bidding war. It could sell at a discount to asking, which is more normal for Boulder real estate. The deferred maintenance might also scare away many home buyers, leaving behind flippers and others willing to put in sweat equity. Remember, you can change your bid up until midnight on 12/14/14.   

Survey says...
[THE GAME IS NOW CLOSED, WINNER ANNOUNCED WHEN THE PROPERTY CLOSES]
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As always, your referrals are deeply appreciated.  


The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

Tuesday, December 09, 2014

What's in the Crawl Space - Bales of Marijuana?

by Osman Parvez

Last week, I took buyers to see a house in Boulder.   It had been on the market for a while, which is strange given the inventory shortage.   I suspected something was up.   I wasn't disappointed. 

When we walked around back, here's what we saw. 


Note to seller:   My buyer is seriously considering investing a half million dollars in your home.  They're going to want to see the crawl space.   Sealing it with spray foam is probably not a good idea. 

While standing outside this scary looking hatch, we pondered the possibilities.     Dead bodies, bales of marijuana, leftover water from the flood... it all crossed our minds.    

We let it go but once inside the house, it became even clearer why this listing hadn't sold. 

The tenants had a truly MASSIVE amount of personal belongings.   The stuff covered every possible surface, including the floor, resulting in a maze through several rooms.   There were bags of stinky trash in the entryway.   The tenants were also inside the house during this very awkward showing.  My clients couldn't wait to leave.    Are you surprised they don't want to write an offer?

Sorry, no picture.   The tenant's possessions are unique enough that I don't want to embarrass them, although I did share it with the listing agent.   He should know what he's dealing with and why the house isn't getting any offers. 

It's been a while since we published a picture from one of our showings.   This one took the cake.  Here's a few more in the series


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Saturday, December 06, 2014

Hitler Learns the Truth about Zillow

by Osman Parvez
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Funny, this reminds me of a conversation I had earlier this week. 


Friday, December 05, 2014

Google New Boulder Campus and More [Weekend Reading]

by Osman Parvez

Ready for some weekend reading? Here's a quick roundup of interesting real estate tidbits for your reading pleasure. 


1. Google's new Boulder Campus gains preliminary approval. This is a huge deal. Once constructed, the new facility will allow Big G's Boulder employee base to grow to around 1,500 people. The impact to Boulder housing will be substantial, particularly at the mid range of the market. Here's why.  

Most of these employees will make too much to qualify for affordable housing and yet not have enough resources to take down $1MM+ homes. That means the mid range is not going to get a break. If you haven't noticed - the market is already plagued by scarce inventory and bidding wars. The mid range in particular is a place of no-holds barred, bare fisted negotiations and occasional shady pocket deals. It's going to get worse. Of course, some of these people will rent but like most, they'd rather own a home than pay the landlord's mortgage. 

2.  More Jobs and Higher Wages: U.S. Recovery Starts to Hit Home. No surprise - the economy keeps gaining steam, particularly the job market. Talent and capital are mobile, particularly on the upswing of an economic cycle. Where does talent and capital want to move? To places worth living. Know anyplace like that?


3.  Think young people are going to stop moving to Boulder because it's so expensive? If you've lived here long enough, I'm sure you've heard that. Guess again -> Choose One, Millennials:  Upward Mobility or Affordable Housing. "The paradox of the American Dream: The best cities to get ahead are often the most expensive places to live, and the most affordable places to live can be the worst cities to get ahead."

4.   Roommates are a rising trend. The numbers have risen sharply and it's at all age brackets. Just in case you didn't know, Boulder has a limit on unrelated people renting together. The rule is no more than 3 unrelated people per housing dwelling and the city just added two new full time employees for oversight. Reading this piece, I was surprised that a 1 bedroom apartment in Brooklyn now rents for an average of $2,600 per month. Boulder looks cheap by comparison. 



5.  Graph of the week: Has the new bubble really begun? Compared to the last bubble, housing still looks cheap. via Seeking Alpha  
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Like this analysis?    Subscribe to my research.          Ready to buy or sell?  Click HERE to schedule an appointment or call 303.746.6896.

As always, your referrals are deeply appreciated.  


The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

image credit:   Szonyi Istvan via Free Parking

Tuesday, December 02, 2014

Rental Village [Development Update]

by Osman Parvez

Heads up!  As Boulder Junction nears completion, another adjacent development is seeking Planning Board approval. Late last month, the board conducted a second Concept Review of 3000 Pearl Street a.k.a. "Pearl Place" or "Reve Pearl." This is the large lot on the south west of the corner of 30th and Pearl Street, directly across from Barnes and Noble. 

The most recent proposal calls for ~103,000 square feet of office, 12,000 square feet of retail/office (flex) space, 12,000 square feet of retail/restaurant, and 242 residential rental properties comprised of studio, one, two and three bedroom units along with live/work units. The development would require a rezoning for two areas of the property 

Reve Pearl joins Solana (319 rental only units) and Boulder Junction (71 affordable rental apartments). That's a lot of new rental properties in very close proximity. 

Nickel Flats (just 16 units) is the only for purchase, market rate development currently underway in the former Transit Village Area Plan. At least 7 of those units are under contract. Here's an example of one that is currently available.

Note, Planning Board minutes show repeated concern over the number of residents. When complete, Boulder Junction was expected to have between 2,800 and 5,000 new residents and 2,900 to 4,300 jobs. Little did we know the vast majority of those residents would be renters. 

Additional Resources: 
Boulder Development Map
Planning Board Packet


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Like this analysis?    Subscribe to my research.          Ready to buy or sell?  Click HERE to schedule an appointment or call 303.746.6896.

As always, your referrals are deeply appreciated.  


The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

Thursday, November 27, 2014

Thursday, November 13, 2014

Boulder Snow Removal and Snow Plowing

by Osman Parvez

Snow removal.  It's probably the last thing you think about when buying a house - until the white stuff starts hitting the ground. 

If you're new to Boulder, you might be surprised to learn that the city only plows a small portion of our city streets.    This is particularly hazardous in certain residential areas.   


Not your street
What You Need To Know 
  • When it snows, Boulder plows primary and secondary streets only using a fleet of 15 trucks.   Here's a map of what they usually plow.
  • If there is 8+ inches of accumulation, and the temperature remains below freezing for 72 hours, the City will dispatch two trucks to plow 10 predetermined residential areas.   Those areas are depicted on The Residential Street Plowing Map in black boxes.    Most of Boulder doesn't get that special plowing, by the way. It's mostly just certain areas west of Broadway and a small portion of downtown.
  • One truck is available to respond to public safety requests.   Click HERE to request the truck.
  • The city may not plow your street, but as a property owner, you're responsible for removing snow and ice from your sidewalks within 24 hours after snow stops. Failure to remove snow from sidewalks before the 24-hour deadline results in fines and the responsible party will pay for a private contractor to clear your sidewalks. To report sidewalk violations, call Code Enforcement at 303-441-3333.
  • If you're a senior or disabled, you may receive volunteer assistance through the Ice Busters program. Call 303-443-1933 ext. 402 to volunteer or ext. 416 to request assistance with sidewalk snow removal. 
Guess who's not getting plowed?
Due Diligence Tip  
The Residential Street Plowing Map also conveniently shows the slope of streets in Boulder.   Do you see the red and orange streets?   Those are high slope, i.e. sled runs. The red ones in particular are treacherous when things get slippery, which often occurs with far less than 8" of snow.  

Does it matter?    Yes, especially if you want to mobile in the winter.  

Parking your car on a street with 8 degrees (or more) of slope is a great way to make friends with the local body shop, too.   

The fact that the house you're thinking about buying sits on a street that does (or doesn't) get any winter maintenance might make or break a home purchase decision.  It's something you should know before you buy a house.   






image:  Arvell Dorsey, Jr.  ---
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As always, your referrals are deeply appreciated.  

Tuesday, November 11, 2014

The Sky is Not the Limit | A History of Boulder's 55' Height Limit

by Osman Parvez
Close your eyes.  Imagine what Boulder would look like with 300 foot buildings stretching from downtown to 33rd street. Believe it or not, once upon a time, Boulder City Council was seriously considering allowing this to happen.    

a future that didn't happen in Boulder
In November 1967, CU law school student Ruth Wright wrote a seminar paper called "History of Height Control and Environmental Aspects." It sparked a movement which led to the passage of an amendment to the city charter limiting the height of buildings to 55 feet. The amendment saved historic buildings in downtown and the view to the mountain backdrop.  
  
Last night, I attended a talk on the history of height limits in Boulder. The 55' height limit has widespread support today but back in '67, it was controversial and polarizing.  I was also surprised to learn that developers had once planned dozens of skyscrapers in the downtown area and they almost were allowed.  

Key Takeaways
 


  • Safety concerns with high-rise buildings were an important issue that led to passage of the amendment.   Boulder's fire chief at the time was in favor of the 55' limit because the fire department only had equipment that would reach 70'.   Proponents of the limit wanted developers, not taxpayers, to pay the additional cost to fight fires above this level.   Developers balked at the idea.
  • Plan Boulder and other proponents of the amendment only had two months to campaign.   A series of contentious debates were held in Boulder during the Autumn of 1971 featuring dualing slide shows.   Prominent Boulder Architect Carl Worthington was against the 55' height limit and led the debate for the opposition.   Ruth Wright's photographs of Worthington's downtown Denver skyscraper were instrumental in swaying public opinion.  
  • Boulder has a long history of using emergency ordinances as a precursor to permanent regulation.   Along the way to passing the 55' height limit amendment, City Council used a series of interim ordinances to limit the height of buildings to 100'.    The first emergency ordinance was for a 6 month term and it was twice extended.
  • In addition to Plan Boulder, another group called Boulder Tomorrow was instrumental in the passage of the amendment.  This group is not to be confused with today's Boulder Tomorrow, which has co-opted the name.
  • The 55 height limit is not by right.   Plan Boulder and other prominent Boulder groups continue to expect a community benefit.   The height limit also doesn't apply to state and federal entities like CU, NCAR, and NOAA. The Federal labs have largely respected the rule anyway.   CU, not so much.
  • In July 1971, the voting age in Colorado was lowered to 18.   This turned out to be the key factor.   The students were overwhelmingly in favor of the height limit and pushed the vote count in favor of its passage.  


image:  Paul Bica
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As always, your referrals are deeply appreciated.  

Monday, November 10, 2014

Threatened Litigation - Research Archive Suspended

Due to threatened litigation, all content from the blog published prior to June 2013 has been temporarily removed.   

Details here

Our research archive is the best available information on area market conditions. It contains over 1,500 blog posts and more than a decade of obsessively tracking real estate trends in Boulder.   We know a lot of you rely on this information to make better real estate decisions and to advise your clients.    The research archive will return as soon as possible.    

If you're looking for specific information or would like to discuss your real estate situation, call Osman at 303.746.6896

Monday, November 03, 2014

A SELLER Loses The Bidding War - A Cautionary Tale

by Osman Parvez

Sellers can lose a bidding war, too.   Here's how it happens.    

Imagine that you've listed your house with a well regarded, highly experienced Realtor. He's priced it right, the property is staged, the listing photography is perfect.   

The first weekend your house is on the market, you get a ton of showings. Your agent calls to let you know the good news.    Multiple offers are coming in.


Sounds good, right?  Here's where it goes wrong.   

A week after you go under contract, the buyer you chose gets cold feet.  Perhaps in the frenzy of multiple offers, they felt they overbid. Perhaps a better house came on the market.  Maybe they realized that Boulder construction regulations would add far more cost than anticipated to their project.  They're bailing. 

Sellers - Listen Up 
When a property goes under contract and later returns to market, it's tainted.  Instead of feeling a sense of scarcity, potential buyers want to know what's wrong with it.   All they know is that your property was under contract and for some reason the buyer backed out. It's now a fact and it's easily discovered by a savvy buyer's agent.   

As part of due diligence, previous inspections must be made available to future buyers on request and believe me, I'm going to request it.    Sellers can't hide from the market history of their property. 

Bidding wars are great for a seller but they also create a problem.  The more pressure buyers feel to make an offer quickly, the more likely they will back out of the deal.   The contract in Colorado rightfully gives buyers a lot of protection and this is why it's so important to give buyers time to make an educated decision.    

When I'm the listing agent dealing with multiple offers, I allow ample time for all offers to be submitted.   If showings start on Saturday, we're going to wait until at least Tuesday before accepting an offer.   If they really want the house, give buyers time to make an educated decision.   They can wait.  As a seller, you've got a lot at risk - particularly lost time on market. 

The Buy Side
Smart buyers carefully evaluate pricing information.  They look at the recent sales history (comps) in the neighborhood, pricing trend, and the value of improvements.  The role of a good buyers agent is guide them through this process and towards writing an offer that makes sense.    Sometimes it means going over asking or writing aggressive contingencies into the contract to make an offer more attractive.   Sometimes it means encouraging buyers to walk away. 




True Story   
I was talking to one of my buyers on the phone yesterday.  He attended an open house in Boulder over the weekend and was shocked to learn (directly from the seller) that multiple offers were already on the table.    The seller proudly informed my buyer that they would be accepting an offer at 7pm that evening.    Meanwhile, one of the buyers who had submitted an offer was hanging out in the backyard.  

No, I'm not kidding.  It's 1pm on a Sunday and the seller will make a decision by 7pm.   Imagine the pressure buyers are under!   Meanwhile, a buyer was stalking the backyard. 

Perhaps the seller was thinking that this would encourage my buyer to enter the bidding war.   Unknowingly, they increased the likelihood of the buyer flaking out.     If that happens, and yes it does happen (look at the images in this post),  the seller loses valuable time on market and taints the listing.  

Lather, rinse, repeat. 

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As always, your referrals are deeply appreciated.  

Tuesday, October 28, 2014

Remember When?

by Osman Parvez

I was digging through old blog posts this week and came across a little gem. 

From Fed Takes a Breather

For the first time in two years, the Federal Reserve took a break by not raising interest rates. From what I've read, investors aren't sure whether this will be a long pause or a short one. For now, the discount rate (a key benchmark for all interest rates) will stay at 5.25%, a welcome relief for many borrowers.


What does this mean for housing? Mortgage rates nationwide have recently begun trending lower so the Fed decision today could help ease the landing for housing in many parts of the country. Many borrowers who took out adjustable rate mortages (ARMs) might not be pinched quite so badly, though no doubt they'll notice the difference when low initial rates reset to benchmark levels.

Talk about entering a way back machine.     Today, the Fed Funds rate is effectively ZERO and it's been stuck there since about 2009.    


As a benchmark for interest rates, the Fed Funds rate (and discount rate) a the foundation for essentially all bank lending in the Untied States - including, of course, mortgage rates.    I like to think of it as a gas pedal for economic activity and we've been pedal to the metal for a long time.  

Given last week's surprising market volatility and drop in mortgage rates, it looks like we're not letting up the gas anytime soon. 

Here's a long term mortgage rate chart for comparison...

For buyers and sellers, the number one question is whether rates will continue to fall.    As I've said many times, nobody has a crystal ball.   When I wrote Fed Takes a Breather in August 2006, I thought the drop would be relatively short lived.    Instead, we've had 8 years of dropping or flat rates.   

Something to think about.  


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As always, your referrals are deeply appreciated.  

Monday, October 13, 2014

Reputation Matters: A Tale from the Trenches

by Osman Parvez

Let me tell you about this year's most ridiculous closing.  Once again, it's time for a tale from the trenches. 

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Once upon a time (i.e., a few months ago), my clients bought a house in Boulder.   George and Michelle were super excited, and not just for the Dizzy's donuts I brought to the closing table.   They're a young couple and recently engaged.  This would be their first home together. 

Now - it's customary for buyers to walk-through a property before closing.   When we did so, we noticed curtains were missing from the living room windows.   Not a big deal, however per the standard Colorado Real Estate Commission approved contract, curtains are included in the purchase of a home unless specifically excluded.    

Here's the verbiage from the current contract: 



Pretty cut and dry, right?   Guess again. 

I sent the listing agent several messages (let's call him Michael) asking him to contact me so we could discuss a solution.   No response.  He ignored my emails and phone call.   Closing was scheduled for the following day.

The following morning, I sent Michael one last email.  I asked that he please contact the seller and see that the curtains were brought to our scheduled closing. 

A few hours later, we were the first ones to arrive at the title company.   Michael walked in shortly after.  Everyone exchanged typical pleasantries.  I then asked him about the curtains.   

To my utter surprise, he claimed that the contract specifies curtain rods but not the curtains.   He proceeded to pull out the contract and with a smug grin, handed it to me. 

I read §2.5.2 out loud.   "Personal Property. If on the Property, whether attached or not, on the date of this Contract, the following items are included unless excluded under Exclusions (§ 2.6): storm windows, storm doors, window and porch shades, awnings, blinds, screens, window coverings, curtain rods, drapery rods, fireplace inserts, fireplace screens, fireplace grates, heating stoves, storage sheds, and all keys.  (emphasis mine)

I asked what he thought window coverings meant.    Unbelievably, Michael claimed window coverings didn't include curtains or drapes and in this case the curtains were decorative and not functional.   Yes, seriously. 

Here's a picture of the window coverings in question: 
Remember, we're at the closing table.   Those damn donuts are just sitting there, begging me to eat them.  We're all looking at each other. 

Of course, George and Michelle aren't going to walk away because of missing curtains but this is ridiculous.   I asked Michael what he thought the real estate commission would say.    Unbelievably, he claimed he'd actually been in arbitration for this very issue and the real estate commission had agreed that while curtain rods are included, decorative curtains are not.  

You've got to be kidding me, I thought.   Not about arbitration, I could see how Michael is just the sort of agent who lands himself in arbitration over and over again.    I'm shocked we're about to have a negotiation at the closing table over curtains worth a few hundred dollars, tops.     

Luckily, the seller walked in at that very tense moment.   In her hands - a bag containing the missing curtains.  She had simply removed them for washing and hadn't had time to re-install them before closing.  


All included?
So why the F was Michael creating a stink at the closing table?   It was clearly not at the direction of his client.   He probably didn't even contact her to ask about the missing curtains.  She obviously understood they go with the house. The only thing that I could think of was his ego.   

While we were puzzling over this, the title clerk walked in and started processing the paperwork - a welcome distraction.   We all dived into the signature process but I couldn't shake the absurdity of it all.

Near the end of the closing, I asked the seller if it would be OK if the buyers had her phone number - just in case they had any questions about the property.  She readily agreed.   For me, this is a normal part of closing.  I always encourage buyer and seller to have each other's contact information because questions sometimes arise after closing (about how things work, like the dishwasher, for example.) 

The seller started to give me her phone number but before she could finish, Michael interrupted.   With a smarmy look on his face, he said, "Why don't you just call me if you have any questions and I'll get the answers for you."   

I looked at the seller.   She looked confused and maybe even a little embarrassed. 

"Do you really want to be in the middle of simple questions about the house after closing?"   

He paused.  "Yes." 

I laughed and shook my head.   "OK, I guess." 

Conclusions
New agents.   Sit down with Uncle Osman and get out your notepad: 

Reputation matters.  If you want to be successful, safeguard your reputation. You will find yourself doing deals with the same agents over and again. Remember, top agents do the majority of deals in Boulder.  Want to represent your clients well?  Work on building trust.  

Think about it.  In a competitive offer scenario, which offer would you trust?    The straight shooter or the guy who wants to argue over the legal definition of window coverings?    Who do you want to do business with again?

Michael came across like a slime ball and his shiny suit wasn't helping.  Going forward, I will be reluctant to do business with him.   Of course, I will engage again if necessary, but next time I'll be sure to add the wikipedia reference for window coverings to any contracts submitted to his office which by definition includes decorative coverings. 

THE FOUR-WAY TEST
A few years ago, I had a seller, unprompted, handed over a $400 check to my buyers at the closing table.  He said that the dishwasher had started making noise during the last few days and he thought it was on its last legs. 

At Rotary, we have something called The Four-Way Test.  It's a simple ethical guide for Rotarians to use for personal and professional relationships.  I'm citing it here because I think it's a good reminder for how to behave.   It's also not coincidental that both that seller and I are Rotarians. 

The Four-Way Test: 

Of the things we think, say or do

Is it the TRUTH?
Is it FAIR to all concerned?
Will it build GOODWILL and BETTER FRIENDSHIPS?
Will it be BENEFICIAL to all concerned?

If you're ever confused about how to behave, start with Rotary's four-way test. 

p.s. You can argue anything (in a court of law or elsewhere).  You can claim curtains are art or even priceless antiquities.   You can argue anything you want, but common sense would dictate the curtains in the picture above are window coverings hung on mounts designed to obscure light and visibility through glass windows.   Just look at the picture.     Even if there is a middle ground, is your reputation worth a few hundred bucks?

image:  Aaron Tang

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Seal Me

by Osman Parvez

The #1 thing I see on inspection reports?    Unsealed tile.    

I attended a walk through for a brand new house earlier this month. Guess what?   The builder didn't bother sealing the bathroom or kitchen tile.   

Unsealed Tile, New Contruction
The builder's rep was there, so I asked him why.   The not so impressive answer?   Because it costs a couple of hundred per house (with labor) and buyers never ask for it.

He did agree about the importance of doing it.  It's sort of like buying art and then not putting glass in the frame.  WHY?


Sealing tile is trivial. It takes at most an hour or two.  Sealant costs little.   Not doing it means mold and failed tile down the road.  

Do it. 

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Ready to buy or sell?  Click HERE to schedule an appointment or call 303.746.6896.

As always, your referrals are deeply appreciated.  

Thursday, October 09, 2014

Meet the Spirits [Spooky Fun]

by Osman Parvez

Yesterday's Community Harvest Festival certainly fit the bill and attendance was almost 3x expected.   Kids everywhere, fantastic music, and tasty food.    What more could you ask for?

Here's another Boulder event worth attending.   

MEET THE SPIRITS

Starting at NOON this SUNDAY, October 12th, stroll up 9th street to Columbia Cemetery.    
Boulder’s Parks and Rec and Historic Boulder will be bringing more than 30 of Boulder’s dearly departed back to life.    Notable spirits include including Eben G. Fine, Mary Rippon, and James P. Maxwell.

This year, “Meet the Spirits” will host a new “Cemetery Symbolism Scavenger Hunt” for children including prizes, and celebrate its tradition with Victorian mourners, funeral music, vintage hearses, as well as a re-enactment of a solemn Masonic burial service.

This isn't a scary haunted maze.  It's a family friendly event. 

“This is a marvelous opportunity for people of all ages to learn about our local history in a fun, interactive way,” said Mary Reilly-McNellan, event organizer and the department’s program specialist. “It gives the public an opportunity to see that Columbia Cemetery is not scary, but that it is a special place that reveals rich stories of the past, roots us in the present, and inspires us to protect its future.”

“Meet the Spirits” is scheduled from noon to 5 p.m. on Sunday, Oct. 12, at Columbia Cemetery, located at Ninth and Pleasant streets. Tickets are $15 for adults, $12 for Historic Boulder members and $5 for children/students under 16. Tickets are available in advance at Historic Boulder at 1123 Spruce St. in Boulder, or at Columbia Cemetery at Ninth and Pleasant streets the day of the event.  Proceeds will benefit Columbia Cemetery and Historic Boulder.  In case of inclement weather, the event will be rescheduled to Sunday, Oct. 19.  For more event information, call 303-444-5192.

image:  toritoons
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Like this analysis?    Subscribe to my research.          Ready to buy or sell?  Click HERE to schedule an appointment or call 303.746.6896.

As always, your referrals are deeply appreciated.