28 Jun

Is Denver Colorado in a Real Estate Bubble?

Now this may be a somewhat unpopular opinion among realtors – who are often all to eager to cheer the market on (after all, it’s how we make money)  but I think the Denver Colorado real estate market is, in fact, a real estate bubble.   It may not crash down in the same fashion as in 2007, but I think we’re in for some pretty significant price drops in the coming years.  Since my cat decided to go moth hunting at 4 in the morning, I’ve decided to make an article and video on the subject while I’m in that hazy, creative, half awake mode.

Why oh why would I, a real estate agent, suggest such a horrid thing?  Prices are up! The market is hot!  Yes, that all may be true, but I think there are some looming stats that can indicate a potential real estate bubble in the Denver metro area.

I would point you to the following articles that may give you some pause as a buyer in this crazy market .

Real Estate Growth Market Or Impending Bubble? How To Tell The Difference – Forbes, March 2 1017

Is Denver’s real estate market a bubble ready to burst? – Denver 7 Channel

Denver, northern Front Range real estate party ends in late 2019, new forecast predicts – The Denver Post

Here are 9 charts that can help the Fed spot the new housing bubble – Business Insider

Why It May Take Sixteen Years for Denver Millennials to Afford to Buy a Home – Westword

While these articles do make the important distinction that we do not have  a high number of sub prime mortgages (and resulting foreclosures) as we did during the 2007 crash, a major factor in my opinion that the Denver metro could be a real estate bubble is pretty simple-  the prices have soared a lot higher than the wages.   The Westword article above is pretty sobering for us millennial first time home buyers.

Another factor that I see coming that could make Colorado a real estate bubble is something that I don’t hear a lot of other realtors talk about – but I actually just took a class on it – and that’s our marijuana boom and future bust.  You’ll notice that shortly after Colorado ratified amendment 64, which legalized cannabis in the state, the housing prices soon shot up as well.  With  the 2016 election, California, Nevada, Massachusetts and Maine have all joined the ‘legal club’ that is going to cut largely into the influx of out of state Americans flocking to Colorado.

Again, this is just like, my opinion, man.    I do still think it’s a great time if you’re a seller – and selling now could likely put you near the top of the market if it’s a good option for you or you’re planning on moving.   However for buyers, it  may be worth waiting a little longer to see if the prices start to drop as the Denver post articles allude to.  Time will tell!

If you have any real estate questions or want to talk about buying or selling, give me a call at 720 260 0977.

Until next time,

Caleb

16 Aug

Denver Colorado Real estate market stats July 2016

It’s August 16th ALREADY?  Where has this year gone?  My awesome title rep from First Integrity Title Co.  provided me with some nifty stats on the Denver market this morning that I thought were worth sharing.  So, please feel free to download this Denver Colorado real estate market stats PDF for the month of July 2016.  Also, INFOGRAPICS!

July Market stats

Let’s break it down:

Active listings:

July 2016: 6391

July 2015: 6714

= 5% less houses on the market from this time last year

Under Contract listings:

July 2016: 5568

July 2015: 5327

= 4% more homes under contract from this time last year.

Median Price:

2016: $350k

2015: $313k

= Median sales price is up a whopping 11% from last year!!!

Sold Listings:

2016:4953

2015: 5841

= 16% fewer homes sold this month than last year 

CDOM (Current Days on Market)

2016: 24

2015: 21

= Homes are on the market 13% longer than they were last July.
Well, if that wasn’t enough information for you  –  please feel free to download this PDF with all the Denver Colorado real estate market stats your little heart could ever desire.  If you have any questions or need help with Colorado real estate, give me a call at 720 260 0977.

Information provided by First Integrity Title

DMAR _ August Market Data

 

Curious about Colorado real estate?  Contact me.

Contact Caleb Block




13 Jun

How does Real Estate Commission work?

Today, I am going to blog about one of the most despised words in the real estate world.  Hold on, here it comes:  Commission.  EEK!  Egads!  Now, for the few of you that haven’t run out of the room in terror, are you familiar with how a real estate commission works?  After all, we only fear what we don’t understand.  Let me try to demystify this for you so the word doesn’t seem so scary anymore!

Now, let’s define the word commission, I always think providing a definition is a solid starting point.

Simple Definition of commission

  • : a group of people who have been given the official job of finding information about something or controlling something

  • : an amount of money paid to an employee for selling something

  • : the act of committing a crime

Full Definition of commission

  1. 1a:  a formal written warrant granting the power to perform various acts or dutiesb:  a certificate conferring military rank and authority; also:  the rank and authority so conferred

  2. 2:  an authorization or command to act in a prescribed manner or to perform prescribed acts :charge

  3. 3a:  authority to act for, in behalf of, or in place of anotherb:  a task or matter entrusted to one as an agent for another

  4. 4a:  a group of persons directed to perform some dutyb:  a government agency having administrative, legislative, or judicial powersc:  a city council having legislative and executive functions

  5. 5:  an act of committing something <commission of a crime>

  6. 6:  a fee paid to an agent or employee for transacting a piece of business or performing a service; especially:  a percentage of the money received from a total paid to the agent responsible for the business

  7. 7:  an act of entrusting or giving authority

in commission

or

into commission

  1. 1:  under the authority of commissioners

  2. 2of a ship:  ready for active service

  3. 3:  in use or in condition for use

on commission

  1. :  with commission serving as partial or full pay for work done

out of commission

  1. 1:  out of active service or use

  2. 2:  out of working order

Thanks for the definition goes to Merriam Webster online.

 So, as you can see in the orange I’ve highlighted the specific definition we’re referring to here.  (although I am sure some frustrated buyers and sellers saw the crime definition and applied it to their agent!
A fact of life in the real estate industry is that all real estate agents and Realtors work on 100% Commission. Many buyers and sellers are confused by the commission set up and are not sure how it is set and who controls the commission. The reality here is that the seller is the one who sets the Commission in each transaction. The following picture is from the contract  called the exclusive right to buy or right to sell listing contract. This contract is between the buyer or seller and their agent and defines on the listing side how much commission will be paid to both a buyer’s agent, seller’s agent or a transaction broker.
In this contract, the total commission is set at 4%.  2.8% to the buyer's agent, and 1.2% to the listing agent.

In this contract, the total commission is set at 4%. 2.8% to the buyer’s agent, and 1.2% to the listing agent.

A very important point to remember if you are entering into an exclusive right to buy all right to sell agreement with an agent is that there is no standard commission percentage or amount that the commission must be. If they tell you otherwise they are not being truthful! Commission is always always always negotiable. Commonly in Colorado what you will see is a 2.8 % Commission for both the buying side agent and the listing agent who works for the seller. That means you were looking at a total commission expense of 5.6%. However this is always like I said, negotiable and you can discuss this with your agent about how much you feel is an appropriate payment. I have seen commissions of anywhere from 1%- 4%, with those higher commission rates often on vacant land that has been on the market for quite some time.

Section 7.2 of the Exclusive right to sell listing contract indicates how much of the total commission will be awarded to a buyer's agent or transaction broker.

Section 7.2 of the Exclusive right to sell listing contract indicates how much of the total commission will be awarded to a buyer’s agent or transaction broker.

 

 

 

 

While it may be beneficial in your mind to offer a very low commission to a buyer’s agent. you must remember that all agents are working solely on commission. While they should be loyal to their clients via a fiduciary duty, many agents may look at a listing that has an extremely low commission for a buyer’s agent and simply not show it to their clients. I advise sellers to at least offer a decent sum of money for a buyer’s agent so they will work hard to bring a buyer to the table. And on the flip side while you may be able to save some money by having your listing agent take a lower commission you should also keep in mind that marketing a property also takes money. Things such as professional photographs, professional staging of a home, gasoline expenses and time spent for open houses advance and other selling techniques are not free. If you find a Savvy agent who is up to speed with technology then you are much better served than somebody who will merely put the home in the MLS for you and then just hope that somebody comes along to buy it.

what-is-real-estate-commissionThus, this is the reason that many people choose to do a for sale by owner. They think they will easily be able to save around 6% of their sale price. And while they may save some money, the easy part is never easy.  Especially if you’re not familiar with the market you are in or how the home-buying/selling process works. I liken this to somebody who decides to fix the transmission on their car by themselves. Sure, you may be able to do it. However,  if you do not have the expertise of a professional, you may find that it is more of a headache and a anxiety-inducing event than you would reckon.  A real estate deal gone bad can carry significant legal and financial liabilities (and for this reason real estate agents carry errors and omissions insurance.)

I do my very best to work with clients and come to a point that we can both agree on in my payment when selling a home. I understand that the equity that you may have saved up through living in your home is very important to you and you do not want to see a single dollar of it lost – who would? This is why I work so hard for clients – because I know their money is means a lot to them, and marketing and selling a home is a full-time job in and of itself. Just remember that you can always negotiate the cost of a real estate commission with your agent to something you are comfortable with!

How can I help you with Colorado real estate?

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17 Feb

Colorado Real Estate Industry Snapshot

bank3Colorado Real Estate Industry Snapshot for 2014

Colorado consistently receives top national rankings for quality of life, as well as a place to start and succeed in business.  Recent honors and recognition include:

Best Place to Live and Work

Boulder, Carbondale, Durango, Highland and Louisville (Sunset.com)

Happiest Cities in the US 2014

Boulder #2, Ft Collins/ Loveland  #3 (Gallup-Healthways)

#3 Technology Industry Employment Concentration

(TechAmerica Cyberstates 2013)

#3 Research & Development Inputs

(Milken Institute 2013)

#4 Fastest Job Growth 2014 – 2.67%

(Forbes Magazine)

#5 Best States for Business 2013

Best Hunting and Fishing Towns

Craig #20, Grand Junction #30

(Forbes Magazine 2013)

Top 100 Best Cities

Aurora, Colorado Springs, Denver

(Vibe 2013)

progress5HOME OWNERSHIP:

  • Nearly 66% (3.5 million) of Colorado’s 5.2 million residents are homeowners.
  • Nearly 80% of homeowners in Colorado have lived in their house for more than 1 year.
  • Median household income in Colorado is $58,244

 

Icons made by Freepik from www.flaticon.com is licensed by CC BY 3.0