Denver Real Estate

How do you value your time?

February 23, 2011 by Spencer Barron

Do you value your time? Harlan Ellison, a Hollywood writer, had this incredibily irreverent rant that resonated with me. It resonates with me because people often ask me to give my work away for free.

Plumbers and electricians often get paid just to show up. Appraisers get paid to show up. Inspectors get paid when they show up. Real estate agents on the other hand, are often expected to give their opinions for free before they have even been hired. An experienced agents opinion could be worth thousands of dollars to the homeowner by the time the home sale reaches fruitition. So why do agents give away their best ‘stuff’ for free?

I can’t help but wonder if the National Association of REALTORS and large brokerages have effectively homogenized the value of agents. It’s in all of their marketing. Claims that working with a paticular brokerage or working with a REALTOR alone is what will guarantee great results. I wonder if people believe that.

I would recommend to any agent to reconsider how they go about their business. How they handle listing appointments and what advice they give potential buyers when discussing a paticular property, especially before getting something in writing.

Do you view yourself as a commodity? Are you really that easily replaced? If you have a unique knowledge and can offer advice that will help people make thousands more on their homes and save them countless headaches, shouldn’t you act like it? Do you communicate your value proposition effectively? Do you prove it in the service you offer?

It’s all about how you are going about your business each day. Chances are, if you don’t value your time, no one else will either.

Filed Under: commissions, Denver Real Estate, Denver Real Estate, Marketing

Stop looking at the list price! It doesn't really matter.

September 3, 2009 by Spencer Barron

Why is it that your typical buyer will always be locked in on the list price. They certainly don’t want to pay more than that, after all, it’s still a buyer’s market right? But the list price has nothing to do with what it is worth. Take the house I listed about a week ago, 1464 S Benton St in Lakewood, CO. It’s not lender owned or a short sale, just a great deal.

1464 S Benton St - FlatGrass Realty

The property is listed at $119,900. A price designed to attract attention from investors because it has a certain relationship to what it could be worth.

We have had multiple offers at, above and below the list price from investors willing to pay cash. Why? Because investors work from what it could be worth to them rather than the list price. Most of the offers (not all) we received from traditional buyers tended to net a value under the list price. If the traditional buyer did their homework, they would know that the home is worth much more than the list price. The list price was just a tool to attract attention or to get a cash buyer involved. The same home down the block sold earlier this year for around $170,000 and that wasn’t even a full remodel. This home could fetch $175,00-$180,000 with a good remodel.

This home’s value is being held down by a handful of local foreclosures that though comparable on paper, sold in days to investors. Some of which have already been flipped. I’m guessing most agents didn’t take the time to look at what it could be worth, the ‘adjusted retail value’ of the property.
This is just one example, if you want to see lot’s of examples, take a look at the HUD bid statistics that come out each week. You’ll be able to see all the bids. You’ll notice that the vast majority of buyers make a ‘shot in the dark’ approach to their bid rather than considering the actual value of the home. That’s frustrating for me to watch. Whereas I’m working to attract an investor offer, HUD prioritizes owner occupants over investors. This can be a great opportunity for the average buyer to put themselves into a home with a great equity position. If only they (or their agent) would do the math.

Filed Under: Buying a home, Denver Real Estate, Flipping, foreclosures

Update on Renter's rights when rental is foreclosed

September 2, 2009 by Spencer Barron

This isn’t new but you may not have heard about it. It’s especially important if you’re interested in purchasing properties in foreclosure down at the public trustee’s auction. It’s also an update on this post where unknowing renters were being evicted from the property even though they had a lease in place with the owner.

New Federal law effective from August until December 31, 2012 says they can stay through their previous lease as long as they continue to honor the terms of the lease. Alternatively, a 90 day notice is given for the renters to vacate.

You can see more of it here.

Filed Under: Denver Real Estate, Flipping, foreclosures

Strong Summer Sales Deplete Supply of Quality Affordable Homes

August 31, 2009 by Spencer Barron

We haven’t really seen an increase in home sales in Denver but if you are trying to buy a home right now, it sure could seem like it. With the buyer credit set to expire November 30th and interest rates hovering around 5%, many buyers who waited until the last minute to start looking are finding the sales rack looking a bit picked through.
With inventory levels back at 2004 levels and still a large supply of lender owned and short sale properties clogging up the works, the few that are quality affordable homes are selling almost as fast as they come on.
January of this year saw the lowest average sale price for residential homes in the Denver area. A paltry $230,000 compared to the 2007 low of $270,000. The low price levels should have been a strong buy signal to anyone who was thinking of getting in.
Well if you are looking to time the market and you are thinking of selling your home in the under $275,000 range. September will be the month to do it.

Stochastic developed using Denver Real Estate average sale prices in 2009

Here’s a chart showing where we are at in the market cycle based off annual pricing movements when compared to the average. We are just passing what will be the peak sales season and entering the slow season after what could be considered stronger than expect spring and summer sales.

Filed Under: Buying a home, Denver Real Estate, Selling a home, statistics

Selling your home? Better Photo’s = Faster sales…

January 30, 2009 by Spencer Barron

Perhaps even a better price…

I’ve always tried to take the best photos possible for my listings. Sometimes it means making multiple trips to the listing just to get the right lighting. Recently though, I began employing new HDR (high dynamic range) photography techniques using my digital SLR camera that have significantly improved both quality of the pictures and the number of showings I get to my listings.

Often, HDR techniques are used for an artistic rendered effect but you can often take advantage of the process for difficult shots you would otherwise be unable to get.

Before I say how we do it, I just wanted to emphasize why you should. Most agents, take below average to slightly better than average photos. The key word in that sentence was “average”. I don’t want to be average. I want to look like the best. The way listings appear on the internet or on your local MLS will most likely be in the context of other home photos. I want to be the best on that list. I promise you, that even agents can be influenced by the photos. If an agent has 50 possible homes to show and will only have time to show 10-15 in a day (that’s a lot of homes), the agent has to screen out the good ones. Assuming that the homes are fairly similar, it often will come down to having the right photos.

Of course, you could just hire the local Obeo photographer or someone similar who offers a photography and virtual tour service. I use them too. But lots of other agents do too. Besides, don’t you want to do more than the next agent? Being better, especially when it comes to the visuals, will go along way in a listing apointment. But who wants to be slightly better than average? (If you answered “I do”, you should read “The Dip“.)

Think of it like this. When you watch a basketball game and you see the guy dunk over the defender. Just remember, nobody wants to be the guy being dunked over. (Here’s an example if you want to think about it some more) I would rather be the guy that is dunking. I don’t feel bad about it. It’s not my fault if other agents are not doing all they can.

Point is that being average isn’t the goal. More eyes, means more showings, which becomes more sales. I’m not saying that you should alter your photos, rather take use of modern technology that lets you take photos that previously only talented photographers using special film and dark room techniques could achieve.

Here’s what I’m talking about. On the left is the picture from the professional photographer (who I also hire) on the right, my photo.
In the Washington Park neighborhood, 900 S Vine. The professional’s usually do a decent enough job on the inside but usually don’t do anything more than a representational shot for the outside. When I decided to reshoot the front photo, it was winter so the trees didn’t look as nice anymore and the front was enclosed by flower boxes that had vines in them…the vines end up looking like dead twigs. To get around this, I went in close with my wide angle lens and did a long exposure HDR series before the street lights came on and made everything orange. Here’s the difference.

900 S. Vine - Left photo taken by Obeo photographer for virtual tour. Right photo taken by me is an HDR night shot

Here’s another example of 13706 E Weaver Ave, in Centennial, CO which just went under contract. North facing homes like this can be difficult to get good photo of, especially during the winter. HDR helps you get around that.

13706 E Weaver Ave

You can do the same for your interior photographs as well…

Interior - Kitchen HDR

While everyone is going to have their own ideas about what they think is the better photo, in my experience, it’s really about what is going to ‘jump off the page more’. High dynamic range photography can help you get your properties noticed.

The process is simple, 3 or more exposures (minimum if you’re not shooting ‘in RAW’) bracketed 1 or 2 stops apart to achieve a series of under exposed, correct and over exposed photos (or sim), all from the same location using a tripod.

Example of applying HDR photography

These photos are then merged into one HDR file that will then need to be rendered using a process that controls the ‘development’ process along the same ways photo technicians might ‘burn’ and ‘dodge’ a photo to make darker areas lighter or lighter areas darker. Only with digital, this process can be automated. My current software of choice is PhotoMatix but you can achieve the same results in new versions of Photoshop (CS3+) if that’s what you have.

This isn’t as hard as it looks, you can download the trial version of PhotoMatix and see for yourself. You may just be able to put to use that nice camera you bought.

These shots represent my first and second attempts at this, so I offer my apologies to the truly talented photographers out there as I run afoul their techniques and the execution of their art.

Filed Under: Denver Real Estate, Featured, Selling a home

The main cause of Foreclosures in Denver….

October 21, 2008 by Spencer Barron

The cause of many of the current foreclosures may be simply that there is no longer any incentive to make payments. There is no equity because there was no money involved for the home owners. There was none created by paying down principal, and there is no longer any more appreciation. It’s an important thought because most people want to believe that those in foreclosure have problems that are far removed from them. Regardless of what you believe to be the cause, it is evident that foreclosures aren’t just a result of an economic downturn. Neighborhoods with a lot of foreclosures reach a tipping point where even those that normally would have made the payments, don’t. A homeowner doesn’t feel like struggling with a payment when he can walk away and rent for cheaper. There is just no reason left after a 20% (or more) reduction in values. Why struggle with the payments any more? At least that’s my understanding as I try to wrap my head around this report that came out last year that fingers the price devaluation rather than just the typical woes of a down economy. It’s a page turner.

Here’s and example of the Green Valley Subdivision in Denver, Colorado

Notice that once current home values cross the value of what was paid on the 1st position loan, there is a spike in foreclosures.

Foreclosure rates in Green Valley Ranch

just to add some more perspective…

An example of a highly localized collapse of home prices common in many cities.

It’s something to think about. It’s not just a matter of a few bad loans, lost jobs and problems paying health expenses, for many neighborhoods that may be close to a similar tipping point. Because of the substantial amount of money invested into Green Valley Ranch, I would expect that they’ll recover from the collapse within 5 years as the foreclosure sales work through the system. For other neighborhoods in Denver, I’m a lot less optimistic.

Filed Under: Buying a home, Denver Real Estate, Flipping, foreclosures, Fraud, housing bubble, pricing, statistics Tagged With: Denver Real Estate, Green Valley Ranch

Wondering what to expect next in the financial markets? Take your pick a BailOut, More Pain or Worse.

October 1, 2008 by Spencer Barron

I’ll just have to get this doom and gloom post out of the way before I post another market update. Don’t worry, at least nothing new has changed in the real estate market. Slow has become business as usual for most. Now the rest of the world is starting to realize that this wasn’t just our problem. As I see it, it seems like the majority of people are just beginning to understand that there is even a problem with the financial markets. More and more people are figuring it out. Thiis new insight is not because people have educated themselves as to what’s at stake. It is starting to show up closer to home. I suspect that most people about a month from now might begin to think that $700 billion could of been a pretty good deal.

“If you don’t like this offer, you won’t like the next.”

Often times, foresight and taking action are more useful than waiting for the perfect approach. There is a lost time cost that needs to be considered.

Confidence is at the core of the problem. Perhaps we shouldn’t call it confidence, as at this point, that term is almost laughable. We’ll call it “faith”. Faith that you’ll have a job and you will continue to make a living is central to being a good little consumer. Faith in businesses is at the core of how a business may raise money to cover their operating expenses. Faithful businesses lend money as they hold the belief that the vast majority of people and other businesses they lend to are good for it (What if they’re wrong?). Faithful consumers, spend money between paychecks using credit cards because they can count on that check (What if they lose their jobs?). What happens as the once faithful businesses begin to doubt that they’ll be paid back (What if we don’t get paid for that last invoice?). What happens when the once faithful consumers can’t get credit or know that soon they could be out of a job. When minor liquidity problems turn into a financial ‘ice age’, what then?

One only wonders how Bernanke and Paulson could keep people in the ‘pews’ and involved in the day to day business of being a good consumer if those people lose their faith in the system entirely. If those people begin to feel that they could be out of a job next week what effect does that have. How much will that cost the economy. What happens when they feel that everything they’ve worked for, their house and their savings, could be lost. Heaven forbid they even take a look at their 401k plan. Pretty soon people would be (some already are) stuffing their mattresses with money and buying gold bars.

Think of Washington Mutual, people lacked faith that it was safe. They felt it was not safe enough to hold their money and not safe enough to be lent money even short term. People start pulling money out of the bank. Their credit rating gets cut down to that they can no longer raise money. Soon enough their $310 Billion in illiquid (frozen) assets are taken from them and sold to JPMorgan for $1.9 Billion where the ‘thawed out’ assets are instantly worth much more.

The concept that the value of a business, an asset, or your dollar is determined by market forces presupposes that there is a market. What happens when there is no market? That being said, bail away. Take action to establish that there is a market. Draw a line in the sand or something.

Filed Under: Denver Real Estate, Economy, foreclosures, Stock Market

The Denver Real Estate Market's Long Winter…

June 6, 2008 by Spencer Barron

In 1816, the winter seemed to never end. In New England, ice on river banks was still visible in July and August. The year came to be known as ’1800 and froze to death’ or ‘the poverty year’. It seems 2008, while much warmer and comfortable temperature wise, will be the year of poverty for many in the real estate industry. The year the real estate market never really came out of the winter slow down.

The real estate market usually is subject to certain cyclical phenomena that vary by area. In Denver, winter usually brings a slowdown in the real estate market, marked by slightly lower prices and sales volume. Typically as early as January or February the seasonal market begins to turn around. Well..not this year.

This chart is a stochastic representation of real estate sales prices over the last couple years. I love technical analysis, almost to a fault. In evaluating stocks, charts like these help traders identify trends and compare the current market price to past prices to identify opportunities. To keep it simple, when the blue line crosses up through the red line, this marks the best time to buy in the market. When the blue line crosses down through the red line that’s when you should sell. When prices go one way when the stochastic suggests another, that’s when there might be a trend reversal coming.

Imagine how many REALTOR friends you would have if you bought and sold that often. Thankfully, this model is usually only applied to stocks. A stock’s liquidity makes it possible for it to be bought and sold in shortened time spans. While it is a poor tool for evaluating the length of a trend and potential buying opportunities, it’s great at determining cycles and safer entry and exit points.

Here are a few things you might notice by examining your market in this way.
1. When is typically the best time of year to buy a home? If we look at the chart, it becomes obvious that the best time to buy a home would be between August and February. Of course, if you look at the actually sales stats, you would notice that August might just be the best month to buy a home during the year because not only is there a slight drop in pricing, there is a larger supply of homes to chose from. Deep down, I would never suggest that you rely on the time of year as the number one reason to buy or sell a home, but it always helps to know where you’re at in the cycle so you know what to expect.

2. How has the credit crunch affected home sales in Denver? From my observations, the availability of credit for lower income and even middle income buyers with lower credit scores has significantly slowed the market. Notice how the chart shows a longer, flatter curve all the way into April (2008) compared to previous years with the market bottoming between December and February. This means sellers can expect continued pressure on high home prices. It doesn’t mean things aren’t selling, it just means your going to need to work harder, show better and price lower than you used to.

3. How long will this last? Who really knows. I wouldn’t expect to see stability return next year at this time without significant improvements in the economy. (I here Microsoft wants more sun and is considering Denver…not really but that’s the instant boom I’m looking for.) Additionally, if REALTOR’s out there still think next year will be better, think again. Foreclosures are driving the market down by far out weighing the slowing local economy. Until lender owned inventory starts drying up, expect more of the incredible buying opportunities and poor selling prices. That being said, I’m keeping an eye on the price of ownership when compared to renting, the ratio of home prices to median income, the economy and inflation. There are encouraging signs and improving signs in many of these statistics.

If you saw one of my previous posts regarding the real estate bubble, you would know I don’t believe Denver is a true bubble candidate and thus has a shorter fall. I would expect that prices would continue to decline through Spring of 2009 finally bottoming during that Summer. I wouldn’t expect an immediate recovery either. Prices will likely stabilize before racing back up. Denver homes will start to look pretty affordable by spring of 2010. To arrive at that, you have to make a few leaps of faith regarding inflation, demand and foreclosures peaking this summer. But I’m sure I’m still more accurate than NAR’s method.
Sometimes though, an opportunity can come along that would likely never come again. Housing is very inconsistent and resists almost every opportunity to have an absolute value price. Most great opportunities will appear only for a couple of days before a savvy waiting investor would pounce. At this moment there are hundreds of homes in Denver that didn’t last a week on the market before being snatched up. If it’s a good deal, it’s a good deal. Who cares if you could of saved $5000 here or there when you get what you want and it has a great long term outlook either for you and your family, your pocket book or both?

Not to mention, the smart money loves these down turns. They need them to get into positions they couldn’t normally get into in strong upswings.

A long bottom can represent a real opportunity for some people in some areas. Of course, in most instances, we don’t usually refer to ourselves as the smart money, though we all wish it to be true.

Filed Under: Buying a home, Denver Real Estate, housing bubble, statistics

Renters rights when being forced out by a foreclosure

March 26, 2008 by Spencer Barron

A recent news story on 9news.com brought to light a problem many renters are facing. The landlord stops paying the mortgage but still demands the rent. A real estate attorney, Joseph Davies, is quoted as saying,

the “deal with the owner is independent of the owners deal with the bank.” … “Generally speaking, the rights of the lender are greater than the rights of the tenant.”

Seems reasonable enough but I can’t help but wonder about the fairness of that.

What about a tenants right to quiet enjoyment?

I wonder if the tenant shouldn’t contact an attorney. Wouldn’t the tenant have a claim of non-performance?

Regardless, if you or someone you know in Colorado are facing problems with foreclosure, you should definitely contact an attorney if you have any questions about your rights.

You should also take advantage of the Colorado Foreclosure Hotline at 1-877-601-HOPE (4673).

Filed Under: Denver Real Estate, foreclosures, Renting

The Hyper-local Blog and 10 Questions you need to ask yourself before you get started.

March 7, 2008 by Spencer Barron

The linear thinkers in Real Estate 2.0 seem to believe that byÂ appointing themselvesÂ ’mayor’ of their suburb they will rule the roost in their real estate market.Â It’s an interesting concept.Â A new spin on the old school real estate newsletter that could put an agent on the map.

This is how it would work.Â You would pick some area that seems ripe withÂ aÂ financially viable, tech savvy group of people in need of information and hopefully a new home.Â What type of information wouldÂ you feed them?….oh…everything of course.Â You see,Â you would figure out everythingÂ your ‘peeps’Â are interested in and pipe it toÂ them fresh by blog and RSS feed.Â High School player bios, the latestÂ track results, and who’s cat had kittens….people love that stuff right?Â Â All the good stuff.Â Â TheyÂ wouldn’t be able to get enough, soÂ they would come back without having to be prompted by other means.Â Â Of course you would go neighborhood viral worse than like little Johnny fresh out of kindergarten.

Â People would stumble across the site on Google and many others would find it on flyers/mailing that would eventually be phased out once the web presence took over.Â Â Then,Â Â yourÂ constant craving for the information I have would keep you coming back like some sort crackÂ head.Â YouÂ wouldn’t be able to get enough.Â Â Of course all the while I would be subliminally establishing myself as an expert in your area.Â The perfect person to sellÂ your home and the best resource for a buyer.

While all of this sounds great, my gut feeling on this is that it’s not quite possible/likely yet.Â I personally am not pursuing this approach to blogging locally.Â I am working on some approaches to this but an onlineÂ newsletter it shan’t be.Â I can imagine a client being a little put off by the fact that you just decided that your going to insert yourself into their lives.Â I’m on record as saying I don’t think you can be a successful hyper-local blogger unless you live there, have kids,Â grew up there or have some other attachment that peopleÂ can use to relateÂ to you on a personal level.Â Maybe you should open your office there.

I have some concerns about the hyper-local approach because it seems to be a house of cards built on a card table.Â

The card table is the premise that you are filling a need.Â Â The idea that people will continue to choose area expertsÂ since everyone charges the same.Â The idea that an agent that sellsÂ in one subdivision is not qualified to sell in another.Â Â Â Can you imagine the tedium involved in putting this together?Â Tedious as it is, it is possible it could pay off.Â Especially if you’re making the comparison to established agents who are using the old fashioned methods successfully but will that transfer well to the Internet?Â

Here’s a few more random thoughts, questions and observations that should be considered before starting down this path.Â I wouldn’t say you shouldn’t attempt this approach, but rather, I would attempt to resolve these conflicts or plan ways to address the potential issues early in your development process.

Brokers need the people,Â but people don’t need you.Â Is what you got fresh enough to be news to them?Â Would they even care to read your stuff?
There’s a small matter of trust and privacy. “I don’t want you taking pictures of my kids or anything.”
Who Voted you Mayor?Â Would they feel you need their permission?
This sounds like an incredible amount of work.Â Â Is it sustainable?
Will this create a steep barrier to entry?
Who is better positioned to do this same job?Â Will they take you out at the knees next year?
Will the shrinking real estate margins crimp your projected profit?
Will this work if you’re competing against an established farm agent?
Where do people currently get the information you will offer?
How much will it cost to market the blog or will you rely on Google to deliver people to you from the subdivision you’re targeting?

Correct me if I’m wrong, I’ve seen lots of attempts at local blogging but haven’t seen anyone suggest that they’re ‘killing’ it with this method.Â A deal or 2 here and there doesn’t deem the method an absolute success.Â Even the most successful national bloggers don’t put up numbers that match top farm agent numbers.Â While there might be 20 agents makeingÂ the high 6Â figures in a big city, the big time local bloggers aren’t among them.Â Â It makes me think the hyper-local approach is over-hyped and merely a new topic for a real estate conferences to ponder and theorize about.Â

I personally have researchedÂ many ofÂ the agents locally that blog as their primary rain maker and it really isn’t that impressive.Â It’s a living.Â Â It’s not a surprise really,Â I feel they get a fair return on their invested time andÂ money but I’m personally willing to trade money for time if it gets me to the same point or better.Â Â Â

Â The methodÂ doesn’t approach the numbers that standard farming brings in.Â Â I’m left with the thought, that if you don’t have any ideas to generate business and you have a very limited budget, this can’t hurt.Â Â I’m sure there are tons of agents out there that have the time to focus on this.Â Â The 2 biggest problems with this is that the Internet hasn’t achieved a true hyper-local capability yet though I would expect that to change.Â Second,Â I’m not convinced that people would be any more likely to use you than the other guy that got some face time with the potential clients.Â

As for the house of cards analogy, once you have it all built and up and running, people using you and all…how easy would it be to knock down.Â Will you be able to keep up or will competition take over where you left off.

Â Here’s a tip.Â Your clients probably Googled you.Â Blogging is key to your business because people use the Internet for research.Â Especially so when it comes to real estate.Â You have a chance to create your own spin, your own buzz.Â Â Potential clients get to know you anonymouslyÂ Â and make decisions about your expertise and qualifications prior to making contact.Â Â Even after meeting you they mayÂ wantÂ to learn more about you.Â Â Â

Â Just a few thoughts.Â Here’s some further reading on the subject:

Seth’s Blog – Advice for real estate agents (quit now!)
Jeff Brown – House Agents â Wanna Start the New Year Kickinâ Ass? Hereâs How Â - My apologies to Jeff for not getting back to the subject sooner.Â I had to ‘wrap my mind around it’ some more.
Life that Pops – Everything new is old

Â There is a lot said there and in the comments that might trigger some new thoughts on the subject for you.Â

Filed Under: Denver Real Estate, Internet, Marketing, Technology, Web 2.0

Here’s and example of the Green Valley Subdivision in Denver, Colorado

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