Colorado REALTOR eMagazine

colorado

速 REALTOR Knowledge Happens Here

VISIT THE NEW CAR WEBSITE MAY 6, 2013

www.ColoradoREALTORS.com

IN THIS ISSUE...

WAVES OF OPPORTUNITY GETS LARGER IN COLORADO Discover the new value proposition CAR offers to members.

HOME SALES& PRICES CONTINUE TO TREND UPWARDS Statewide and Regional First Quarter Housing Statistics IS THE IRS TARGETING REAL ESTATE PROFESSIONALS? IRS casts a wide net to target those abusing real estate deductions.

What Do Home Buyers Value Most When Looking for a Home Online?

By: Helana Neumann Enough buyers begin their searches on a digital device these days that the information you present online about yourself and the properties you represent will be the first impression you make on potential clients.

A PUBLICATION OF THE COLORADO ASSOCIATION OF REALTORS速

WHICH HOME FEATURES ARE BUYERS LOOKING FOR? Although desired home features vary somewhat according to region, type of home, and buyer demographic, there are certain features that continued on pages 4

April 2013

colorado

REALTOR® ABOUT

In This Issue...

The COLORADO REALTOR® is published by the Colorado Association of REALTORS® 309 Inverness Way South Englewood, CO 80112 (303) 790-7099 or 1-800-944-6550 FAX (303) 790-7299 or 1-800-317-3689

3 .....................Waves of Opportunity Gets Larger in Colorado

EDITOR: Tyrone Adams tadams@coloradorealtors.com DESIGN: Monica Panczer Creative, LLC. panczers@gmail.com

9 .....................Quick Hits News

The Colorado Association of REALTORS® assumes no responsibility for return of unsolicited manu­scripts, photographs or art. The acceptance of advertising by the Colorado REALTOR® does not indicate approval or endorsement of the advertiser or his product by the Colorado Association of REALTORS®. The Colorado Association of REALTORS® makes no warranties and assumes no responsibility for the accuracy or completeness of the information contained herein. The opinions expressed in articles are not necessarily the opinions of the Colorado Association of REALTORS®.

This is a copyrighted issue. Permission to reprint or quote any material from this issue is hereby granted provided the Colorado REALTOR® is given proper credit in all articles or commentaries, and the Colorado Association of REALTORS® is given proper credit with two copies of any reprints.

The term “REALTOR®” is a national registered trademark for members of the National Association of REALTORS®.

The term denotes both business competence and a pledge to observe and abide by a strict Code of Ethics. To reach a CAR director who represents you, call your local association/board.

4 .....................What do Home Buyers Value Most... continued 6-8 .................First Quarter Housing Statistics 8-9..................Are You Utilizing the CAR Legal Hotline

11....................CAR to Enhance Professional Development 13 ...................The Unintended Consequences of Consumer Protection 14 ...................NAR Convention 15....................Calendar of Upcoming Events 16 ...................Increase Your Sales By Doing One Thing 19 ...................Come January 1st You WILL Have Health Insurance 20-21 ............Fair Housing - It’s the Law 22 ...................Is the IRS Targeting Real Estate Professionals?

23....................Using Technology to Increase Sales 24....................Live Webcast Schedule

CAR Revamps Website CAR is proud to announce some needed upgrades to the CAR website. The new website is set to launch May 6th and in addition to a professional new look it will have many new features.

Some of the new features include an expanded section for consumers including helpful videos, details on how to become

a REALTOR®, easy social media tabs and much more. We hope you take a moment to visit the new site and tell us what you think.

www.ColoradoREALTORS.com 2

Waves of Opportunity Get Larger in Colorado

Colorado by the Numbers First Quarter 2013 Number of homes sold:18,343 Median Sales Price: $225,000 By: Keith Kanemoto, 2013 CAR President

Days on Market: 90 days on average Supply of Inventory: 4.1 months Unemployment Rate: 7% Jobs added: 10,800 in February 2013

Colorado REALTORS® continue to enjoy a progressive real estate market and economy as we end the first quarter of 2013. Our first quarter home sales (18,343) and prices ($225,000) continue to trend upward and are gaining momentum.

However, some members are already starting to ask the question how long will this rebound last? For REALTOR® Associations this question should not be taken lightly as most of us saw our membership numbers drop dramatically when the economy and real estate industry went spiraling down.

aveRsToUNfITY W O PPO

2012

Knowledge Happens Here

Members are no longer ok with just belonging to an Association they want an effective Association – an association that is going to help them be more successful in their business as a real estate broker today and tomorrow.

CAR (Colorado Association of REALTORS®) is working hard to answer our members’ demands. We are making our operations more fluid by restructuring some of our committees, moving toward some form of policy governance and reviewing our Board of Directors structure to make it more effective and efficient.

Our core value proposition approved by our Board of Directors last month includes research and industry information, legal information and political advocacy.

Unfortunately, political advocacy is our most overlooked member benefit! I know non members reap this benefit as well, but

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just imagine if our association was not an effective advocate for private property rights or for REALTORS® to be able to conduct business in a fair and equitable manner. How many more barriers would be in the way of homeownership? How many of us would still be in the business?

Below are a few political hot topics CAR has reviewed and monitored this year so we don’t have to imagine “what if”: • Oil and Gas- this bill requires real estate listing contracts, contracts of sale, or sellers’ property disclosures for residential properties to disclose information about mineral rights.

• Water District Transparency- bill requiring that a special district that provides domestic water or sewer service conduct a public meeting prior to fixing or increasing fees, rates, tolls, penalties, or charges.

• Changes to the Board of Assessment Appeals – CAR is working to make sure that detailed decisions are maintained on property tax appeal cases that reach the State Board of Assessment Appeals. We are happy to report that our amendment to retain such decisions was adopted.

We are proud of what we have accomplished thus far and as the waves continue to roll in, CAR will be looking for more opportunities to make our members more successful in bad or good times!

Aloha

Home Buyers continued from page 1 are consistently attractive to today’s buyers. Interestingly, though, the importance of those features to searchers is very different depending on whether the home is new or previously owned.

According to the 2013 Profile of Buyer Home Feature Preferences, here are some of the differences in importance to the home searchers surveyed about interior design features: What is “Very Important” When Buying a Home?

80

NEW HOME PRE-OWNED

60

PRE

Mobile devices now play a large role in home searches. Eighty-nine percent of new home shoppers use a mobile search engine, and 68% use a mobile application when doing research on available homes.

Hardwood Floors

According to the joint study by NAR and Google, Digital House Hunt, buyers use mobile devices to:

What is “Very Important” When Buying a Home?

80

NEW HOME PRE-OWNED

60

The 2012 Profile of Home Buyers and Sellers reports the following responses to questions about the value of web site features:

PRE

100

VERY USEFUL SOMEWHAT USEFUL

80 60 40 20

4

INTERACTIVE MAPS

Photos. People want photos. They also want detailed information about the property—all the information they’ll need to imagine themselves living there, to help them decide if the home is right for them.

Value of Website Features

NEIGHBORHOOD INFO

WHAT DO BUYERS WANT TO SEE IN AN ONLINE PROPERTY LISTING?

Stainless Steel Appliances

DETAILED PROPERTY INFO

Kitchen Island

NEW HOME

PRE

NEW HOME

PRE

Granite Countertops

Reprinted with permission from the National Association of REALTORS®

PHOTOS

New Kitchen Appliances

NEW HOME

PRE

20

NEW HOME

40

• Read general home information • Get directions to visit a home • Compare prices • Compare features • Search a listing company’s inventory • Call a brokerage

AGENT CONTACT INFO

Eat-in Kitchen

NEW HOME

PRE

NEW HOME

PRE

Ensuite master bath

HOW ARE MOBILE DEVICES BEING USED FOR ONLINE HOME SEARCHES?

VIRTUAL TOUR

Walk-in closet in master

NEW HOME

PRE

20

NEW HOME

40

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CAR QUARTERLY INDICATORS KEY METRICS GLOSSARY New Listings –This is a measure of how much new supply is coming onto the market from sellers. For example, Q3 New Listings are those listings with a system list date from July 1 through September 30.

Pending/Under Contract – This is the most realtime measure possible for homebuyer activity, as it measures signed contracts on sales rather than the actual closed sale. As such, it is called a “leading indicator” of buyer demand.

Sold Listings – This measures how many home sales were actually closed to completion during the report period.

Median Sales Price – This is a basic measurement of home values in a market area and basically states that 50 percent of the homes sold were either higher or lower than the Median Sales Price.

Average Sales Price – This is another basic measurement of home values in a market.

Percent of List Price Received – The mathematical calculation of the percent difference from the list price and the sold price for those listings sold in the reported period.

Days on Market – A way to measure how long it is taking homes to sell.

RESEARCH

Home Sales and Prices Continue to Trend Upward LEGAL INFO

Statewide and Regional First Quarter 2013 Housing Statistics POLITICAL ADVOCACY

www.ColoradoREALTORS.com/HousingStatistics Sales of single-family, condominium and town homes (taken together) increased 16 PROFESSIONAL percent statewide to 18,343 units during the DEVELOPMENT first quarter 2013 compared to first quarter 2012, according to Quarterly Market Statistical Reports released by the Colorado Association of REALTORS® MEETINGS(CAR). & EVENTS

company, and are based on data provided by Multiple Listing Services (MLS) in Colorado.

The current Q1 2013 reports represent approximately 90 percent of all MLS-listed residential real estate transactions in the state. The metrics do not include “For Sale by Owner” transactions or all new construction.

Sales of lender-mediated properties New listings dropped slightly more than 7 (properties owned by banks and other percent statewide, primarily due to drops in mortgage lenders) declined in all areas of the Denver Metro Region and the Mountain the state, ranging from a drop of 3 percent Region, while the median sales price rose in the Southeast to 44 percent in the nearly 15 percent to $225,000 compared to Northwest area. Overall, such the first quarter 2012. Days We are seeing more sales represented about 22 on the market continued percent of all transactions in the downward, dropping 22 sales, increasing first quarter 2013. The median percent to 90 days on average. median pricing and sales price for lender-mediated The statewide number of active fewer days on the properties increased 10 percent listings for the first quarter was at 30,114, representing a 4.1market consistently statewide compare to the same period in 2012. month inventory supply.

over the last three

“These figures are quite quarters compared to The CAR Housing Affordability Index, a new statistical measure similar to what we reported previous years. for Colorado’s housing market, last quarter and demonstrate dropped about 7 percent to 163 consistent patterns that speak for the state as a whole, declining in each area to a steadily recovering market in Colorado,” of the state except the Northwest. An index of said CAR spokesperson, Michael Welk. “We are 120 means the median household income in seeing more sales, increasing median pricing that area was 120 percent of what is necessary and fewer days on the market consistently to qualify for the median-priced home under over the last three quarters compared to prevailing interest rates. A higher number previous years. In many areas of the state is usually interpreted as greater housing sellers are receiving as much as 98 percent affordability. Higher values generally benefit of asking price on average and seeing their buyers whereas lower values help sellers. homes sell very quickly. Similarly, buyers continue to face significant competition in In addition to cumulative statewide statistics, most areas.”

CAR has commissioned six regional reports, The Colorado Association of REALTORS® Quarterly Market Statistical Reports are prepared by 10K Research and Marketing, a Minneapolis-based real estate technology

6

using the same measures, whose content is summarized below along with local expert contacts. continued on next page

See market overview on page 8

Housing Reports By Region

Metro Denver Region (Denver, Jefferson, Adams, Arapahoe, Broomfield, Douglas) Contacts: Michael Welk –303-263-3217 or Anthony Rael- 303-520-3179 Sales in this region rose 18 percent while median sales price jumped more than 16 percent to $240,000. Prices rose consistently throughout 2012, a trend that continued into the first quarter of this year. One of the consequences of improved prices is that the Affordability Index for Metro Denver has dropped steadily during 2012 and into the first quarter 2013. Days on the market showed the largest drop of any region in the state (-29 percent) compared to the same quarter in 2012. In addition, this region had less than 9,100 homes available at the end of the quarter, representing a 2.2-month supply and down about 2000 from the previous quarter (Q4 2012).

Mountain Region (Garfield, Grand, Gunnison, Jackson, Pitkin, Routt, San Miguel, Summit) Contacts: George Harvey – 970-729-0111 or Andrew Ernemann – 970-379-8125 The median sales price rose 20 percent to $428,750 in this region, which includes Colorado’s ski resort communities, while the number of sales dropped slightly (-4 percent, 422). Days on the market declined nearly 16 percent. With 3,000 active listings, this region has approximately 15 months’ supply of inventory which, in these areas of the state, is not unusual. New listings of available properties declined (-13 percent) while the Affordability Index dropped to 93, keeping it as the lowest rating on this scale in the state.

Northeast Region (Boulder, Larimer, Logan, Morgan, Weld) Contacts: Duane Duggan – 303-449-7000 or Kelly Moye – 303-327-6522 This region of Colorado is one of three in the study which showed an increase in the number of new listings (8 percent). Sales increased 21 percent, the highest quarter-to-quarter increase in the state. The median sales price grew 7 percent and days on the market decreased by more than 14 percent. The CAR Affordability Index increased slightly but stayed slightly below the state average of 167.

Northwest Region (Delta, Hinsdale, Mesa, Moffat, Montrose, Pitkin, Rio Blanca) – Contact: Sandy Borman – 970-256-9100 This region of our state had a fifth consecutive quarter of increased new listings (over previous years), up 7 percent compared to the first quarter 2012. Sales however, dropped 2 percent, one of only two regions showing a decline (Mountain Region is the other). The median sales price rose 3 percent and days on the market dropped 11 percent. This area of the state experienced the largest drop in lender-mediated sales, down 44 percent and enjoyed the highest Affordability Index at 221, a number that has been steadily rising for three years.

Southeast Region (Baca, Chaffee, Crowley, Custer, El Paso, Freemont, Huerfano, Las Animas, Otero, Pueblo, Teller) Contacts: Jay Gupta – 719-785-4114 or Dave Anderson – 303-327-6522 Southeast Colorado homes sales increased 18 percent to 3,116 during the first quarter of 2013 compared to 2012. Even so, the raw number of homes sold dropped consecutively for the third quarter (despite being improved over the comparable quarters in previous years). Median sales price increased a healthy 15 percent to $178,000 and days on the market declined by 13 percent. While the CAR Affordability Index showed a decline (-6 percent) the area’s score of 198 is the second strongest in the state. At the end of the quarter, this region had nearly 7,700 active listings which represent an inventory that would last about six and a half months. The Southeast Region reports the lowest percentage of sales in the state coming from lender-mediated properties (9 percent).

Southwest Region (Alamosa, Archuleta, Conejos, Costilla, Dolores, Hinsdale, La Plata, Mineral, Montezuma, Saguache, San Juan) Contact: Don Ricedorff - 970-375-7014 The median sale price in this region continued to trend upward, increasing approximately 12 percent to $206,500. Number of sales increased modestly (2 percent) and days on the market increased about 6 percent to 219, the highest average in the state. The Affordability Index in this area dropped again (-4 percent) but still remains strong at 175. New listings were up 5 percent and the percent of list price received rose consistently over the last six quarters, now approaching 85 percent.

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Conclusion With median sale prices rising in all regions of the state and days on the market declining everywhere expect the Southwest Region, the data indicates that Colorado continues to see strong improvement in the real estate market nearly everywhere. Spokespersons throughout Colorado are available for interviews or to answer specific regional questions. The reports cited in this press release are available online at: www.ColoradoREALTORS.com/HousingStatistics

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Are You Utilizing the CAR FREE Legal Hotline?

WHAT IS THE REALTORS速 LEGAL HOTLINE? The REALTORS速 Legal Hotline is a service which provides members of the Colorado Association of REALTORS速 with direct access to a qualified real estate attorney who can offer information on real estate law and related matters. The Hotline provides legal information, not legal representation.

HOW DO I USE THE HOTLINE? The principal broker and one additional designee from each REALTOR速 office are allowed access to the Hotline. Each user will be assigned a unique Hotline Identification Number. Your name and ID number will provide continued on next page

RESEARCH

Market Overview LEGAL INFO

Key metrics by reported quarter and for year-to-date (YTD) starting from the first of the year.

Key Metrics

Historical Sparkbars

New Listings

POLITICAL ADVOCACY

Q4-2010

Q4-2011

Q4-2012

Q4-2010

Q4-2011

Q4-2012

Pending/Under Contract

Under Contract Activity

Not enough historical data for chart

PROFESSIONAL DEVELOPMENT

Sold Listings

Q4-2010

Q4-2011

Q1-2013

Percent Change

YTD 2012 YTD 2013

34,394

31,925

- 7.2%

34,394

31,925

- 7.2%

20,470

22,393

+ 9.4%

20,470

22,393

+ 9.4%

--

--

--

--

--

--

15,797

18,343

+ 16.1%

15,797

18,343

+ 16.1%

$196,000

$225,000

+ 14.8%

$196,000

$225,000

+ 14.8%

$259,350

$277,062

+ 6.8%

$259,350

$277,062

+ 6.8%

97.0%

98.1%

+ 1.1%

97.0%

98.1%

+ 1.1%

115

90

- 21.7%

115

90

- 21.7%

175

163

- 6.9%

175

163

- 6.9%

Percent Change

Q4-2012

Median Sales Price

MEETINGS & EVENTS

Q1-2012

Q4-2010

Q4-2011

Q4-2012

Q4-2010

Q4-2011

Q4-2012

Q4-2010

Q4-2011

Q4-2012

Q4-2010

Q4-2011

Q4-2012

Q4-2010

Q4-2011

Q4-2012

Average Sales Price

Pct. of List Price Received

Days on Market

Affordability Index

Active Listings

Not enough historical data for chart

--

30,114

--

--

--

--

Months Supply

Not enough historical data for chart

--

4.1

--

--

--

--

Current as of April 12, 2013. All data from the multiple listing services in the state of Colorado. Powered by 10K Research and Marketing. | Click for Cover Page | 2

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verification that you are an authorized caller. Legal information will be given at the time of your call or within one business day if research is required.

This list, while not all inclusive, includes some of the topics addressed by the HOTLINE: Agency Approved Forms Broker Liability Brokerage Closing Issues Contract Issues Disclosures Earnest Money Fair Housing

To obtain your Hotline ID, go to the Legal Tools section of CAR’s website at www.ColoradoREALTORS.com and complete the online application. After verification, you will be notified of your number and will have immediate access to the Hotline.

HOURS The REALTORS® Legal Hotline is available Monday – Friday 10:00 am – 12:00 pm and 2:00 pm – 4:00 pm Only one question per call will be answered.

Lease Issues License Law Listing Contracts Title Issues Title Insurance Transaction Brokers Warranties and Representations Withdrawal of Offers

NOTE: Ethics and Arbitration matters will not be handled by the Hotline and should be referred to your local board.

RESEARCH

Lender-Mediated Report – Q1-2013 LEGAL INFO

A research tool provided by the Colorado Association of REALTORS®

Lender-mediated properties are those marked in an MLS as a Foreclosure, REO, Short Sale or other distressed sales type. For a complete list of methodology used from each MLS, see page 2 of this report. Activity comprised of single-family properties, townhomes, and condominiums combined.

POLITICAL Share of Sold ADVOCACY Listings that were Lender-Mediated: 22.0%

Sold Listings

40%

35%

30%

25%

PROFESSIONAL DEVELOPMENT

20%

15% Q1-2010

Q1-2011

Q1-2012

MEETINGS & EVENTS

Historical Median Sales Price

Traditional

Q1-2013

REO

Q1-2012

Q1-2013

+/–

Traditional

10,749

11,370

+5.8%

REO

3,433

2,133

-37.9%

Short Sale

1,471

1,023

-30.5%

Total Market*

15,797

18,343

+16.1%

Median Sales Price

Q1-2012

Q1-2013

+/–

Traditional

$227,500

$243,000

+6.8%

REO

$136,000

$150,000

+10.3%

Short Sale

$159,950

$165,000

+3.2%

Total Market*

$196,000

$225,000

+14.8%

*Total Market is not a sum of traditional, REO and short sale activity, as some lender-mediated homes can be listed both as REO and short sale.

Percent changes are calculated using rounded figures.

Short Sale

$260,000 $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 Q1-2010

Q1-2011

Q1-2012

Q1-2013

Current as of April 12, 2013. All data from the multiple listing services in the state of Colorado. Powered by 10K Research and Marketing. | Page 1

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POLITICAL ADVOCACY

Is Help for Underwater PROFESSIONAL Homeowners on the Way? DEVELOPMENT Remember HARP (Home Affordable Refinance Program)?

HARP was created in 2009 to help homeowners who were MEETINGS & EVENTS underwater- that is if your loan was backed by Fannie Mae or Freddie Mac. Now we hear that all homeowners stuck with mortgages worth more than the value of their homes could get some relief in 2013 thanks to changes to the governmentbacked HARP 2.0 which is set to expire in 2013. Enter HARP 3.0.

House Bill H.R. 736 was already introduced on February 14, 2013 by representative Peter Welch from Vermont with the intention to create HARP 3.0 and expands to pool of eligible borrowers who are underwater but don’t qualify for refinancing under HARP 2.0.

The main purpose of HARP 3.0 is to address mortgages that are not backed by Fannie and Freddie and for those people that have loans over $417,000 or for people with jumbo loans.

Similar to HARP 2.0 requirements, in order to qualify for the program consumers need to have been on time with mortgage payments for the last six months and have only been late once in the past 12 months. They also have to have less than 20 percent equity in the home.

When you read more about HARP 3.0 both sides of the isle, Democrat and Republicans, like the concept agreeing “there will be fewer foreclosures and people will have more money in their pocket which will stimulate the economy. HARP 3.0 is a win win for everyone.” HARP 3.0 was even applauded by most if not all during President Obama’s State of the Union Address in February this year.

So the question is- what’s taking it so long to be enacted? Learn more about HARP 3.0 at www.harp-mortgage.com/harp-3-0/.

SAVE THE DATE - Oct 13-15, 2013 CAR Convention Education, Exhibits, Networking and Fun Sheraton Denver Downtown Learn more at http://www.CARStateConvention.com

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PROFESSIONAL DEVELOPMENT

MEETINGS & EVENTS

Property Tax, Valuations & Appeals

CAR to Enhance Professional Development Opportunities Plans to Replace GRI Program The Colorado Association of REALTORS® (CAR) remains committed to providing relevant and quality professional development opportunities to Colorado REALTORS®.

its members, current GRI and new applicants will have sufficient amount of time and opportunities to complete the GRI program before the final sunset date, which has yet to be determined.

Some of the newer methods CAR is currently CAR is in the process of reviewing and utilizing are educational and informational evaluating all of its programs and services webcasts; learning opportunities for Broker/ to ensure they are relevant to the member, Owners around the state; and and is effective and efficient CAR is committed diverse educational offerings for CAR to administer. One to providing at our meetings and events of the programs under throughout the year that are review was the Graduate, pertinent and open to all members.

REALTOR® Institute (GRI) quality professional program.

It is also important to remember development the National Association of After CAR’s Education opportunities to REALTORS® provides numerous Development Committee (EDC) conducted its Colorado REALTORS® niche specific designations and analysis, the Committee and we will forward your local association offers an array of relevant education recommended the sunset to enhancing your opportunities. of the GRI program due to learning experiences. lack of participation and As stated before CAR is current member interest. committed to providing pertinent CAR’s Board of Directors approved the and quality professional development recommendation last month at the CAR opportunities to Colorado REALTORS® and Spring Business Meetings. we look forward to enhancing your learning experiences.

As CAR transitions to new methods to deliver quality professional development to

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Douglas County Assessor Teri Cox gives us the scoop on property taxes and how the valuation process works in our state. Understand what goes into determining a property’s taxable value and discover the various resources that are available to you and your clients.

DETAILS Date: May 8, 2013 Time: 9:00 –10:30 am Instructor: Teri Cox, Douglas County Assessor Location: Live Webcast Price: FREE CE Credit: N/A This live webcast will cover: • Services Funded by Property Taxes • Calculating Mill Levies and Property Taxes • Impact of Constitutional and Statutory Requirements • Real Property Mass Appraisal • The Valuation Protest and Appeal Process

You closed the sale.

We’ll close the mortgage.

Proudly supporting the

and all its members.

efirstbankmortgages.com Member FDIC 866- 964 - 2040

12

Surveys continue to show that owning a home is still a core American value and an

The Unintended Consequences of Consumer Protection

important part of the American dream.

By: Todd Crowley, EVP Mortgage Operations FirstBank What does home mean to you?

I have asked that question a lot recently and the answers are always different, always meaningful, and often deeply personal.

People seldom talk about a physical place and instead focus on people and family or concepts like love, protection, or inspiration.

When you talk a little more, though, it’s clear that to most people a safe, affordable “house” is a critical element in creating a “home”. In fact, even with the trauma of the financial crisis and the crash of the housing market, surveys continue to show that owning a home is still a core American value and an important part of the American dream.

Unfortunately, that dream is becoming less attainable for many people.

New regulations designed to protect consumers may prevent qualified buyers from obtaining a loan while increasing the cost and level of effort required to obtain a loan for many others. Some of the new rules cover loan originator compensation, appraisal delivery requirements, servicing practices, and loss mitigation. All of these rules increase costs and change the dynamics of the industry, for better or worse.

One of the more significant changes that directly impacts the home buying process is the Ability to Repay rule. This rule states that lenders must determine that a borrower has the ability to repay a loan by analyzing, verifying, and documenting eight underwriting factors. Loans that are lower in cost, do not have risky features such as interest only periods or negative amortization, and that meet specific underwriting criteria including a maximum 43% debt to income ratio are considered Qualified Mortgages.

These loans provide lenders with a safe harbor that limits their risk and many lenders may choose to originate only Qualified Mortgages.

The impact of this well-intentioned rule on the home buying process is two-fold. First, well qualified borrowers may need to provide even more documentation than is required today to obtain a mortgage. Second, if most lenders choose to origination only Qualified Mortgages, many qualified borrowers whose situation does not fit within this underwriting framework will have fewer choices or may be unable to obtain financing. In some cases, the unintended consequence of protecting the consumer may be that consumers are prevented from owning a home.

As trusted advisors to our buyers and borrowers, it is important that we

13

FirstBank is the Official Bank of CAR

advocate for them by getting involved in the legislative process to insure that regulations do not unintentionally harm people by limiting access to credit. We must also educate them about the mortgage lending process in today’s environment and the regulatory forces driving the underwriting and documentation requirements.

It is also important to understand that not all lenders are the same . Some lenders still offer flexible, common sense underwriting and are willing to take a little more risk for a responsible borrower.

Finally, it’s important to remember that “home” means something to our buyer/borrower. No matter the challenges, it’s up to us to get them through the process and into their home.

Todd Crowley is the Executive Vice President of Mortgage Operations for FirstBank, Colorado’s largest locally owned bank and its second largest depository institution. FirstBank is also a leading mortgage lender and continues to experience a high level of growth due to its unique business model and high level of customer satisfaction. If you have any questions about this article or would like to contact Todd, he can be reached at 303-2395112.

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events 2013 CAR CALENDAR OF RESEARCH

LEGAL INFO

POLITICAL ADVOCACY

PROFESSIONAL DEVELOPMENT

MEETINGS & EVENTS

MAY 13-18 NAR Midyear Legislative & Governance, Washington D.C.

SEPTEMBER 12 RPAC Road Rally, Black Hawk OCTOBER 13-15 CAR Convention, Denver 13-16 CAR Fall Business Meetings, Denver 15 Broker Connections, Denver

JUNE 3-6 CAR Leadership Elections 20 Broker Connections, Breckenridge 29-30 Team Colorado REALTORS速-MS 150

NOVEMBER 8-11 REALTOR速 Conference & Expo, San Francisco, CA

AUGUST 15 Broker Connections, Boulder 14-16 CAR Leadership Retreat, Snowmass

15

Increase Your Sales Activity by Adding One Thing As our latest statistics show home sales and prices are on the upward trend. In virtually every part of Colorado with some exceptions the Real Estate market has improved and, in most cases, has improved by a lot as our first quarter housing reports suggest. If you are not improving your productivity, at the same time the market is improving, you should ask yourself why not?

We know successful REALTORS® have a variety of skills, including prospecting, closing a sale, hosting a successful open house, and managing time wisely. However, what one thing can you do relative to your competition to help increase your sales activity?

“Internet, internet, internet is the way to go” said James Weischelbaum, Managing Broker Owner at Remax 100 in Lakewood. “Ninety to ninety-five percent of connections with customers are made through the internet,” he added.

Attend one more networking event this year. You never know who you’re going to meet at these events, and getting yourself out to one more each week will almost guarantee you a dramatic rise of exposure within the local community.



Network with one more previous client each month. If you want to increase your business, and get more referrals while you’re doing it, then a great first step is to spend more time with people who have already used your services.



Make one more phone call (or email) just before heading home. Why? Over the course of the year, that works out to be over two hundred “extra” contacts. And all you need is one of them to turn into a customer for that time to be very well spent.

“

Various studies confirm what Weischelbaum is saying. The internet is the first place consumers’ go to get information. But what other tactics can you use? 

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Do you have an effective social media plan in your overall business plan? This means more than just having accounts on Facebook, Twitter and LinkedIn, it’s about utilizing their power and influence they have on customers. Over 1 billion people can’t be wrong.

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If you can accomplish just one more thing, relative to what everyone else is doing, then you increase your chances of having more sales activity.

”

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Colorado REALTOR速 Health & Wellness insurance and discount benefits program 18

January 1, 2014 You Will Have Health Insurance…Or Else!

Under the Affordable Care Act, starting in 2014, you must be enrolled in a health insurance plan that meets basic minimum standards. If you aren’t, you may be required to pay an assessment. ¹ Like mandatory E&O coverage for Colorado REALTORS®, now health insurance becomes another “must” for not only you, but all family members.

“Beginning in 2014, most health insurance plans sold to small employers and individuals must include a minimum set of health care services and products. According to federal regulations, health plans offered in the individual and small group markets inside and outside of the Exchange need to include, at a minimum, the following benefits and services: n Ambulatory patient services n Emergency services n Hospitalization n Maternity and newborn care n Mental health and substance use disorder services, including behavioral health treatment n Prescription drugs n Rehabilitative and habilitative services and devices n Laboratory services n Preventive and wellness services and chronic disease management n Pediatric services, including oral and vision care” ² As a member of the Colorado Association of REALTORS®, you have access to a “one stop shop” website for health insurance options that meet current needs and will meet the new law’s requirements.

The Affordable Care Act is forcing more of us to get educated when it comes to our health care. Take advantage of the resources offered to you as a member of the Colorado Association of REALTORS® and visit http://carbsinsurance.com. ¹http://www.healthcare.gov/law/timeline/full.html ²http://www.getcoveredco.org/News-Events/Communications-from-the-FederalGovernment/Essential-Health-Benefits

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LEGAL INFO

Fair HousingIt’s the Law! POLITICAL ADVOCACY

PROFESSIONAL DEVELOPMENT

April is Fair Housing Month MEETINGS & EVENTS

April is Fair Housing Month and HUD has played a lead role in administering the Fair Housing Act since its adoption in 1968. The 1988 amendments, however, have greatly increased the Department’s enforcement role. First, the newly protected classes have proven significant sources of new complaints.

Second, HUD’s expanded enforcement role took the Department beyond investigation and conciliation into the area of mandatory enforcement.

SIGNIFICANT RECENT CHANGES

Complaints filed with HUD are investigated by the Office of Fair Housing and Equal Opportunity (FHEO). If the complaint is not successfully conciliated, FHEO determines whether reasonable cause exists to believe that a discriminatory housing practice has occurred. Where reasonable cause is found , the parties to the complaint are notified by HUD’s issuance of a Determination, as well as a Charge of Discrimination, and a hearing is scheduled before a HUD administrative law judge.

Either party - complainant or respondent - may cause the HUD-scheduled administrative proceeding to be terminated by electing instead to have the matter litigated in Federal court. Whenever a party has so elected, the Department of Justice takes over HUD’s role as counsel seeking resolution of the charge on behalf of aggrieved persons, and the matter proceeds as a civil action. Either form of action - the ALJ proceeding or the civil action in Federal court - is subject to review in the U.S. Court of Appeals.

HOPA retains the requirement that senior housing must have one person who is 55 years of age or older living in at least 80 percent of its occupied units. It also still requires that senior housing publish and follow policies and procedures that demonstrate an intent to be housing for persons 55 and older.

1. The Housing for Older Persons Act of 1995 (HOPA) makes several changes to the 55 and older exemption. Since the 1988 Amendments, the Fair Housing Act has exempted from its familial status provisions properties that satisfy the Act’s 55 and older housing condition.

First, it eliminates the requirement that 55 and older housing have significant facilities and services designed for the elderly.

Second, HOPA establishes a good faith reliance immunity from damages for persons who in good faith believe that the 55 and older exemption applies to a particular property, if they do not actually know that the property is not eligible for the exemption and if the property has formally stated in writing that it qualifies for the exemption.

An exempt property will not violate the Fair Housing Act if it includes families with children, but it does not have to do so. Of course, the property must meet the Act’s requirements that at least 80 percent of its occupied units have at least one occupant who is 55 or older, and that it publish and follow policies and procedures that demonstrate an intent to be 55 and older housing.

A Department of Housing and Urban Development rule published in the April 2, 1999, Federal Register implements the Housing for Older Persons Act of 1995, and explains in detail those provisions of the Fair Housing Act that pertain to senior housing. continued on next page

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2. Changes were made to enhance law enforcement, including making amendments to criminal penalties in section 901 of the Civil Rights Act of 1968 for violating the Fair Housing Act. 3. Changes were made to provide incentives for self-testing by lenders for discrimination under the Fair Housing Act and the Equal Credit Opportunity Act. See Title II, subtitle D of the Omnibus Consolidated Appropriations Act, 1997, P.L. 104 - 208 (9/30/96).

BASIC FACTS ABOUT THE FAIR HOUSING ACT WHAT HOUSING IS COVERED? The Fair Housing Act covers most housing.

In some circumstances, the Act exempts owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a broker, and housing operated by organizations/private clubs that limit occupancy to members.

This information was provided by the US Department of Housing and Urban Development- HUD. For more information about the rules of Fair Housing go to http://www.hud.gov.

Unsure? Questions? Let us know, HUD is here to help! Call the toll free number below if you or your clients have any questions.

Spring Meeting Photos

Members enjoy the Mountain District Reception.

(800) 877-7353 Amy Dorsey and Michael Labout.

WHAT IS PROHIBITED? In the Sale and Rental of Housing: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap: • Refuse to rent or sell housing • Refuse to negotiate for housing • Make housing unavailable • Deny a dwelling • Set different terms, conditions or privileges for sale or rental of a dwelling

Members enjoy the Mountain District Reception.

• Provide different housing services or facilities • Falsely deny that housing is available for inspection, sale, or rental • For profit, persuade owners to sell or rent (blockbusting) or • Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.

Jolon Ruch speaks at the CAR Board of Directors meeting.

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LEGAL INFO

POLITICAL ADVOCACY Is the IRS Targeting Real Estate Professionals for Audits?

Philip Panitz

An Interview with attorney Philip Panitz PROFESSIONAL DEVELOPMENT

by Tyrone Adams, CAR VP Member Services

MEETINGS & EVENTS Panitz: Anytime an investor is moving losses from their Schedule E properties and offsetting other income from a W-2 job, you are almost painting the red flag “scarlet.” That screams to the IRS “audit me.” That doesn’t mean that the losses are not legitimate, and if the investor qualifies as a real estate professional they will be allowed, but it almost guarantees at least the IRS is going to look at it.

According to Philip Panitz a nationally known tax litigator with Panitz & Kossoff the IRS is casting a very wide net against what they perceive as abuse in the area real estate. The IRS is claiming that too many passive investors are using losses from real estate investments to offset their other income.

Tyrone Adams, VP Member Services, took some time to discuss a little more in depth with Mr. Panitz why the IRS is unwilling to allow legitimate real estate professionals who spend the requisite 750+ hours and over 50% of their time doing real estate endeavors, claim their losses.

TA: What is the audit process like for small business owners?

Panitz: It’s surprising to some but the “audit process” for small business owners is excruciatingly painful, more so than large business owners. It comes down to time and money. Small business owners typically don’t have the resources to spend a lot of time gathering information to comply with the IRS’ numerous requests, and the common complaint is that an IRS audit takes the owner of the business away from their business without anybody to cover for them.

TA: It appears this issue is not really new, are there other reasons the IRS is auditing more real estate professionals?

Panitz: Although the IRS never admits which taxpayers are in their crosshairs, it’s clear that real estate professionals are being targeted because previous audits of real estate investors have netted a large amount of tax adjustments due to loss disallowance. Success breeds success which leads the IRS to determine that there has been a tax gap or abuse in this area. In the 1990’s I averaged about two real estate professional cases a year and now I average about ten. There’s a reason for that.

TA: If I am the broker/owner of an office and one of my brokers is audited will it have a domino effect and now the other brokers including me the broker owner become likely candidates for being audited?

Panitz: I have not seen in practice an audit of a real estate investor/ broker causing additional audits of other brokers in the same office.

Since most of the real estate professional audits are for properties deducted on a Schedule E of a personal 1040 tax return, these are “individual audits” and not company audits and the IRS auditor is focused on that particular individual.

TA: What does the law say about claiming failed investments on your taxes?

Panitz: A “failed” investment in real estate could mean one of two things. It’s either an ongoing investment that is losing the investor money in the short term when monthly expenses and depreciation exceed income or a loss upon complete liquidation of the investment.

The distinction is significant. The IRS attacks “losses” that exceed income from the investment, particularly if they are offsetting other income on an investor’s tax return. However, when a property is liquidated for a loss, which is a capital loss that the IRS is not disputing the sale year as the appropriate time to take the loss. Unfortunately, if you are not a real estate professional, you can only write off $3,000 per year against other non-capital income.

TA: What do our members need to know or do to be prepared if they are audited?

Panitz: The best advice I can give real estate investors to support their deductions is to keep a contemporaneous log of their time managing their real estate investments, as well as the time they spend on real estate in general. Keep really good substantiation of their expenses, and sometimes it is handy to cross-reference their log to the expense item. IRS auditors usually go away a lot faster when the taxpayer isn’t just telling them the way things are, but showing them with objective proof the way things are. If you spend ten hours

TA: What are some red flags that would put our members at risk of being audited?

continued on next page

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QUICK HITS NEWS IN A FLASH

painting an apartment building, the entry of ten hours in your log might mention the cost of the paintbrushes, the paint, the tarp, the invoice from a painter if you paid someone else, the yellow page ad showing the painter you called, the phone calls you made shopping for a painter, all of these items objectively corroborate the time the investor says he spent on the project. The more the auditor is overwhelmed with the taxpayer’s thorough records, the more likely the taxpayer has bought him or herself a “no change” audit.

TA: How long does the audit process take?

Panitz: The audit process can take a couple of months, or a year. It will depend upon the taxpayers records, and if the auditor has to keep asking for additional information and how long it takes for the taxpayer to get back to the auditor. I typically recommend that the taxpayer NOT sign waivers of the statute of limitations, this will give the IRS unlimited time to keep asking for more information. The more organized the taxpayer, the shorter time period of the audit, and the less painful it will be.

TA: If the audit findings reveal some discrepancies intentional or not what happens? Fines? Criminal charges?

Panitz: If there are mistakes on a tax return, this normally does not result in criminal charges. Mistakes happen. On the other hand, if the audit reveals that the taxpayer was keeping a separate set of books and declaring 10% of what he was actually earning, you might be facing a criminal investigation for tax evasion. A normal audit, where the IRS determines that there is an additional tax liability could add some negligence penalties and failure to pay penalties plus interest. Of course, just because the IRS says that they have disallowed deductions doesn’t mean they are correct.

A tax professional should always be assisting the taxpayer through the audit process, and sometimes that tax professional will advise the taxpayer to fight the audit because the auditor is simply wrong. The IRS is not infallible, far from it.

REALLY! BANKS BOUNCE CHECKS? Banks began to compensate 4.2 million borrowers last week for past mistakes in processing foreclosures, but a few borrowers say the checks they were sent wouldn’t clear. So far, only a handful of borrowers reported being unable to cash their checks, “but the incident is another embarrassment for federal banking regulators already faulted for prematurely halting [foreclosure reviews] and not securing more money for affected home owners,” The Wall Street Journal reports.

CAR PROMOTES VALUE OF USING A REALTOR® TO CONSUMERS The CAR Public Awareness Campaign started at the end of March. Utilizing TV ads, social media and online marketing tactics we are educating consumers about the value of using a REALTOR® in their real estate transactions. To view some of the consumer ads go to www.ColoradoREALTORS. com/GetTheAnswers.

NEW SCAM RATINGS SITE SURFACES In response to several inquiries we’ve received, NAR has posted a new article warning members of a new site alleging to rate real estate agents. This site, <agent-ratings. com>, looks extremely similar to the fake complaint site called <Realtor-complaints.com> that was shut down in January. Please feel free share this article with members who may contact you with questions. It’s available at: http://speakingofrealestate.blogs.realtor.org/2013/04/15/ sham-rating-site-oregon-agents-raise-the-alert/.

You can learn more about the IRS increasing audits on real estate professionals by going to Panitz & Kossoff website at http://www.pktaxlaw. com/.

CAR Law and Policy DVP Justin Knoll speaks at the CAR Spring Business Meetings.

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Your Professional Development.

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CAR LIVE WEBCAST SCHEDULE Our goal is to provide you with a convenient way to access and receive important industry updates, as well as a variety of other professional development opportunities utilizing our state-of-the-art live webcast broadcast system.

For live presentations offering CE: Students must log in on time and will be asked to meet attendance verification criteria throughout the course. Learn more

UPCOMING WEBCASTS

The CAR webcast program is brought to you by:

n Property Tax, Valuations & Appeals, Teri Cox, Douglas Co Assessor MAY 01, 2013 – FREE n Capitol Connection: CAR Legislative Update, Rachel Nance, VP Public Policy MAY 22, 2013 – FREE n 2013 Annual Commission Update (4 CE) JUN 05, 2013 – $30 n Presentation by the Colorado Energy Office JUN 26, 2013 – FREE n Q2 Report on Colorado Real Estate & Housing Activity, CAR Statistics Program JUL 17, 2013 – FREE

ENJOY THESE FREE PREVIOUSLY RECORDED WEBCASTS n n n n n n

Update From the Colorado Division of Real Estate, Marcia Waters, DORA Short Sales: What You Don’t Know Can Jail You, Roxanne Webster & Jake Gieger Green MLS: An Update from the Colorado Energy Office, Scott Morrissey & Peter Rusin Understanding Your Title Commitment, Carl Laffin, First American Title Your E&O Insurance: Are You Properly Covered?, Ken Levinson & Steve Morgan Coaching Your Referral Partners, Tom Ninness, Summit Champions

Visit www.carbusinessservices.com to register.