Colorado REALTOR eMagazine

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

VISIT THE NEW CAR WEBSITE MAY 6, 2013

www.ColoradoREALTORS.com

I N T H I S I S S U E . . .

W A V E S O F O P P O R T U N I T Y G E T S L A R G E R I N C O L O R A D ODiscover the new value proposition CAR offers to members.

H O M E S A L E S & P R I C E S C O N T I N U E T O T R E N D U P W A R D SStatewide and Regional First Quarter Housing Statistics

I S T H E I R S T A R G E T I N G R E A L E S T A T E P R O F E S S I O N A L S ?IRS casts a wide net to target those abusing real estate deductions.

coloradoREALTOR®

A PUBLICATION OF THE COLORADO ASSOCIATION OF REALTORS® April 2013

continued on pages 4

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.

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

Knowledge Happens Here

By: Helana Neumann

ABOUT The COLORADO REALTOR® is published by the Colorado Association of REALTORS®

309 Inverness Way SouthEnglewood, CO 80112(303) 790-7099 or 1-800-944-6550FAX (303) 790-7299 or 1-800-317-3689

EDITOR: Tyrone [email protected]: Monica Panczer Creative, [email protected]

The Colorado Association of REALTORS® assumes no responsibility for return of unsolicited manu scripts, 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.

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

4 ....................What do Home Buyers Value Most... continued

6-8 ................First Quarter Housing Statistics

8-9 .................Are You Utilizing the CAR Legal Hotline

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

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 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.

In This Issue...

2

coloradoREALTOR®

www.ColoradoREALTORS.com

Waves of

OPPORTUNITY Waves of

OPPORTUNITY20122012

CAR Revamps Website

By: Keith Kanemoto, 2013 CAR President

Colorado by the Numbers

First Quarter 2013Number of homes sold:18,343

Median Sales Price: $225,000

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.

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

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

Waves of Opportunity Get Larger in Colorado

3

Waves of

OPPORTUNITY Waves of

OPPORTUNITY20122012

Knowledge Happens Here

4

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:

Home Buyers continued from page 1

Walk-in closet in master

80

60

40

20

NEW

HO

ME

PRE

Ensuite master

bath

NEW

HO

ME

PRE

Eat-inKitchen

NEW

HO

ME

PRE

NEW HOME

PRE-OWNED

HardwoodFloors

NEW

HO

ME

PRE

What is “Very Important” When Buying a Home?

NewKitchen

Appliances

80

60

40

20

NEW

HO

ME

PRE

GraniteCountertops

NEW

HO

ME

PRE

KitchenIsland

NEW

HO

ME

PRE

NEW HOME

PRE-OWNED

StainlessSteel

Appliances

NEW

HO

ME

PRE

What is “Very Important” When Buying a Home?

80

100

60

40

20

PHO

TOS

DET

AIL

ED P

ROPE

RTY

INFO

VIRT

UA

L TO

UR

AG

ENT

CON

TACT

INFO

INTE

RACT

IVE

MA

PS

NEI

GH

BORH

OO

D IN

FO

VERY USEFUL

SOMEWHAT USEFUL

Value of Website Features

HOW ARE MOBILE DEVICES BEING USED FOR ONLINE HOME SEARCHES?

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.

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

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

Reprinted with permission from the National Association of REALTORS®

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

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.

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

54

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 real-time 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.

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

New listings dropped slightly more than 7 percent statewide, primarily due to drops in the Denver Metro Region and the Mountain Region, while the median sales price rose nearly 15 percent to $225,000 compared to the first quarter 2012. Days on the market continued downward, dropping 22 percent to 90 days on average. The statewide number of active listings for the first quarter was at 30,114, representing a 4.1-month inventory supply.

“These figures are quite similar to what we reported last quarter and demonstrate consistent patterns that speak to a steadily recovering market in Colorado,” said CAR spokesperson, Michael Welk. “We are seeing more sales, increasing median pricing and fewer days on the market consistently over the last three quarters compared to previous years. In many areas of the state sellers are receiving as much as 98 percent of asking price on average and seeing their homes sell very quickly. Similarly, buyers continue to face significant competition in most areas.”

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

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 (properties owned by banks and other mortgage lenders) declined in all areas of the state, ranging from a drop of 3 percent in the Southeast to 44 percent in the

Northwest area. Overall, such sales represented about 22 percent of all transactions in the first quarter 2013. The median sales price for lender-mediated properties increased 10 percent statewide compare to the same period in 2012.

The CAR Housing Affordability Index, a new statistical measure for Colorado’s housing market, dropped about 7 percent to 163

for the state as a whole, declining in each area of the state except the Northwest. An index of 120 means the median household income in that area was 120 percent of what is necessary to qualify for the median-priced home under prevailing interest rates. A higher number is usually interpreted as greater housing affordability. Higher values generally benefit buyers whereas lower values help sellers.

In addition to cumulative statewide statistics, CAR has commissioned six regional reports, using the same measures, whose content is summarized below along with local expert contacts.

Statewide and Regional First Quarter 2013 Housing Statistics www.ColoradoREALTORS.com/HousingStatistics

Home Sales and Prices Continue to Trend Upward

6continued on next page

We are seeing more sales, increasing

median pricing and fewer days on the

market consistently over the last three

quarters compared to previous years.

RESEARCH

LEGAL INFO

MEETINGS & EVENTS

POLITICAL ADVOCACY

PROFESSIONALDEVELOPMENT

Housing Reports By Region

7

Metro Denver Region (Denver, Jefferson, Adams, Arapahoe, Broomfield, Douglas) Contacts: Michael Welk –303-263-3217 or Anthony Rael- 303-520-3179Sales 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 – 970-379-8125The 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 – 303-327-6522This 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 – 970-256-9100This 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 – 303-327-6522Southeast 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.

See market overview on page 8

ConclusionWith 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

{

8

Market Overview

Key Metrics Historical Sparkbars Q1-2012 Q1-2013 Percent Change YTD 2012 YTD 2013 Percent Change

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

New Listings 34,394 31,925 - 7.2% 31,925 - 7.2%

Pending/Under Contract 20,470 22,393 + 9.4% 20,470 22,393 + 9.4%

34,394

+ 16.1%

Median Sales Price $196,000 $225,000 + 14.8% $196,000 $225,000 + 14.8%

Sold Listings 15,797 18,343 + 16.1% 15,797 18,343

+ 6.8%

Pct. of List Price Received 97.0% 98.1% + 1.1% 97.0% 98.1% + 1.1%

Average Sales Price $259,350 $277,062 + 6.8% $259,350 $277,062

163 - 6.9%

Days on Market 115 90 - 21.7% 115 90

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

--

Months Supply -- 4.1 -- -- -- --

Active Listings -- 30,114 -- -- --Not enough historical data for chart

Not enough historical data for chart

-- --Under Contract Activity -- -- -- --Not enough historical data for chart

- 21.7%

Affordability Index 175 163 - 6.9% 175

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

Q4-2010 Q4-2011 Q4-2012

Q4-2010 Q4-2011 Q4-2012

Q4-2010 Q4-2011 Q4-2012

RESEARCH

LEGAL INFO

MEETINGS & EVENTS

POLITICAL ADVOCACY

PROFESSIONALDEVELOPMENT

WHAT IS THE REALTORS® LEGAL HOTLINE?The REALTORS® Legal Hotline is a service which provides members of the Colorado Association of REALTORS® 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® office are allowed access to the Hotline. Each user will be assigned a unique Hotline Identification Number. Your name and ID number will provide

Are You Utilizing the CAR FREE Legal Hotline?

continued on next page

9

RESEARCH

LEGAL INFO

MEETINGS & EVENTS

POLITICAL ADVOCACY

PROFESSIONALDEVELOPMENT

Lender-Mediated Report – Q1-2013

Sold Listings 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%

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

*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.

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.

$120,000

$140,000

$160,000

$180,000

$200,000

$220,000

$240,000

$260,000

Q1-2010 Q1-2011 Q1-2012 Q1-2013

Historical Median Sales Price Traditional REO Short Sale

15%

20%

25%

30%

35%

40%

Q1-2010 Q1-2011 Q1-2012 Q1-2013

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

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.

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.

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

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

AgencyApproved FormsBroker LiabilityBrokerageClosing IssuesContract IssuesDisclosuresEarnest MoneyFair Housing

Lease IssuesLicense LawListing ContractsTitle IssuesTitle InsuranceTransaction BrokersWarranties and RepresentationsWithdrawal of Offers

This list, while not all inclusive, includes some of the topics addressed by the HOTLINE:

Is Help for Underwater Homeowners on the Way?

Remember HARP (Home Affordable Refinance Program)? HARP was created in 2009 to help homeowners who were 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 government-backed 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/.

10

SAVE THE DATE - Oct 13- 15, 2013CAR ConventionEducation, Exhibits, Networking and FunSheraton Denver DowntownLearn more at http://www.CARStateConvention.com

RESEARCH

LEGAL INFO

MEETINGS & EVENTS

POLITICAL ADVOCACY

PROFESSIONALDEVELOPMENT

11

Property Tax, Valuations & Appeals

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.

DETAILSDate: May 8, 2013Time: 9:00 –10:30 amInstructor: Teri Cox, Douglas County Assessor Location: Live WebcastPrice: FREECE 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

The Colorado Association of REALTORS® (CAR) remains committed to providing relevant and quality professional development opportunities to Colorado REALTORS®.

CAR is in the process of reviewing and evaluating all of its programs and services to ensure they are relevant to the member, and is effective and efficient for CAR to administer. One of the programs under review was the Graduate, REALTOR® Institute (GRI) program.

After CAR’s Education Development Committee (EDC) conducted its analysis, the Committee recommended the sunset of the GRI program due to lack of participation and current member interest. CAR’s Board of Directors approved the recommendation last month at the CAR Spring Business Meetings.

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

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 utilizing are educational and informational webcasts; learning opportunities for Broker/

Owners around the state; and diverse educational offerings at our meetings and events throughout the year that are open to all members.

It is also important to remember the National Association of REALTORS® provides numerous niche specific designations and your local association offers an array of relevant education opportunities.

As stated before CAR is committed to providing pertinent and quality professional development opportunities to Colorado REALTORS® and we look forward to enhancing your learning experiences.

Plans to Replace GRI Program

CAR to Enhance Professional Development Opportunities

CAR is committed to providing

pertinent and quality professional

development opportunities to

Colorado REALTORS® and we will forward to enhancing your

learning experiences.

RESEARCH

LEGAL INFO

MEETINGS & EVENTS

POLITICAL ADVOCACY

PROFESSIONALDEVELOPMENT

12

Proudly supporting the

and all its members.

efirstbankmortgages.com Member FDIC 866-964 -2040

You closed the sale.

We’ll close themortgage.

13

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

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 303-239-5112.

By: Todd Crowley, EVP Mortgage Operations FirstBank

The Unintended Consequences of Consumer Protection

Surveys continue to

show that owning a

home is still a core

American value and an

important part of the

American dream.

FirstBank is the Official Bank of CAR

13NAR007_Full_Page_Ad.indd 1 4/10/13 2:40 PM

14

14 1515

CAR CALENDAR OF

2013events

MAY 13-18 NAR Midyear Legislative & Governance,

Washington D.C.

JUNE3-6 CAR Leadership Elections20 Broker Connections, Breckenridge29-30 Team Colorado REALTORS®-MS 150

AUGUST15 Broker Connections, Boulder14-16 CAR Leadership Retreat, Snowmass

SEPTEMBER12 RPAC Road Rally, Black Hawk

OCTOBER 13-15 CAR Convention, Denver13-16 CAR Fall Business Meetings, Denver15 Broker Connections, Denver

NOVEMBER8-11 REALTOR® Conference & Expo,

San Francisco, CA

RESEARCH

LEGAL INFO

MEETINGS & EVENTS

POLITICAL ADVOCACY

PROFESSIONALDEVELOPMENT

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.

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?

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.

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.

Increase Your Sales Activity by Adding One Thing

16

“”

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.

17

18

®

insurance and discount benefits programColorado REALTOR Health & Wellness

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.html²http://www.getcoveredco.org/News-Events/Communications-from-the-Federal-Government/Essential-Health-Benefits

1918

20

Fair Housing- It’s the Law!

April is Fair Housing Month

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.

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.

SIGNIFICANT RECENT CHANGES1. 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.

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.

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

RESEARCH

LEGAL INFO

MEETINGS & EVENTS

POLITICAL ADVOCACY

PROFESSIONALDEVELOPMENT

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.

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

• 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.

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.

Members enjoy the Mountain District Reception.

Amy Dorsey and Michael Labout.

Members enjoy the Mountain District Reception.

Jolon Ruch speaks at the CAR Board of Directors meeting.

Spring Meeting Photos

Unsure? Questions? Let us know, HUD is here to

help! Call the toll free number below if you or

your clients have any questions.

(800) 877-7353

21

22

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

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.

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: 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 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

Is the IRS Targeting Real Estate Professionals for Audits?

Philip Panitz

An Interview with attorney Philip Panitz by Tyrone Adams, CAR VP Member Services

continued on next page

RESEARCH

LEGAL INFO

MEETINGS & EVENTS

POLITICAL ADVOCACY

PROFESSIONALDEVELOPMENT

23

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.

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

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 CONSUMERSThe 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 SURFACESIn 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/.

QUICK HITS NEWS IN A FLASH

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

Visit www.carbusinessservices.com to register.

Your Professional Development. Your Way!

Watch Video

CAR LIVE WEBCAST SCHEDULEOur 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 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 WEBCASTSn Update From the Colorado Division of Real Estate, Marcia Waters, DORAn Short Sales: What You Don’t Know Can Jail You, Roxanne Webster & Jake Giegern Green MLS: An Update from the Colorado Energy Office, Scott Morrissey & Peter

Rusinn Understanding Your Title Commitment, Carl Laffin, First American Titlen Your E&O Insurance: Are You Properly Covered?, Ken Levinson & Steve Morgann Coaching Your Referral Partners, Tom Ninness, Summit Champions

The CAR webcast program is brought to you by: