Agency Status Makes a Difference

As real estate professionals, we are licensed by Colorado to represent people in the sale, purchase, or lease of real property.  State statutes, codes of ethics, principles of agency law, and agency forms define our responsibilities.  We strive to protect our buyers and sellers from the inherent risks in real estate transactions.  All parties deserve our fair and honest treatment.

Over the years many buyers and sellers have misunderstood our role.  As a result, our real estate commission and the state legislature have instituted the ways in which we may work with the public.  We are required to discuss these relationships early in the buying and selling process.

When we work with a seller, we can act either as a seller's agent or a transaction broker.  When we work with a buyer, we can act either as a buyer's agent or a transaction broker.  If you have no brokerage relationship with the real estate broker, you are a customer.  In that case, the broker only has to give you fair and honest treatment.  Whenever you hear buyer say "but I thought my real estate agent was my friend," it's because that buyer had no agency relationship with that broker.  My advice is to stay away from being just a customer.    

A seller's agent works solely on behalf of the seller by promoting the interests of the seller with the utmost good faith, loyalty, and fidelity.  The seller's agent negotiates on behalf of and acts as an advocate for the seller.  The seller's agent must disclose to potential buyers all adverse material facts actually known by the seller's agent.  A separate written listing agreement is required which sets forth the duties and obligations of the broker and the seller.

A buyer's agent works solely on behalf of the buyer but is typically paid by the seller or seller's brokerage.  Yes, that's right; a buyer's agent can be paid by the seller even though the buyer's agent promotes the interests of the buyer with the utmost good faith, loyalty, and fidelity.  The buyer's agent can negotiate on behalf of the buyer.  The buyer's agent must disclose all adverse material facts actually known, the buyer's financial ability to perform the terms of the transaction, and, if it's a residential property, whether the buyer intends to occupy the property.

A transaction broker assists the seller or buyer or both throughout a transaction.  A transaction broker must use reasonable skill and care in the performance of any oral or written agreement.  In addition, the transaction broker must disclose all adverse material facts actually known by the transaction broker concerning the property, a buyer's financial ability to perform the terms of the transaction, and, if it's a residential property, whether the buyer intends to occupy the property.

Since January 2007, it has been required to have a buyer or tenant sign Colorado Real Estate Commission Form (BD 24-10-06).  With this form, the buyer or tenant can choose to be a "customer" whenever the broker and brokerage listings are based on a seller's agent relationship.  Because our larger companies have a considerable number of listings, they may have a company policy that its brokers may only enter into a transaction broker relationship with buyers and sellers.

If you have read through all this legal mumbo jumbo, you will notice that the buyer's agent is similar to a seller's agent and that a transaction broker is similar to both of the other relationships.  However, there are significant differences.

What is the best deal for you?  Only you can answer that question.  Many real estate brokers only want to be transaction brokers because there is less liability.  However, savvy real estate buyers and sellers may feel that the transaction broker relationship is too limiting.  In my humble opinion, a buyer or seller gets a better deal by entering into a buyer's agency or seller's agency with your real estate broker.

Do the Due or Sing the Blues

I know it's not easy, but you've got to put your emotions on hold.  Before you buy your dream property, you have to conduct a study that considers the physical, financial, legal, and social characteristics of the property.  In the real estate business, we call this "due diligence."  My specialty is looking at due diligence from a land use perspective.

I believe that all real estate transactions - industrial, commercial, agricultural, and residential - unavoidably induce discussions and consideration of property rights and land use controls.

You and your Realtor need to examine the ownership rights that come with your dream property.  Do you have rights to your neighboring properties as a result of encroachments, appurtenances, and rights-of-way?  Are there party wall agreements, covenants, and deed restrictions?  Is your property subject to negative and/or affirmative easements? 

You need to consider the private land use controls such as water rights, ditch easements, nuisances, and voluntary restrictions in the form of covenants, deed restrictions, or conservation easements.  A private nuisance is any act that interferes with another property owner's rights.  In addition, unreasonable harm must be caused by the action.

Covenants or CC&Rs (Covenants, Conditions, and Restrictions) control the uses and activities in most of Loveland's residential subdivisions as well as aggregated commercial and industrial properties.

You also need to consider the most common public land use controls: zoning, subdivision regulations, and master plans.  As the major land owner in the U.S., our government administers the public land use controls.  We expect our governments to be fiscally responsible and plan for capital improvements and infrastructure.  In turn, our governments want us citizens to help them in the planning process.  In Loveland, the primary product of the planning process is our comprehensive plan.  Our plan describes the current community characteristics and looks at what size and shape the community will resemble in 10 to 20 years.  On the City of Loveland's Community and Strategic Planning home page (www.cityofloveland.org), you can click on the 2005 Comprehensive Plan as well as click on the 2007 Land Use Plan map.  The map will show how the areas around your dream property that either have developed or will probably develop.

After perusing the master plan and land use map, your next task should be to examine the zoning code.  The text and zoning map determines the current uses, height, bulk, and density parameters.  The zoning code details the permitted principal and accessory uses, conditional uses, and use exceptions that are allowed in the zoning district. On the City of Loveland's Current Planning home page, you will be able to access the zoning code and learn about your zoning designation.  What does the zoning code tell you about your dream property?

In general, the City of Loveland's web site provides a fantastic amount of information about individual properties.  On the left side of the City's home page, you will find a list of quick links.  Click on "Property Info" and insert an address.  You can then create a report which includes any special reviews or variance approvals, a plat map, the zoning, the legal description, your city councilors, and even your voting precinct.

When you visit the Civic Center to discuss utilities, you can also visit the Building Department and get a history of building permits for the property's address.  The City of Loveland considers building plans, building permits, and certificates of occupancy to be public documents.

Now that you have copies of the approval documents, covenants and building permits as well as the zoning designation and master plan information, you need to compare the current use and structures with your collected information.  Are there differences in uses, building masses, allowed animals, or well water usage?

When you need additional assistance, the staff at Current Planning is very helpful.  I believe that Larimer County's Planning Department still offers zoning compliance letters at a nominal cost.  In addition, some attorneys who specialize in real estate will produce an opinion letter detailing a land use profile for your dream property.

Even though land use controls are not readily visible, they are very real, affect value, and your enjoyment of the property.  Now you can dream on.

Learn to be Right On with Radon

What if I told you that approximately 70% of all homes in Loveland and Larimer County have radon levels above acceptable levels, according to the Environmental Protection Agency (EPA)?   What if I told you that indoor radon is the second-leading cause of lung cancer in the United States?   To reduce your exposure to radon, would you live outdoors in a tent?  I doubt it.

Radon is an invisible, odorless, radioactive gas created during the natural decay of uranium in our soil.  The gas gets concentrated in basements, crawl spaces, and under slabs.  Breathing radon over a prolonged period of time presents significant health risks to Lovelanders.  The EPA has set a level of 4 pico Curies per Liter (pCi/L) of air as an acceptable maximum.  Readings in the Loveland area range from 2 to 200 pCi/L.  How did the EPA arrive at 4 pCi/L?  The story goes that a high percentage of coal miners were dying from lung cancer and the radon readings in the mines were above 4 pCi/L. I wonder if they were also smokers and inhaled coal dust.  Regardless, we have this benchmark and we must live (and die) with it.    

If you want to check your radon, it's easy to purchase a kit at a local building supply store or on the Internet.  The City of Ft. Collins sells kits at the Senior Center and the Development Review Center.  Kits are fairly inexpensive.  You could also hire a local inspection service that will do a long-term test for approximately $100.00.

Since the test results will probably be problematic, there are some simple fixes that you could try.  First, caulk any cracks in your basement or crawl space.  Second, if you have a crawl space, you can put down a thick plastic sheet on the ground and run it up walls to the floor joists.  You can also seal the bottom of the floor joists.  Then you should retest your house.  You would be surprised how these simple improvements will decrease your radon infiltration.

Our excessive radon has spawned a mini-industry of inspectors and radon-mitigation companies.  Plumbing companies, construction companies, property inspection companies, and Realtors have enlarged their business models to assist the public with radon issues.

Since 2005, the City of Fort Collins has required that that all construction of single-family homes and duplexes be equipped with passive radon-reduction systems.  The required system uses passive ventilation, plastic sheeting, and special caulking.  The home buyers must be notified that a passive system was installed and that a radon test is highly recommended.

Fort Collins also requires that sellers of residential properties provide a City-generated brochure be given to each buyer prior to the execution of a contract to buy.  As a Realtor, I'm authorized to provide this disclosure.

The City of Loveland has no construction and disclosure requirements.

Regardless of the jurisdiction, the success or failure of residential real estate transactions depends on how the buyer and seller react to the issue of radon.  Section 10 of our Contract to Buy and Sell Real Estate gives the buyer the right to examine the Seller's Property Disclosure Statement and the right to examine the property.  A radon test is typically part of an inspection.  A high radon score can cause the buyer to terminate the contract, accept the results and still buy the property, or ask the seller to assist in mitigation costs.  If the property is bank-owned or a short sale, the buyer will not likely get any concession.

Realtors are smack-dab in the middle between the buyer and seller.  We are experienced in handling radon issues and can direct buyers and sellers to local radon experts.  Radon should never be treated lightly.  Until you reach your comfort level, keep learning about this deadly gas.

Lots of Pay Dirt 

"Buy land, they're not making it anymore."  Mark Twain must have been talking about raw land, real dirty dirt, the kind you can hunt, fish, farm, raise a family, and forge a livelihood on, if the weather cooperates.

Raw land in and around Loveland and Berthoud is getting harder to find.  Our farm land, pastures, and foothills are giving way to subdivisions, employment centers, and commercial centers.

As of the Thanksgiving weekend, my MLS provider's database revealed 46 active listings of land ranging from 35 to 160 acres.  You can buy 35 acres for $74,000.00 or, if you want to buy an entire subdivision of 118 acres, you will have to pony up $8,389,093.00.

More down to earth (excuse the pun), I found only two active listing for vacant land from 20 to 35 acres.  From 5 to 10 acres, there are 25 active listings.  From 1 to 5 acres, there are 169 active listings.  Why so many?  One of the reasons is that the minimum size for lots outside of the cities is 2.3 acres.  County subdivisions are platted with this fact in mind.

The real bonanzas in land are lots less than one acre in size with over 460 available.  These lots are typically found in approved subdivisions where you are not allowed to build your own house, unless you are a licensed and approved contractor.  Some purchasers are able to bring their own builder, but many purchasers use the builder who is selling the lots.

In order to get a different perspective on the land business, I attended Larimer County's annual tax lien sale.  All 280 of us were in a buying mood because an 11% annual interest rate is not easy to find these days.  With over 3000 tax liens for sale, everyone had a chance to spend lots of money, with some people spending several hundred thousand dollars.

What struck me about this year's sale was the number of improved lots and also small tracts.  I counted over 300 lots in the Loveland area with tax liens from as little as $20.00 and as much as $2000.00.  Typically, lot owners do not pay their property taxes until the property is sold to a builder or to you.  The owner can lose the property if taxes are not paid for 3 years.  Does it happen?  Yes, but not often.

What is my point about talking about lot liens?  Whether you are an investor or just want a good deal on a lot or a piece of land for your dream house down the road, this is a great time to talk to your Realtor.  Buying a lot now is like buying a sweater in the summer; both are priced to sell.

When you find a piece of land that you would love to buy, you can find the owner/seller by poking around the Larimer County website.  Your first step is to visit the County Assessor's home page and link to the Larimer County Parcel Locator.  The Parcel Locator allows you to zoom in to a single lot labeled with a parcel number.  You can even see the lot's dimensions.   Once you have the 10 digit parcel number, your second step is to go to the County Treasurer's home page and find out who pays the property taxes.

Whether you do your own search or work with a Realtor, you can bargain with the lot and land owners.  As taxpayers, they would rather have you pay the taxes until the business cycle favors real estate again.  At that point, you will be happy you bought when you did.

In the meantime, I wonder if my family will accept my paid-for tax liens as holiday gifts.