Rants, Raves & Real Estate
The City and County of Boulder (Colorado) has a great website resource for identifying a meth lab.
With the rise in foreclosures and more agents being the first people to enter recently vacant homes after and possibly during a foreclosure, a little education can go along way for your own safety and the safety of your clients. Going into homes before they’re ‘trashed out’ can mean just about anything these days.
I just walked out of the second recent condo conversion in a month that I saw back on the market way at about 30% of what it had sold for. It had been ‘flipped’ in 2006 by some investors. In my humble opinion, it seems suspicious to me when large numbers of foreclosures show up all at once in the same building. There were eight or nine lock boxes on the door. Postings in the windows. hmm…
If you know me, you know that this is what I do. I want to know why and how, so, I did a little checking in the MLS and public records.
The unit I saw had previously sold for $204k but was now listed at $60,000 in a building that every unit had previously sold for over $150k. A few even sold for up to $250k. What makes it suspicious is that there were no real upgrades to justify 204k. In fact, the value today is probably about $80,000 if it was cleaned out. No electrical or plumbing upgrades to the building. Some newer windows and a few new light fixtures in the hallway. That’s it. Now it is possible to get $160,000 for this type of unit if it’s done right.
Some developers who do a killer job on the conversions do make top dollar. They add roof top decks, change the curb appeal, improve all the common elements and put about $30,000-$60,000 into each unit upgrading the kitchen, bathrooms and finishes. The units I saw at this place weren’t like that. For this building though, the appraiser would have to be blind not to notice that the doors were missing handles and nothing that was described in the MLS was actually completed. (business center, fitness room, etc..)
It’s painful to see because you really don’t get a redo on a condo conversion. It’s to late. The building is still a dump. Can you imagine trying to coordinate an overhaul of the building with 24 different owners. It’s going to be a blight to the neighborhood for a long time.
They bought the property for $2.9 mill and sold the units for a total of $4.8. 15 days after they closed on the property, they were already selling them. 6 at a time. Many of the buyers bought multiple units. They were 80% sold out in 2 months. In the middle of winter during 2005-2006. That was not a great time for selling condos, even nice ones.
It seems like if you wanted to make 1.8 million fast the dirty way, you could get people who were going to file bankruptcy purchase these properties using stated 80/20 loans. The paper values would support the apparent protection of the 1st lender and the 2nd would be carried back by the seller. It’s all just funny money right? Seller kicks back some money to the buyers for the ‘service’. The buyers then try to rent the properties out and never make a payment. When it all goes south, they just walk and let the properties foreclose. Now, I’m not saying that is what happened here, but I do think it happens.
I know there are people who believe that the only one they’re hurting when they do this is the lender. That frustrates me. It gives the entire industry a bad name. Especially when a lot of people need to work together to decieve the lender. It’s no wonder that the agent that listed the property had his license just long enough to do this deal then leave the business by going inactive. The building had been listed as having an agent owner so he must have been involved. I wonder what his employing broker was thinking. Probably wasn’t. I wonder if the buyers weren’t actually in on it and had their credit ruined by an investor who made a lot of promises he didn’t deliver on.
I’d love to give you the address and name the players…but that seems to get people in trouble. No, I can’t flat out say that there is some fraud involved but it makes you wonder doesn’t it.
Out of curiosity, I had to check to see what people were reading outside of my main page and feed. Essentially what posts attracted the most hits from search engines and links from other blogs. Here’s how they show up in order of popularity.
And a few honorable mentions.
I know what your thinking, HQwho? Don’t fault yourself for not hearing of it. I’ve been working with them for about three years now during which we’ve (notice my team approach) implemented many changes to improve the overall direction and marketing presence of the company. Since some of the others in our company are just warming up to the idea of blogging, I’ll get to be the first to discuss what we are doing.
HQHomes.com implemented a new website that has one of the better IDX solutions (just shy of a custom solution) available for searching for homes in the area. We feel that real estate search is the cornerstone to any long term success for a real estate website. Considering what our search looked like originally. This is a huge step up. One of the features I find the most useful is an RSS feed for the paticular search that you want. We hope our clients find that this search is better than any currently in use by a competing brokerage.
HQHomesBlog is going to be the outlet for much of our statistical research on different Denver neighborhoods. We also plan to let this be our up to date platform to give our view of the markets. We have been delivering a newspaper to some parts of Denver with some good response but find that most people don’t have the time or desire to open a good old fashioned newspaper. By the time they look at it, it’s out of date. The blog will hopefully fill this gap while decreasing some of our costs.
One of the better side effects of blogging, besides traffic to the website, is the fact that readers and those interested in our company can get a better feel for the neighborhoods they’re interested in and the agents that work in those neighborhoods.
I’ll be a frequent contributor on the site. Feel free to stop by and give your opinion of what we are doing.
Can you imagine what the Mona Lisa would look like if Leonardo da Vinci worked quickly with a 4 inch brush? He probably would not have caught the details necessary to communicate his intent and we likely would never have even heard of this masterpiece. If the details get lost in translation, much of the artist’s intent will be lost. Similarly, it’s difficult to communicate complex ideas with just a few words. A couple months back Jim Cramer of “Mad Money” made a few broad statements about the housing market. Anyone that watches his show “Mad Money” knows that he claims that there is a bull market in every market (stock market) and he’s going to help you find it. I find that interesting coming from a man that said on the Today show that ‘anyone that bought a house now would be making a big mistake’. Where’s the positivity for the housing market? In fact, he even said that anyone that bought a house then would lose money. That’s a pretty broad statement and of course, Realtors and sellers everywhere got all worked up about it.
The media loves to overstate fact in order to generate some fear. They love to stumble across the financial equivalent of the ’if it bleeds it leads’ statement targeted to get the public to stop and stare. Scared out of their wallets, afraid to make a move. Combined with their love to oversimplify, they start getting dangerous. They love to pretend their audience isn’t intelligent enough to make their own decisions. Instead, they make the decisions for you. That’s not conducive to good investing in housing or otherwise. Most investors know they can’t just buy the stocks that get hyped each day on CNBC. They know they need to dig a little deeper. Sometimes when most people are saying sell, that’s when you need to be buying.
Real estate can be just as complicated as the stock market but thankfully, real estate moves a little slower. There’s a lot more real estate markets and homes out there than all the stocks that Mr. Cramer claims to have in his head. (I think he’s claiming 2000…) Certainly, the opportunities in housing have to exist. I know what and where they are in my area and I’m sure if you work hard enough, you’ll find them in your area too.
Anyway, Cramer was on his show yesterday and mentioned that with the rate cuts, he thinks it could be a good time to buy a house again. Funny part is that, during the time between his first public denunciation of real estate and his recent reprieve, not much has changed in Denver or anywhere else. Just the Fed’s interest rates. Mortgage rates will eventually follow but truth is they weren’t bad three months ago. Some of the outlying areas of Denver will have some issues with the foreclosures, that hasn’t changed. Maybe the only thing that changed is the fact that media feels it needs to put a new twist on the news.
For the most part, the new urbanism movement in Northwest and Southeast Denver has helped those areas of the city through most of the slump. In fact, I pity the people that passed on the home they wanted in these areas based on news that they should be waiting for a better deal. Most buyers are looking for the 20% price reduction that will never come. It’s their loss. I’ve said it before. The rest of the country’s problem isn’t necessarily Denver’s problem. We are not immune from the problems but all the factors that contribute to a strong local economy are still in place. So don’t get worked up when you hear incredibly outlandish statements saying to ‘do this’ or ’don’t do that’. There are always opportunities if you know where to look. I’m sure a sane Jim Cramer would admit to that.
…have you ever noticed Mona Lisa’s wandering eye? Maybe she spotted a deal over the artist’s shoulder.
I’m putting on my armchair economist’s hat today. I’m still amazed that people would get excited enough to buy stocks just because the Federal Reserve announces a rate cut but it happens more times than nought. You would think that a savvy investor would buy a particular stock based off of expected growth of the asset or the strength of the company’s financial statements. What happens when you toss the homework aspect of a purchase aside?
I think the Wall Street adage is, “Bulls make money, Bears make money, Pigs get slaughtered.”
In my opinion there are only three actions a smart trader would take:
Now, I’m not a economist or even a stock market analyst, so don’t get too worked up if you understand this much better than I do. I know this is an oversimplification, but my understanding is that rate cuts are applied when the economy is slowing down. So when the seven economist types that sit on the Federal Reserve Board of Directors get together, and six of them vote to cut rates by a half a point, my take away on that would be some concern that there could be some problems in the short term with the economy. Problems with the economy usually doesn’t bode well for most stocks. At least until the stocks account for the expectations in the stock price. So when I see a rally like I saw at 2 P.M today, I try to think about what the people were actually thinking. The truth is, the people that were buying weren’t really thinking.
Those that were buying, for the most part, were buying based off emotion. That’s pretty dangerous when you’re making a purchase. Whether it’s a stock or a new home, it’s a safe bet that you should only make the purchase if you really understand what’s going on. What is the asset worth? Do I need to buy it now? What’s the advantage of buying right now? If I wait, do I miss an opportunity or will I pick it up next week cheaper? Do your homework. For the stocks today, the simple explanation of it is that everyone expected that there was going to be a 50 basis point cut today. They’ve expected it for weeks. It’s been so expected that it’s already priced into the stocks. So when the Dow Jones Industrial average goes up 226 points without any real basis for it, and especially since the underlying factors actually suggest some negativity in the underlying assets, the smart money that already owned the stock would probably sell, right?
“That’s too expensive.” The words have the sound of an excuse to me. I would respond better to, “That appears to be an inappropriate purchace considering current trends and the inability of the product to add real value to our enterprise within our time constraints.” At least it would show me that they thought it through.
Expensive usually means that something costs a lot. That is a really bad definition.
I remember trying to talk my parents into buying me a pair of Nike shoes way back when. All they saw was the cost. I saw opportunity. The Nike shoes would obviously make me run faster, jump higher and inevitably propel me into an improved social circle. Certainly the $50 price tag might have seemed a little pricey to the untrained observer but as any ten year old could tell you, sometimes you need to “just do it.”
Most children can see the big picture. They see the benefits the product brings to the table at least in terms of the instant gratification they’ll get. They understand how the product will affect the complex social interactions of junior high and why they need to have it now before it is too late. By the time they turn into full grown business managers though, they’ve lost their vision. Adults slowly beat it into your mind that price is the most important thing. “How much money will the purchase take out of your pocket?”
I try to think of it differently. “How much money will the purchase put in my pocket.”
If I spend $200 on marketing that doesn’t bring me any business. That’s expensive.
If I spend $20,000 on marketing that makes my phone ring off the hook, marketing that nets me $100,000 or more, that’s not expensive, that’s shrewd business. A great deal.
Somewhere along the line you need to make assumptions and projections in order to determine if there is going to be a benefit that is worth your investment. Return on investment (ROI) is only a certainty after the fact. There is no certainty but if you can find that childlike vision you used to have, maybe you can get past the price and look for the benefits.
Greg over at Blueroof.com did,
Instead of creating well-designed websites that offer real value to the consumer, agents usually either get a cheap template just to have a website or they pay a technology company (Trulia/Realtor.com/Zillow) for leads. I understand why- it’s a lot easier and much less expensive to build a custom site. Custom websites can cost a lot. I spent well over six figures on BlueRoof.com, and it’s tough to pay that kind of money, especially if you have no experience converting online leads and have no idea what sort of return (if any) on your investment you’ll get. But help is on the way.
… I closed over 100 homes in 2007 from buyers and sellers we met through my website (of course I have a team of buyer’s agent also). These consumers all felt as though they were given value on the website and they used the website and contacted us because of it. If you want a better brand of business and want to build your team and business in 2008, stay tuned in January- when I discuss a new system that I think will offer more value for agents, and more value for the consumer. – Greg at Blueroof.com
That sounds like a deal to me. I look forward to seeing what’s in store.
Have agents made so much money in the past that they need not be concerned with details? Most of the ancillary services offered to Realtors have a common thread. Good enough is good enough.
That’s just the short and local list. The local Realtor associations push their poor quality products down your throat with little or no choice for alternatives. The Denver MLS that we pay for by the minute is incredibly slow. Realtor.com, … I think that says enough. When will there be actual quality services for real estate professionals that just want to focus on their business?