It’s spring. Don’t do this.
Monthly Archive for May, 2009
At least that’s what one real estate couple, Melinda and Scott Tamkins believe.
A Las Vegas real estate agent named Melinda mysteriously dies. Mortgage broker husband, Scott, is the key suspect in the case. Oh, and did I forget to mention that shady husband Scott is also a heavy drinker and an aficionado of porn and S & M?
Does this sound like something you’d see on TV or what? It should, because it is. In fact, this storyline played out on a recent episode of CSI, and Southern California real estate agents Melissa and Scott Tamkin believe that these characters so closely resemble them, that this episode has hurt their business (even more than the downard spiraling economy has). In fact, they are suing CSI writer/producer Sarah Goldfingerfor $6 million in damages claiming defamation of character and invasion of privacy. The CSI characters reportedly bear a resemblance to the real-life couple, and the characters’ original last name was Tamkin, until the scrip was later revised.
Could these claims be true? Here are the known clues: In 2005, writer Goldfinger entered into a real estate transaction to purchase a home listed by the Tamkins. The purchase was never completed, as Goldfinger pulled out of escrow, reportedly on amicable terms. You decide. Whatever the facts of this case ultimately are, it’s clear that the Tamkins believe that their impression on former client Goldfinger was big enough to manifest itself nearly five years later.
It seems ludicrous to me that prior to the lawsuit, the vast majority of people never would’ve related this one CSI episode to this couple, but now, even I (a person who’d never heard of the Tamkins before) make the association. Could a brief transaction really have such an impact this far down the road? I think back to all the real estate agents I have know, and yes, indeed, there are a few that stand out. There are a few that stand out as heroic in my mind (and remain good friends to the day), and yes, there are a few that are worthy of their own Dateline story. Either way, it goes to show that transactions that involve hearts, minds, and homes can stay with you long after the paperwork is filed.
A recent poll of economists concludes that the recession will end by the end of the year, according to NPR. Since there is no trigger of growth, however, the economy will remain sluggish well into 2010. What do you think is going to be the leading industry that will take us out of the recession?
Read more about it here.
Here we are at the end of May, enjoying one of the biggest slumps in housing since the Depression. Hope everybody had a great weekend!
Among the blooming flowers and singing birds have been the last gasp of heavy layoffs and an expected drop in home values, but Torsten Slok from New York City’s Deutsche Bank is saying the drop has “improved affordability and…is key to the housing market’s recovery.”
As my angry old neighbor tells me weekly, “common sense is universal.” Let’s follow his lead and start smiling about this increasingly afforable market. Heck, in my neck of the woods, rent has dropped to the point where Manhattan is…affordable! That’s right: those of us who are still employed can actually live remotely close to where we work! Huzzah!
Similarly, reasonably priced condos are abound. Combined with low interest rates and a decent credit score, those among the employed can enjoy the kind of bargains that might just bring us back to normal by next spring.
Patience, Grasshopper.
When is an up-and-coming neighborhood truly coming up, and when is it all just hype?
I asked myself this question last weekend, while touring open houses in a working-class neighborhood of Boston that has recently been touted as the next great thing in real estate investment. East Boston, in fact, has gained so much attention that it even got a write-up in the London Financial Times .
“It’s a cool little neighborhood, full of young, hard-working, motivated people from diverse backgrounds, great for entry-level buyers and you can get a house with some good appreciation,” said one realtor quoted in the Financial Times article.
The main attraction for Eastie, as the neighborhood is affectionately called by its residents, is it’s cheapness combined with water views and proximity to downtown Boston. The disadvantages of the neighborhood are not few, and include its relative isolation (East Boston is separated from downtown by water. In order to get downtown or any other part of Boston, you must take the subway or drive through a long, tolled tunnel). Other disadvantages include the neighborhoods’s proximity to the noisy comings and goings of jumbo jets at Logan Airport, as well as hardscrabble housing stock with small rooms, low ceilings and non-existent yards.
So is the real estate buzz in East Boston and neighborhoods like it, real? Or is it just hype?
Here’s my take: Neighborhoods appreciate in value when there is something of value in the neighborhood to appreciate. That explains why abandoned but still elegant brick rowhouses in Boston’s South End were eventually reclaimed and rehabilitated and why the Back Bay, with its gracious brownstone mansions, has always been a pricey place to live. If a neighborhood is ever to become “hot,” in my opinion, it has to have:
1) Great housing stock that has been ignored or neglected. This means well-built stylish homes, with high ceilings, big windows, architectural detail or some other overwhelmingly appealing feature.
2) Accessibility — in all forms, from public and private transit to walking and biking. Accessibility is especially important in areas where the housing stock is not particularly attractive. For example, many areas of Cambridge and Boston’s North End are filled with tiny little walk-ups in so-so buildings, but both areas have proven sound real estate investments and “hot” neighborhoods to live because they are easily accessible by subway, car, bike, or foot.
That’s it. If the area doesn’t have these two factors in place, in my book, it will never be the next great real estate investment. East Boston, charming as it may be, doesn’t have these things.
And what about the up-and-coming neighborhood that you’re thinking of buying into?
Watching Corporation the second time around made me wince a little when I read this article, where REIT holders are wincing at what now seems to be the dumbest real estate/business structure ever: owning what you have. Similar corporations like Walgreens and Sears are keeping stockholders happy with an apparently successful structure, where they own about 20% of their real estate. It seems that owning your big-box store just isn’t the investment it used to be.
Target seems to be ready to restructure the Target REIT to make it a little more er, profitable for stockholders. Something that’s tough to do these days, regardless of the sinking pit that commercial real estate is in. “Lease” is the new operative word, and everyone is jumping on board.
The age old debate of which came first, the chicken or the egg, has never been actually decided. And in the real estate market, I’ve always wondered, what comes first, the purchases or the press? (Today, I guess it really doesn’t matter — I just hope they continue to feed off each other until we’re out of this festering economic mess. )
Case in point. The most recent headlines tell us that things are on the mend, and it’s occurring across the nation. In Orlando, there is a surge in sales of lower priced homes, in Santa Clara, April stats showed an increase in activity, and in Fort Worth, signs of healing are starting to show. Of course, some areas are still slow to pick up, but there is hope that they simply lag behind. For example, in Oneida County, New York, sales are still down, but spirits are high.
Keep it coming. Keep it coming, press people. Focus on the positives and let’s hope that we can create a bandwagon that potential homebuyers will be eager to jump on to. It seems that new buyers are finally taking the plunge. Momentum provided by a perfect storm of big tax credits, ultra low interest rates, motivated sellers and inventory extraordinaire are causing lower priced condos and houses to actually sell again.
Is this enough to call it over? Probably not, but it is certainly a good first step, and an upturn in the real estate market is likely to generate some momentum that can potentially affect other key economic indicators, including the job market, the stock market, retail sales and travel and tourism. I for one, am quite happy to see that this new media attitude and regardless of whether the purchases or the press came first — keep it moving, people!
Start searching for a home, and the first thing you’ll hear from your realtor is how you should get a pre-approval letter from a bank.
The pre-approval letter is supposed to tell you and the seller of a home that a bank would be willing to lend up to a certain amount on the purchase of a home. More than just a pre-qualifying letter (which can usually be handled in about a five-minute phone conversation with your lender), a pre-approval letter goes an extra step. The bank will actually ask for documentation confirming your employment and the source of your down payment, along with other aspects of your financial circumstances. In a pre-qualification letter, the bank mostly just accepts whatever you tell them.
Now lets be honest. Pre-approval letters are mostly for the benefit of realtors. Realtors feel better showing homes to clients with pre-approval letters because they feel less like they’re wasting their time. Banks, however, make no guarantees, and by now, both buyers and sellers know that. Just because a buyer may have a piece of paper stating they are “pre-approved” does not mean he or she will necessarily get financing once an offer has been made and accepted. In fact, after a diligent search, one couple I know was denied financing for a home — even though they had received a pre-approval letter from the bank just a few weeks earlier. Nothing in their circumstances had changed.
How can you make a pre-approval letter actually mean something? You can’t really. But you can try to have your letter written in such a way that you’ll obtain the best price for any home you’re making an offer on. Here’s what the strategists say:
1) Have the pre-approval letter match your offering price and not more. If a seller sees you are approved to offer more, they may reject your offer and hold out for a higher bid.
2) Try submitting a “low” low-ball offer along with a preapproval letter for a slightly higher amount. The amount in your preapproval is your “real” low-ball price. The seller will likely counter with your maximum price, which is really what you were aiming for in the first place. If you’re lucky, the seller may even accept your originial lowball offer.
3) Get your preapproval letter from a recognized local lender. Both listing agents and sellers will feel more comfortable with a trusted lender, rather than a fly-by-night online or long-distance operation that may change the terms of the loan, threatening the deal altogether.
4) Try having your preapproval letter state that you are preapproved to buy a certain house, rather than a certain amount. In other words, you are preapproved to buy 1 Oak Lane, MSL # xxxxx. According to some realtors, this implies that you have been approved to pay full asking price, but still provides for more flexibility during negotiations.
Fact: the Federal Reserve just extended the Term Asset-Backed Security Loans Facility, otherwise known as TALF, to include commercial mortgage-backed securities as collateral. The length of the TALF program is also extended from three to five years.
Repercussion: The Real Estate Roundtable is ecstatic about the potential for a more liquid market. This will help prevent otherwise inevitable loan defaults, and help sell “distressed properties,” according to the AP.
This also means that securities will be owned by smaller numbers of investors, and they will most likely be overseas.
It’s clear that this will stimulate the market for the short-term, but isn’t it the structured investment vehicles like this that got us into a mortgage mess in the first place? Are we creating another investment bubble that could burst down the road?
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