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Waiting at the Check Stand

by Larry D. McGee, Denver Realtor on November 24, 2008

I suspect I share a certain peeve with most folks. You find yourself in need of a “thing”, and you pop on by your local retailer for the “thing”. You navigate through the self-help system, perhaps even receiving assistance from a smiling clerk wearing the appropriate retailer vest. You find the “thing”, and probably a few “things” you weren’t looking for, and make your way to the Disney influenced Check Stand. There you find many other people, with their “things” in hand, waiting in line for the lone, not smiling, checkout person; wearing the appropriate vest of course; overwhelmed by the steady stream of customers with “things” they want to pay for. Let us sum up: the drive to the retailer takes 10 minutes, you spent 10 minutes finding your “thing”, and it takes 30 minutes to actually pay for the “thing”. I have to believe that retailers stay awake at night determining the profit and loss differentials of one checkout clerk verses how many people walk out in frustration, leaving their “thing” behind. On the other hand, I have noticed that few people actually abandon their “thing”. Rather, the whole long line of customers stands there, getting frustrated and sometimes downright angry about having to WAIT TO PAY!

Like I said, a pet peeve.

So, right here in Denver, we have an escrow closing company that makes home buyers wait (and wait, and wait) to check out (close) on their REO purchase. The operation is owned by a legal firm that specializes (surprise) in foreclosure actions for the financial and securities industry (The Bank). (Most likely, there is a similar operation in your neck of the woods.) That same legal bunch also owns a title agency that provides the title insurance on behalf of “The Bank”. Not there is anything really wrong with the legal firm operating this group of businesses in concert, except they have NO concern for the consumer. Zip, nada, none! Knowing that these rather slick operators are lawyers, I am relatively certain that their concern is for their client, “The Bank”, and their job is to close the sale at the least possible cost to the Bank, while protecting “The Bank’s” legal position. From a strictly legal point of view, there is nothing wrong with that position. And, I am pretty sure the position of “The Bank”, transmitted to their agents (lawyers, Realtors®, escrow providers, Et al.), is something like “we got screwed taking this house back, the buyers are getting a great deal, and so who cares if we don’t offer great service”. And most buyers, and their Realtors® and lenders, live with it. And get angry and frustrated at a system that plainly does not care a whit about the guy and gal on “Main Street”, U.S. of A.

Well, that is the problem. “The Banks” made loans they should not have made; to people that really could not afford to buy the houses they bought; so that “The Banks” could realize an inflated profit on the loan. High profit, high risk. And, when the market did what market’s do, they got whacked, along with their “clients”, both the investors and borrowers. Well, maybe sort of whacked. That sound of hooves you hear is the horse carrying everybody’s rich Uncle, riding to the rescue with billions in “bailout” dollars for those selfsame “Banks”. But for crying out loud, put a few more resources at the Check Stand. “The Banks” may want to put a few clerks in front of their present clients, “the borrowers” and figure out how to stop (or at least slow down) the foreclosure virus. And “The Banks”, and all their agents, should be treating the REO buyers like royalty. After all, the buyers are taking the REO’s off “The Banks” books, and giving “The Bank” cash in return. With Uncle Sam underwriting the loss, it occurs to me that the only folks really suffering in frustration are the people on “Main Street”. You know who I mean, the people that got kicked out of their homes by “The Banks”, and the other people that are waiting in line to buy the REO’s from these same “Banks”. Is it any wonder that the American People are frustrated, angry and scared?

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The Real Estate Market

by Larry D. McGee, Denver Realtor on November 15, 2008

We stopped taking the newspaper a few months ago. What I miss most about the daily rag is the comics, which I guess goes to show you just how valuable the daily was in my life. Oddly enough, about the same time, I stopped watching the 10 o’clock news, which is now the “all the time” news, so I am no longer in touch with the talking heads of broadcast media. So, it was a bit unusual that as I was waiting for my plane home after an out of town conference a few days ago, I was idly watching a talking head on a television in the terminal. The talking head was speaking in sad tones about the state of the economy and mentioned in passing the national real estate market having lost XXX trillions of value in the last few years. It suddenly occurred to me that the talking head did not understand the concept of a market, as he was just reading the script. So goes my inspiration for this article.

According to Webster, a market (from the Latin -mercatus), is “a meeting together of people for the purpose of trade by private purchase“. Further, a market is a geographic area of demand for commodities or services. Real Estate is defined as property in buildings or land. So, a “real estate market” is “a meeting together of people in a geographic area for the purposes of purchasing buildings or land“. What the media is constantly referring to as “the real estate market” is really a reference to housing data compiled from thousands of markets to present simple and reportable national averages that can be addressed in 30 or 60 second sound bites.

In the Denver area real estate market, as with most markets nationwide, there are really many “markets”. Certainly there are many geographic markets, with values in neighborhoods such as Washington Park remaining steady, and values in Green Valley Ranch plummeting due to excessive foreclosures.There are new development projects such as The Landmark in Greenwood Village that are selling as fast as the builder can finish them, and other new home projects that are not selling at all. There are also markets stratified by price. Today, in Metro Denver, the price bracket of $100,000 to $200,000 is actually a sellers market, with multiple offers presented on some properties, and sales well over asking price on many bank owned homes. However, there is a glut of million dollar plus homes, with sales slowed to the level of watching grass grow.

And the “real estate market” is very dependent on another market, the “monetary” or “credit” market. With the worldwide money market in complete disarray, the housing market, as well as every other market, is captive to the lack of available credit.

The “real estate market” is much too individually specific, much to complicated, and much to local to accept what the talking heads are spewing on the nightly news. If you have need to buy or sell real property, you must take time to understand the market as it applies to your specific needs. You might want to spend time with a knowledgeable Realtor® and have an extended conversation about how your specific needs relate to the “market”.

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Raining on the Parade

by Larry D. McGee, Denver Realtor on October 17, 2008

Along with many other Denver area residents I have enjoyed visiting the annual Parade of Homes, supported by the Home Builders Association of Metro Denver. As a Realtor®, I am of course professionally interested in the products, styles, and vision offered by some of the areas best custom home builders. Therefore I noted with interest the announcement in today’s newspaper of the 2009 Parade of Homes. The 2009 event will be held at McKay Shores, a high end development in Broomfield, a suburb northwest of Denver. Home prices from 1 million to 1.5 million, down somewhat from recent years. Reading the announcement led me to a curiosity moment. Knowing that million dollar plus homes are not flying off the shelves, I looked at the sales of homes in the 2007 and 2008 Parade of Homes, and then at the current available inventory of similarly priced homes.

Oops!

It appears that the very cool, extremely well designed and well built custom homes showcased in both the 2007 and 2008 Parades are not selling well. Some of the 2007 homes are now owned by the banks that financed them, and I am told that showing activity on the 2008 Parade is very slow. Seems we like to look, but do not (or cannot) want to buy.

There are 1,940 homes for sale in Metropolitan Denver priced between 1 and 3 million, the recent target prices for the Parade homes. 38 such homes sold in the past 30 days. That amount of inventory divided by that amount of sales indicates a 4.25 year supply of homes in the 1 to 3 million price range.

A much as I enjoy visiting new million dollar homes, I must question the wisdom of next years Parade. What banks are going to finance the construction, especially in light of sales at the past 2 events? Which builders really want to showcase their product, risking the embarrassment of their best not selling?

Why?

While it is probably too late to alter the 2009 event, I respectfully offer a thought on future events. Build really nice showcase products that are obtainable by the above average buyer. Make them very functional, use the best products, make them green and energy efficient. 2000 to 3000 well designed square feet, with space for 2 cars and some toys (and a plug for electric cars). With a four year supply of million dollar homes, the building community may need to rethink.

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LoHi Home Tour this Sunday!

by Kimberly Beethe on September 19, 2008

Join us on Sunday, September 21st from 12:00 to 5:00 for a neighborhood open house tour featuring some of the areas most exciting new developments!  Each site will have food, drinks and the opportunity to tour each project. You have the opportunity to visit 16 different new contruction projects in the Lower Highlands (LoHi) and Jefferson Park neighborhoods.  A few of these are “hardhat tours” so be sure to wear your comfy shoes! The tour will conclude at Pasquini’s (32nd and Zuni) where prizes to local restaurants will be auctioned off and just in case you didn’t fill up during the tour, you can sample some of their wonderful pizza!

Participating developments include;

3131 Zuni, 3505 Osage, 3650 Osage, Confluence Heights, Flats 15, Highland Bridge Lofts, Highland Views, HiVu29, Jefferson Park Townhomes, LoHi Lofts, Q36, Q-Mod, RiverClay, Sprocket on Wyandot, Shoshone Heights and the Wyandot Townhomes.

This open house tour is for neighbors, buyers, brokers, and anyone else that is interested in learning more about new construction projects in the LoHi neighborhood.

Please feel free to contact me if you have any questions and I hope to see you all on Sunday!

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BEWARE! Investing Rip-Off!

by Larry D. McGee, Denver Realtor on September 9, 2008

I received a request from a local attorney on Thursday to investigate a property purchased by a potential client of the attorney. The attorney had received a call from a nice lady living in another state concerned that the incredible investment she purchased in a Metro Denver suburb might be a problem.

The nice lady was receiving advice from a web based investment club, and made the purchase through a local affiliate of the investment club. The local affiliate employed Colorado real estate licensee’s. The claim made on the web site was that this property could be purchased way under market value, creating “instant” equity, and that a lease would be executed creating monthly “cash flow”. The nice lady bought the property site unseen.

P.T. Barnum was quoted as saying “There’s a sucker born every minute”. The World Wide Web has just provided a great new way to fleece the gullible, especially those looking for the fabled “great deal”.

The truly amazing thing about these so called “investment clubs” is their ability to convince otherwise smart people to buy property sight unseen using the internet. The advice from these “club” leaders is that they don’t need Realtors, because a Realtors fee just runs the price up. Some people, when offered the “great deal”, seem to go silly, and seldom seek a second opinion. Gotta grab the deal while it’s hot, can’t wait, or some other sucker will get there first.

People will believe what they want to believe, so I suspect nothing I am writing here will stop the stampede of suckers looking for a deal, but perhaps if I could save one or two people from acting stupid, it’s worth my time to write this, so please consider:

1. Do not buy an “investment property” sight unseen. In the situation presented above, the nice lady bought a really pretty home backing to a busy street that will get busier. Busy streets negatively affect value. Not to mention the 5 foreclosed properties down the street.

2. Always get a second opinion. If nothing else, contact an independent appraiser and pay a fee for a unbiased opinion. $400.00 may save you thousands of dollars.

3. If you are buying sight unseen, have the contract reviewed by an attorney. That may be good advice in many real estate transactions anyway.

4. Make sure you have escape clauses in the contract. Perform “due diligence” during the alloted time.

5. Do not obtain an “owner occupied loan” to buy an investment property. That is known as loan fraud. Participants in a loan fraud can look forward to spending time as a guest of the United States in a B&B in Leavenworth, KS. Many times, to create “cash flow”, the happy investment club lender will create an owner occupied loan on a non-owner occupied property.

6. There are 15,000 Realtors in the Metro Denver area. I suspect there are large numbers of Realtors in your neck of the woods. Every one of those Realtors are looking for a deal, either for themselves, or their investor clients. Why does anyone think that there a “secret” good deals? There aren’t.

A savvy investor can do very well buying real estate. There are no “secret” formulas or super deals. Money is made in real estate today just like it has always been made: Slowly, by people who really take the time to understand the local market and the property they are buying.

I know, you have heard all those testimonials from “investors” that have done really well. OK, understand that there really are a few great deals. They are almost always made by people that have taken the time to really understand the local market. (There is also dumb luck.) There are also “shills” chanting the incredible opportunity offered by the “investment club”. If it sounds too good to be true, take 5 steps back and slow down.

The nice lady noted above was taken advantage of by unscrupulous people that search for nice people that want to believe in the “great deal”. There really is no free lunch.

Lastly. are there good investment clubs? Of course. Any club, individual or company that is operating in an honest and ethical manner will provide verifiable information so a prospect can perform independent due diligence. Don’t be in a hurry, there will always be a deal out there tomorrow.

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content

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