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Wednesday, September 29, 2010

Bad Behavior Uptown

"Don't Mind Me"

I really don't care if you talk on your cell phone within my earshot in public (trust me, you're not that interesting).

And I don't necessarily lose it when you dawdle using the ATM while I'm standing behind you.

But -- and here's the part that seems self-evident -- if you're going to tie up the ATM machine while there's a line(!!), you may just want to delay taking that cell phone call.

I and two other people got treated to this exceptionally boorish behavior at an Uptown ATM earlier today.

(Try this in a less patient, "Minnesota-Nice" city than Minneapolis and you'll get more than cold stares.)

Price - Terms = Price

The Factor in Selling a Home Today

If you have a choice between price and terms . . pick terms.

--famous real estate line

Once upon a time, when mortgage rates were in the stratosphere, "terms" -- specifically, financing terms, if the Seller was providing it -- were everything in real estate deals.

Fast forward to today's environment of free money (for banks) and very, very cheap money (for home Buyers with decent credit).

Once a listed home is well-staged, photographed, and otherwise well-marketed . . . the only factor that's left is price (that insight per City Lakes Office Manager Josh Kaplan).

Oliver Stone's Last Movie

Review, "Wall Street: Money Never Sleeps"

I went to see Oliver Stone's last film the other night.

And by that, I don't mean his most recent film -- I literally mean, the last film he is likely to make (at least with a big studio budget, at least for a long while).

That's because it was wretchedly bad.

So bad that, even with a subject near and dear to my heart, Wall Street, and a clutch of great actors (Frank Langella, Susan Sarandon, Josh Brolin, Eli Wallach), I couldn't stomach more than 30 minutes or so.

So I didn't, and left (but not before catching Stone in one of his uncredited cameos, though).

Coming on the heels of such disappointments as "Alexander" and "W," you'd guess it's at least awhile before Stone gets bankrolled again.

New Linden Hills Co-op

In a Word: 'More'

Want a one word summary for the new Linden Hills Co-op that just opened near 44th and France, about six blocks west of the old location?

"More."

As in, more floor space (I'd guess at least double); more parking; more deli space and prepared foods; more eat-in dining tables for enjoying all those prepared foods, etc.

Twin Cities' Most Expensive Salad Bar?

And, at least for some items, more money: at $8.99 per pound, the Co-op's salad bar out-does even Whole Foods.

Tempering the sticker shock somewhat: great specials on selected items like Muir Glen Pasta Sauce ($2.50, vs. $4-plus regularly), as well as $5 coupons every two months for members.

Given the high quality (if expensive) food and produce, and the new, more accessible location, the Co-op can expect lots more members.

Making Good Use of the Metrodome

"Grapefruit League North"

Anyone know what's going on with/at the Metrodome?

Except for Vikings games every other Sunday in the Fall -- plus the occasional "Monster Jam," pictured above -- my impression is that it's idle.

I also seem to recall something about taxpayers forking out most of the cost, once upon a time (like, 1981).

Assuming that, due to the economy, redevelopment plans for the site are progressing slowly -- if not completely on the back burner at the moment -- how about getting some use out of what is still a very serviceable, if functionally obsolete, building?

Specifically, let high school baseball and football teams make use of it.

"Grapefruit League North"

What the Metrodome lacks in luxury suites, it more than compensates for in raw, covered indoor space -- space that's at a premium in the Twin Cities during the winter months.

Meanwhile, there must be tens of thousands of Minnesota kids (mine's one) who, somehow, just aren't that into ice hockey, basketball, skiing and the like.

Instead of consigning them (and their parents) to long, winter evenings and weekends in basements playing wii, the Metrodome would seem to be a perfect venue.

I even have a name: 'Grapefruit League North,' a takeoff on baseball's spring training league in Florida.

I have no idea what lights and security for the building cost, but, speaking only for my 10 year-old, as long as he doesn't have to wear mittens, it'll be just fine (and a lot warmer than whatever the temperature is outside!).

P.S.: The stadium's original namesake, Hubert Humphrey, no doubt would have approved of such a plan. The now mostly dark stadium would also make a helluva part-time food shelter, which I hear have some overcrowding issues these days.

P.P.S.: Did I miss when the stadium was re-christened "Mall of America Metrodome," apparently its new name?

Tuesday, September 28, 2010

"Brick Wick"

Masonry Construction Techniques

I first noticed it on a Hopkins townhome I sold this Summer.

Then I noticed it -- in all places -- at a Costco gas station.

"It" was what looked like a piece of rope (actually, several of them) protruding from the masonry (and no, it's not really visible in the photo at right).

The explanation?

The "rope" serves as a wick that dissipates any accumulated moisture in the walls.

Monday, September 27, 2010

"You Don't Need a Realtor if . . ."

"Would You Take . . .?"

In the spirit of Jeff Foxworthy's "You might be a redneck if . . ." string of jokes (sample: 'you've been married 3 times and still have the same in-law's'), I offer up the Realtor equivalent:

You don't need a Realtor if . . . you want to go around verbally offering Sellers 50% on the dollar -- or less -- for their homes.

I don't believe that that's common in the land of Minnesota Nice, but I am hearing about and running into it.

In my experience, such offers are non-starters (see, "The Mulligan Market"), and take as much time to reject as the would-be Buyer put into making them.

And if the Buyer really is serious -- a big "if" -- starting out with an insultingly low offer is almost always a mistake.

Glass Sinks

Fingerprint Magnet?

No, I don't think it's a trend -- I just saw a home with a glass sink and vanity (like the one pictured at right) for the first time today.

And I don't think it will appeal to many families with kids, who already have enough surfaces with fingerprints on them now (fridges, doorknobs, windows, Kitchen counter tops, etc. -- and, if they're unlucky -- bedspreads, clothes . . . and other kids).

However, in the right context, it is impressive.

What context is that?

A high-end, Contemporary home trying to make a smallish bathroom seem bigger -- and show off the beautiful tile wall and back splash.

What's Selling . . . Fern Hill

Where: 2537 Joppa, in St. Louis Park's Fern Hill neighborhood, 2 blocks west of Cedar Lake.
What: 1 1/2 story home built in 1950 with almost 2,000 finished square feet.
How (much): listed for $285,000
When: market time = 2 weeks (listed August 27); scheduled to close Oct. 15 (currently "Pending" on MLS)
Who: sold by Ross Kaplan, Edina Realty City Lakes; co-listed by Linda Platt and Jonathan Spar, Edina Realty

How did this 1950, 1 1/2 story two blocks from Cedar Lake sell in two weeks?

For starters, it helped that it was . . . two blocks from Cedar Lake.

So did an attractive list price, $285,000, that discounted for needed updating -- and then some.

Plus nice curb appeal, a .24 acre lot, and an especially open Living and Dining Room with huge picture windows (pictured above).

Other Factors

So what about the tax assessed value, $404,400?

That certainly didn't hurt the Buyer's perception of value.

However, as I've blogged previously ("Selling Price as % of Tax Assessed Value"), the tax value can be artificially high, especially when it's been years -- or decades -- since the home has changed hands (as was the case here -- the Seller bought the home in 1975 . . . for $46,000!).

Sunday, September 26, 2010

"Enhanced" vs. Real Photos

How to Tell

How do you tell if a photo on MLS has been doctored (er, "enhanced")?

Look for a room that appears to be only slightly smaller than the SuperDome.

Then, check the room dimensions.

If they're something like 12' x 10' -- you've got a culprit (the stately, 25' x 18' Bedroom pictured above is the real thing).

Jonathan Franzen's "Freedom"

Reviewing the Reviewers

You can hardly fancy yourself a "serious social commentator" -- and what self-respecting blogger doesn't? -- unless you take a crack at reviewing Jonathan Franzen's epic new novel, "Freedom."

Which, of course, first requires that you actually read the almost-600 page thing -- no small undertaking.

Before getting to my review, though, I thought it more interesting to review the reviewers.

I've now read three: The New York Times Book Review; David Brooks, from The New York Times Op-Ed page (detect a theme?); and B.R. Meyers in The Atlantic.

In order, they have pronounced "Freedom": 'a masterpiece of American literature'; 'a flawed masterpiece'; and, simply, "flawed."

Anything that inspires such divergent, Rashomon-esque commentary is, at the very least, curiousity-inspiring, and worthy of deeper examination.

It's also telling that the last two reviewers, Rorschach-like, home in on what they think the book is missing ("ambition"), then proceed to expend not a little energy delving into what they wished it addressed, i.e., remedies for the cultural ennui Freedom brilliantly limns (read the book, and you too, will be taking out your dictionary).

Provocative, perhaps, but not exactly great (or very fair) literary criticism -- sort of like a food critic pronouncing the chocolate souffle "exquisite," but then lamenting it doesn't taste more like cherry pie.

More about the actual book to come.

For now, suffice to say that, fresh off completing it, it's impossible to go to a University of Minnesota football game -- as I did last night -- and not scan the crowd looking for "Patty-lookalikes" (one of the story's main characters, in a book with a major Minnesota connection).

Saturday, September 25, 2010

"The Mulligan Market"

Disregarding Buyers' First Offer

Mulligan (ˈmə-li-gən):
a free shot sometimes given a golfer in informal play when the previous shot was poorly played.

So, I think I've got a good name for today's housing market: 'The Mulligan Market.'

That's because so many deals these days start out with the Buyer making an insultingly poor (out-of-bounds?) offer, simply because they believe that: a) housing prices are softer than they really are; and b) every Seller is desperate.

Once Buyers discover otherwise, if they're serious, they typically return to the table with their second, "new-and-improved" offer . . . and negotiations can commence for real.

(The trick for Sellers confronting such Buyers is not to overreact to their first, unrealistic offer.)

"Landlords Have the Upper Hand. No, Renters Do"

So Which Is It?

One side effect of a market flooded with both sales and rentals is that renters are gaining clout when it comes to negotiating, just as buyers have.

--"As Sales Slump, Rental Stock Rises"; The New York Times (9/25/2010)

To the chagrin of many renters . . . the balance of power in the rental market has tipped back toward landlords — if not far enough for landlords to start celebrating quite yet.

--"Landlords Are Back in Control"; The New York Times (9/25/2010)


Want evidence that "all real estate is local?"

Look no further than the real estate section of today's New York Times.

The lead story proclaims that the rental market has surprisingly tightened, giving landlords more leverage; scarcely an inch further down the page (I get 99% of my news online), the same newspaper(less?) observes that the "rental market is flooded."

The explanation?

One article is discussing Manhattan, the other residential New Jersey.

P.S.: Variability in market demand by area and even neighborhood characterizes the Twin Cities, too.

Friday, September 24, 2010

"Last Chance! Don't Miss Out on the $1,500 Tax Credit!"

Overpaying $3,000
to Get Back $1,500?

I fielded a call this week from a client -- her mailbox filled with flyers touting the expiring $1,500 tax credit -- asking how much a forced air furnace should cost to heat her 1,700 square foot townhome.

My answer: anywhere from $3,500 to $4,500, depending on the make, capacity, and number of "bells and whistles."

Which is interesting, because the vendor she called -- in response to their ad pushing the $1,500 credit -- quoted her about $8,000.

I don't know that other vendors are doing this, but as always, it pays to shop around, and get multiple quotes.

Crying Wolf

Aside from the occasional overcharging contractor, vendors who've been bombarding the public with "Last Chance" ads have, I suspect, a "crying wolf" problem: even though the credit really does expire on December 31, they've been pushing the credit's "imminent" expiration for the better part of two years now (in other words, ever since it was enacted).

It's also the case that the federal tax credit is "up to $1,500"; if you read the fine print, it's actually 30% of the total outlay.

So, if you spend $4,000 on qualifying windows, a new furnace, etc., the total credit would be $1,200.

Define, "Everything"

"This Home Has Everything" -- Really?

The pitch for the Broker Open (earlier this week) was certainly alluring: 'Beautiful Cape Cod, Absolute Move-in Condition; this home has everything!'

In fact, the home did have a long list of nice features, updates, etc.

But "everything?"

Not unless you consider a one-car garage -- disclosed a little further down -- to be an amenity (most Buyers decidedly don't).

What's Selling . . . Fern Hill

From Dowager to Belle of the Ball

Where: 2820 Huntington Ave. South, in St. Louis Park's Fern Hill neighborhood
What: top-to-bottom renovation of what had formerly been a 1 1/2 story home with less than 2,000 FSF
When: listed August 6; closed Sept. 20.
How (much): asking price = $859,900; sold price = $840k (purchased last Winter for $390,000).
Who: listed by Mike Sward, Edina Realty City Lakes

Talk about leap frog: what had been the dowager of this pretty block in Fern Hill is now the belle of the ball.

You name it, they did it: dramatically opened up space (see, "What do you do with dead space?"); four all new baths; a spectacular new Kitchen; a widened, 2 car garage in place of the original one car; 3 new dormers; a brand, new lower level with 1,700(!) finished square feet (and over 4,500 total in the re-done home); and a new mud room.

And on and on.

The result?

A quick sale (after about a month of market time) for virtually full price, followed by an even quicker closer (one week).

What do you do with dead space?

(Knowing When to) Open it Up

What do you with a space, like the one pictured above, that feels claustrophobic and cut off from the rest of the home?

Open it up.

So, what was once a seldom-used Den -- technically, a legal Bedroom -- is now annexed to the sweeping, new Living Room.

In place of the confining walls are handsome columns that double as structural support.

The makeover was part of a top-to-bottom, 5 month transformation at 2820 Huntington, in St. Louis Park's Fern Hill neighborhood (see, "What's Selling . . . Fern Hill").

Thursday, September 23, 2010

"The Jack-O-Lantern House"

Is it Halloween Yet?

I'm a big fan of dramatically lit homes.

And with the seasonal change, we're heading into ever-shorter Fall days.

And yet, the technique doesn't work all the time -- and can even backfire: especially for smaller homes, interior lighting at night can produce an (unhelpful) "Jack-o-Lantern effect."

The (kind of) scientific explanation?

The ratio of (orange) interior lights to (white) exterior is lopsided in a small house with lots of windows, making it seem like a back lit pumpkin.

A back lit pumpkin, of course, is the reverse combination, i.e., interior white and exterior orange (dyslexia helps with that one).

Minds in the Gutter

"NYC Stoops and Horse Manure"

Many suspect it, but I have definitive proof that people's minds really are in the gutter.

Literally.

In almost 2,000 posts over 3 years covering everything from Twin Cities real estate to Federal Reserve monetary policy to geothermal energy, the City Lakes blog post getting the most attention on Google at the moment is this one: 'Manhattan Stoops and Horse Manure.'

The post, discussing an anecdote from the book SuperFreakonomics, is ranked #1 on Google for that (admittedly unusual) search query.

Try it.

(Odder still: the last flurry of hits on the City Lakes blog looking for those key words were all from Poland, about 6 a.m. Central earlier today.)

Wednesday, September 22, 2010

25 Minutes to Rochester, 50 to Duluth??

Bullet Trains . . . in Minnesota

How can you compete with a country that is run like a company?

--Thomas L. Friedman, "Too Many Hamburgers?"; The New York Times (9/22/2010)

I suppose that depends on whether the country in question is run like Costco -- or Citigroup.

In fact, Friedman makes a number of trenchant juxtapositions between China's state-of-the-art infrastructure and the U.S.'s decaying one, starting with those bullet trains.

So, how long would it take to get from the Twin Cities to Rochester and Duluth if we had a couple of those babies?

Try, 25 minutes and 50 minutes, respectively.

A bullet train to Rochester would cement Minnesota's world reputation for all things medical, and turn the Twin Cities' airport into a gateway to the Mayo Clinic.

A bullet train to Duluth would make the North Shore a major tourist destination, and do wonders for that city's economy.

Funding

But wouldn't that cost billions?

And where would it come from?

Why not the same place Boston got $25 billion to bury 2 miles of waterfront freeway? (in a just-completed project called "The Big Dig").

And what convenient timing, given that we're supposedly looking for worthwhile infrastructure projects to stimulate the economy.

P.S.: Given the politics, a Twin Cities-Chicago bullet train is probably more realistic, because two more states' political delegations could help do the heavy lifting.

Spiking the Ball . . . on the 2 Yard Line

Q: When Doesn't "Sold" Mean "Sold?"

Answer: when it means "Pending" (as, when it's in front of a home that's for sale).

Huh?

At least in Minnesota, once the Buyer's Inspection has been removed, the convention is to switch a home's status from "Active" to "Pending" on MLS, and to put a "Sold" rider on top of the "For Sale" sign in front of the home.

That's the case even though the home hasn't closed yet -- and the Buyer's loan most likely hasn't been finally underwritten (or even successfully appraised!).

Of course, that's in addition to any title work still to be done, as well as any other outstanding conditions that the Buyer and Seller may have contractually agreed -- or be subject -- to (repairs, obtaining a municipal inspection certificate, etc.).

Isn't declaring such a home "Sold" like spiking the ball on the 2 yard line?

Explanation/Rationale

It can be.

However, once any Inspection issues have been resolved, the odds of a deal closing go up dramatically; from experience, I'd peg the odds at anywhere from 80% to 98%.

Why the range?

If it's a cash deal and the Buyer is richer than Croesus . . . it's virtually a done deal.

However, especially if the Comp's are thin and the sales price lacks recent, nearby precedent, the risk of an appraisal issue goes up.

Too, if the Buyer works for a company that's been hit by the recession, or is otherwise vulnerable to layoffs, there's the added risk that the Buyer will lose their job before closing (or otherwise suffer a major hit to their "creditworthiness").

Less likely, but still within the realm of possibility, are such things as Buyer health issues, an unexpected job relocation, major damage to the home (fire or weather-related) -- or even a simple change of heart (and mind).

"Pending" vs. "Closed"

So, to repeat, why not put up a sign that says "Pending" rather than "Closed" -- or remove the "For Sale" sign altogether?

My take is that it's a mix of the following reasons:

--Psychologically, putting up "Sold" helps cement the Buyer's commitment (see, "change of heart").

--"Sold" better tells prospective Buyers that the house is spoken for, and not to bother the homeowner.

--Marketing exigencies. Whereas "Pending" sounds equivocal and gray, "Sold" is strong and declarative.

Too, because there is a risk that the house won't close, it's premature to remove the sign.

However, once the risk of not closing is effectively zero, i.e., the Seller has been paid, title has transferred to the new owner, and the "For Sale" is removed . . . there's nothing to attach "Sold" to.

Tuesday, September 21, 2010

"Insider Buying" & the Housing Market

The Housing Market's
Flashing Green "Buy" Signal

In the stock market, open market purchases of company stock by senior management ("insiders") is considered to be bullish.

After all, executives may sell stock for many reasons -- to diversify, to raise money for things like real estate purchases, college tuition, etc.

Presumably, however, there's only one reason insiders buy: they think their company's stock is going to go up.

Is there anything analogous in the housing market?

Housing Market "Insiders"

There is, kind of: Realtors.

Of course, unlike senior executives who now receive much of their compensation in stock, Realtors do not get paid in houses.

However, Realtors are still the closest thing the housing market has to corporate insiders.

After all, they're the ones who are in the trenches every day, representing Buyers and Sellers, noting which way prices are going, prospecting for new listings, potential Buyers, etc.

And presumably, knowing when something's a deal.

Contrarian Indicator

So, is it a "buy" signal when Realtors start buying homes as investments?

On the contrary, such activity is more typically associated with a market top.

That's because to buy, Realtors need not only the requisite incentive, but the wherewithal.

When are Realtors are flushest?

When prices are appreciating strongly and there are lots of transactions.

Conversely, when the housing market is slow, and prices are soft (or declining), Realtors' income collectively takes a big hit.

In a tough housing market, just paying the bills becomes a challenge -- forget about socking away money for retirement (or buying that languishing bungalow at a fire sale price, fixing it up, and flipping it).

Guess which environment we're in now??

P.S.: moderating the foregoing cycles a bit: the number of practicing Realtors.

In boom times, the number expands, meaning the total commission pie is divvied up more ways. Too, more homes sellers are tempted to sell homes without using a realtor (called "For Sale by Owner," or "FSBO").

In lean times, FSBO's disappear and Realtor ranks decline, making it (relatively) easier to eke out a living.

What's Selling . . . East Edina

Where: 4617 Tower St.
What: 5 BR/5 Bath new construction by Elevation (division of Streeter)
How much: $1.2 million asking price
When: sold in one day earlier this month (with more buyers reportedly waiting in the wings).
Who: listed by Marian Peterson and Noelle Varecka of Edina Realty

It's not hard to tell what the Buyer liked about this home: an exceptionally open, flowing floor plan; a state-of-the-art Kitchen; and wide halls, tall ceilings and oversize windows that make the actual square footage (just under 4,400 FSF) feel even bigger -- all on a big (.25 acre) lot.

The East Edina location, east of Highway 100 and south of Country Club, is attracting lots of attention from builders and remodelers because of the combination of large lots and older, modestly-sized (and priced) existing housing stock.

The Bridge to Somewhere

Highway 7/Wooddale Avenue Interchange

To frustrated motorists, it's an all-too familiar scene: miles of closed-off roadway that persists for months (or years), traffic slowed to a crawl (or stop), etc. -- all for the benefit of a handful of construction workers, progressing at a glacial pace.

I can think of multiple highway projects around the Twin Cities that seem to meet the foregoing description -- but the new bridge going up over the Highway 7/Wooddale Interchange isn't one of them.

The construction site is swarming with workers most hours of the day (weekends, too?), and the bridge appears to be going up in record time.

When it's done, Highway 7 will be an unimpeded four lanes wide, and local traffic will be able to go from West Lake St. to 36th street with no more long traffic lights.

Talking Heads & the Housing Market

Missing Voices

One of the oddities -- at least to me -- about selling real estate these days is to peruse Op-Ed pages full of people with opinions about the "true state" of the housing market, its future direction -- and what should be done to fix it.

Print journalists (there's an anachronism). Economists. Government officials. Elected politicians. "Members of the Media" (mainstream and minor). Think tank-types. Senior business executives. Financiers. Bloggers.

With some notable exceptions, most of these people are based in either New York or Washington, and none of them have real, boots-on-the-ground insight into the rhythms and nuances of the housing market -- their own locally, and certainly the national market (which is an agglomeration of hundreds of local markets).

The only voice missing from the cacophony?

Realtors' (and PR mouthpieces like NAR don't count).

P.S.: "caveat emptor" applies equally to ideas as well as to products.

Monday, September 20, 2010

Beautiful Built-in's, Buffet, Millwork

What do Realtors have in mind when they say a home has gorgeous built-in's and millwork?

Rooms like the one pictured above.

It doesn't get more aesthetic than this!

(The beautiful dining room is located at 2401 Humboldt, in Minneapolis' Kenwood neighborhood; Steve Havig at Lakes Area Realty has the listing).

On RealClearMarkets.com

"Batting 8th Today . . ."

To a blogger, making RealClearMarkets.com is a bit like a novelist being mentioned on Oprah's book list: it delivers an instant, nationwide "pop" in your traffic (actually, international -- RealClearMarkets.com reaches readers in dozens of countries, not to mention senior policy makers in Washington, Wall Street-types, etc.).

So, it's nice to be on today's lineup -- along with people like Paul Krugman (NY Times), Robert Samuelson (Washington Post), and Fareed Zakaria (Newsweek).

As befits this blog's tiny profile, my post appears further down, in a section called "Off the Street."

Titled "The Wall Street Journal Whiffs on Warren," it discusses why Elizabeth Warren seemed liked a defensible choice to head the watchdog agency . . . she proposed creating, and why the Journal's attack on her appointment falls apart on closer (OK, not so close) scrutiny.

To someone who's been reading the Journal for 40 years (since I was 10), it's both sad and dismaying to see it now stumble so badly under Rupert Murdoch's ownership -- sort of like witnessing a visiting baseball slugger who's eviscerated your home team for years start to lose a couple steps.

The Journal I grew up with never used to be such an easy, broad target . . .

Sunday, September 19, 2010

The Wall Street Journal Whiffs on Warren

Protecting Consumers From Banks

It turns out that Harvard Professor Elizabeth Warren will head the new Consumer Protection Financial Bureau, after all.

The Bureau, which Warren proposed creating, is charged with ensuring that "consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination."

Seeing as how millions of consumers are routinely deceived, abused, and dealt with unfairly by the nation's biggest banks, that would seem to be a good start.

So, what exactly is the Wall Street Journal up in arms about ("Elizabeth III")?

Here is their case against her, followed by my rebuttals in italics:

WSJ: [Senate leaders] have warned the White House that Warren probably isn't confirmable. A President with more political and Constitutional scruple would have nominated someone else.

Ross Kaplan: Most of the Senate's senior leaders depend on Wall Street cash to fund their election campaigns. The surprise would be if someone hostile to Wall Street's interests was confirmable.

WSJ: Ms. Warren was a vociferous opponent of allowing regulators charged with maintaining the safety and soundness of banks to control this new bureau.

Ross Kaplan: Regulators just presided over the biggest financial debacle since The Great Depression, and did nothing to stop it -- in fact, they facilitated it. Why should Warren answer to them??

WSJ: The new bureau [is] destined to be a bureaucratic rogue, inside an agency (the Fed) that it doesn't report to, with a budget not subject to Congressional control.

Ross Kaplan: And exactly who are the too-big-to-fail banks accountable to? Yes, there are "rogues" running amok and threatening the Republic . . . but it's not Warren and her tiny, new federal agency.

In truth, installing Warren by Presidential appointment instead of Senate confirmation -- what the Journal is putatively upset about -- could very well be a tactical blunder.

That's because a Senate confirmation hearing would shine a huge, public spotlight on a dysfunctional U.S. Senate, and the interests it truly serves.

Saturday, September 18, 2010

Condo-Hotels: Instant Anachronisms?

Victims of Soft Economy,
Tight Financing

Imitation is the sincerest form of flattery.

What makes a trend, especially in real estate?

Imitators.

How do you know something's a bust?

Lack of imitators.

In the Twin Cities, two years after it was completed, the Westin Galleria in Edina stands out as the area's sole (to my knowledge) Condo Hotel ("Hotel Condo??").

Economic Sea Change & "The Lag Factor"

The reason there's no "Westin Galleria II" is because such projects have a multi-year gestation period, and since it was conceived, both the economy and real estate financing have undergone sea changes.

Like many real estate trends, the hotel-condo phenomenon -- and the economic headwinds they're now facing -- are most conspicuously on display in New York City:

Nearly a dozen [condo] projects in and around New York City that offer [hotel-like] perks . . . have recently opened or are nearing completion. For developers from Hoboken to Harlem, Williamsburg to SoHo, a condominium with a hotel attached is one more weapon in the reignited amenities arms race.

For buyers, the concept of a home with all the comforts of a hotel may seem like paradise. But hotel services don’t come cheap: the developers of condo-hotels plan to charge as much as 20 percent more per square foot than high-end competitors that don’t have hotel partners. And along with room service can come hotel-like bills, not to mention higher monthly maintenance fees. Financing can also be more difficult to secure; banks are leery of lending money for what could appear to be strictly investment property.

Dolly Lenz, the vice chairman of Prudential Douglas Elliman, said that at the same time they fantasize about dialing up club sandwiches at midnight, prospective buyers should take into account the possibility that the price of the amenities could go up over time. “It might be included for a year or two years,” she said. “Three years from now the kicker hits them.”

Jonathan J. Miller, the president of the appraisal firm Miller Samuel, said, “The key factor to remember is that these properties were conceived in a different market.

--Marc Santora, "Looks Like a Condo, Acts Like a Hotel"; The New York Times (9/18/2010)

To heighten their appeal in more frugal times, several of the properties discussed above are moving towards ala carte pricing for their (long) list of hotel-like amenities.

Revisiting Westin Galleria

So, is the Westin Galleria a financial bust?

I don't know the building that well, so I'm not going to render a verdict; the only thing that jumps out -- quickly looking it up on MLS -- is that 16 of the 82 units total (about 20%) are currently for sale.

And you'd certainly expect such a high-end building to be facing the same challenges common to all upper bracket properties in today's market.

If there's a silver lining for the Westin Galleria (and properties like it in other markets), it's this: real estate is ultimately all about two things: location, and supply and demand.

The Westin-Galleria's location is excellent, and -- at least for the foreseeable future -- the supply of hotel-condo units is constrained.

Friday, September 17, 2010

Tina Fey as a Realtor

"Date Night" Realtor Vignette

In "Realtors in Modern Culture," I noted the paucity of Realtors depicted in movies and on TV.

Well, add one more: Tina Fey's character, Claire Foster, in "Date Night" (I just saw it on DVD).

The highlight of the movie (at least to this Realtor) was a blink-and-you-missed-it scene near the beginning of the movie in which she's showing an upper bracket home to a Yuppie couple.

Fey: this home used to be $1.8 million; now it's $300,000.
Couple: We're going to wait for it to get cheaper.
Fey (rolling her eyes): Good plan, I think that makes a lot of sense.

No, I didn't make up those (movie) numbers.

And yes, lots of real-life Realtors are showing real-life homes marked down almost as much . . . and hearing Buyers same the same thing.

"Can You Shadow Me?"

No, that's not a line from a James Bond movie, or what you might hear during a game of Dungeons and Dragons.

It's what I say to Edina tech support every time I call with a (for me) headscratcher . . . . like 5 minutes ago -- solved by Thu in about 30 seconds.

(If you're not familiar with the phenomenon, "shadowing" allows remote tech support to see what you see on your desktop.)

Attacking Wall Street's Attackers

"But isn't that . . . 'Socialism'??"

He who frames the question wins the debate.

I've been struck in recent months, talking to various people about the economy, by two things:

One. The generally limited vocabulary people have when it comes to understanding all things financial -- even people who are otherwise very sophisticated, well-educated, etc.; and

Two. The tendency -- again, amongst otherwise sophisticated people -- to somehow equate outrage about Wall Street misconduct and calls for genuine, structural reform with a "fringe" political agenda.

The "S Word"

So, what do you call someone who thinks:

--Hedge fund managers should pay a higher tax rate than teachers or firemen? (They don't; thanks to an especially sleazy tax break, their compensation -- called "carried interest" -- is taxed at 15%).

--CEO's shouldn't make literally *400 times what the janitor makes -- up from the 30x-40x that prevailed for almost half a century (roughly from the '30's to the '80's).

--Having half a dozen monster financial institutions -- whose balance sheets can literally be measured as a % of U.S. GDP -- is bad for our economy and political system.

Apparently . . . . "a socialist."

Sorry, folks, but we already have a socialist economy.

Except that it's socialism at the very top . . . and capitalism for everyone else.

*The 400 times is merely an estimate; the truth is, no one really knows, because executive compensation disclosure rules are exceptionally murky and porous.

It's also the case that CEO compensation is not set by the market; it's determined by captive boards of directors -- which is to say, the CEO's themselves.

Thursday, September 16, 2010

Traffic Light as Metaphor

Stale Red Lights

One last one on the "traffic light" theme:

It would sure seem that traffic lights are one of the quintessential government functions.

When they're in the right place and in working order -- they promote civility, and increase general well-being, respect for authority, etc.

Heading West to Go East

And then there's a certain traffic light in my neighborhood.

For reasons no one knows, it lingers on "red" and "green" about three times longer than it should.

So, everyone I know (including me) gets in the right lane, makes a (legal) right turn on red, then drives exactly one block west where they make a (legal) U-turn to go East.

Told "No," But Hearing "Yes"

Showing a Home
Without Permission

Showing a home without permission is a big MLS no-no: any Realtor caught doing it is automatically on the hook for a $1,000 fine.

But the operative word is "caught."

Unless the homeowner happens to be home, it's one of those transgressions that you'd guess frequently goes undetected.

And even if it is, it's up to the client to "press charges," with assistance from their Realtor.

That means filing an ethics complaint, and documenting the allegation with evidence that the showing was rejected, and that the listing agent's electronic lockbox was accessed by the offending Realtor (mechanical lockboxes generate no such log).

A certain Realtor active in the west 'burbs' is very lucky that I have especially gracious clients, and accepted an apology from him rather than having him fined $1,000 (he was showing multiple condo's in my client's building, and apparently, wanted his clients to see the full range of choices. When he unexpectedly found my clients home, he told them a baldfaced lie that he had a confirmed showing.)

P.S.: memo to MLS: I'd actually recommend a smaller fine; $1,000 is so draconian that I'm guessing many wronged home sellers (like mine) decline to impose it, or fear some kind of retribution if they do.

P.P.S.: want a guaranteed way out of paying that $1,000? Write an offer on the property.

Is 4.25% the Floor?

Cutting to the Bone

Can 30-year mortgage rates -- now quoted at a previously unheard of 4.25% -- go much lower?

Regardless of what the economy (or Fed) does from here, it may be hard for rates to decline much more, simply because banks' overhead to originate and service mortgages is about that much (or so I hear from one local lender).

What's that line about a particularly clueless merchant?

"They lose money on every deal, but make it up on volume."

Wednesday, September 15, 2010

Online "Bait and Switch"

Searching for "MLS," Getting "TheMLSonline.com"

One might think that BobMenendez.com would be the Web site of Senator Robert Menendez of New Jersey, chairman of the Democratic Senatorial Campaign Committee. But no. Sharron Angle, the Republican candidate for the Senate in Nevada, has the site, which her campaign uses to bash Democrats.

--Marc Lacey, "Clicking Candidate.com, Landing at Opponent.com"; The New York Times(9/15/2010)

The phenomenon referred to above, called "cybersquatting," is hardly limited to politics; it's rife in real estate, too.

Locally (in the Twin Cities), the best known example of that would be TheMLSonline.com, which, unbeknownst initially to the visitors it attracts, has nothing to do with the local MLS ("Multiple Listing Service").

The MLS is the mother lode of Twin Cities listings, paid for (and only accessible) to Twin Cities brokers and their dues-paying agents.

TheMLSonline.com is just one of hundreds (thousands?) of Twin Cities real estate brokers.

Somebody who's practiced law more recently than I have (not since 1992) has to explain to me why that doesn't constitute a deceptive trade practice -- which, last time I checked, was illegal.

P.S.: if you don't like the practice, vote with your feet and don't use TheMLSonline.com (there --that's my protected free speech!).

Showing Feedback & Real Estate "Glass Slippers"

"It's too, too . . . ."

After almost 9 years selling real estate, I've probably been on the receiving end, conservatively, of perhaps 10,000 showing feedback forms (and probably generated an equal number as a Buyer's agent).

So, what do they say?

Usually, not much.

However, on the relatively rare occasions when the agent includes a comment, here's a partial compendium of what they say:

"It's too . . .

--Big
--Small
--Expensive
--Not expensive enough (they can afford more home)
--Open
--Not open enough
--Pink/White/Yellow/Blue/Brown (pick a color)
--Soon (the Buyer just started looking)
--Dated
--Updated (the Buyer wants to do their own remodeling)
--Vertical (they don't like stairs)
--Horizontal (they don't like ramblers)
--Close (to the elementary school/busy street/ugly neighbor, etc.
--Far (from shopping, schools, etc.)
--Contemporary
--Traditional
--Plain
--Loud
--Dark
--Noisy
--Quiet (Buyers from Manhattan)

Suffice to say, this list could be quite a bit longer.

Which is why my listing clients know one of my favorite lines (and hear it often): 'the only feedback that really counts is a good offer from a well-qualified Buyer.'

Finding "The One"

So, what do I tell my Buyer clients?

That I seldom see -- or sell -- a home that's a "10" on a scale of 1-10 (and if it's a bona fide "10" -- you probably can't afford it!).

But I've sold lots of "7's" and "8's" that, over time, my clients have turned into "10's" . . . for them.

And that, for most Buyers, it's simply the case that there are usually at least a couple homes that conceivably would be very good choices -- vs. "the (elusive) one."

Cort Furniture Sale

"Mark Your Calendar"

If you're looking for decent furniture, cheap, Cort Furniture's annual sale is Sept. 16-18.

Cort, well-known to stagers and Realtors for their rental furniture, is less well-known as a place to buy used furniture at a terrific price.

Did You Hear About the 3.8% Real Estate Sales Tax?

Urban Myths and Election Chatter

Got this one in my email box the other day from a friend:

Under the new health care bill - did you know that all real estate transactions are now subject to a 3.8% Sales Tax ? The bulk of these new taxes don’t kick in until 2013 (presumably after Obama’s re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one.

--The Spokesman-Review (3/28/2010)

There may be plenty of reasons to vote Republican this November -- but a 3.8% sales tax on real estate sales, buried in the new health care legislation, isn't one of them.

That's because it isn't true.

Apparently, fear-mongerers on a certain side of the political spectrum are whipping up anger and paranoia and a BIG dollop of outright lies to engage prospective voters.

So, where'd the myth about a 3.8% sales tax come from?

The best I can determine, someone, somewhere, floated the idea at some point during the health care debate -- but it did NOT become law.

Hmm . . . makes you wonder what other "disinformation" is out there . . .

Monday, September 13, 2010

(The Problem with) Blind Solicitations

"Would You Consider Renting?"

Through the years, I have in rare instances sent a blind mailing on behalf of a client who had seemed to exhaust all other possibilities.

Typically, they were interested in either a very specific style of home, a very specific neigborhood -- or both.

And were under a time deadline.

Junk Mail

While such letters invariably do elicit some bites, the problem is motivation: if you ask someone who wasn't contemplating selling or renting whether they'd consider selling or renting, they have a funny way of coming up with a price that's WAY above market.

Or -- after prolonged, time-consuming negotiations -- back out.

Bottom line?

The best way to be sure someone's home is really on the market -- either for sale or rental -- is that . . . it's already on the market (on MLS, Craig's List, "For Sale" and/or "For Rent" signs in front, etc.).

Broker Tour 11 a.m.. - 1 p.m. Tuesday (9/14)

Spacious Point of France Condo
with 2 Owner's Suites for < $400k

Where: 6566 France Ave. South, one block south of 62 (Crosstown); just northwest of Southdale
What: light and spacious condo (over 2,500 sq. ft.) with Contemporary flair in amenity-loaded Point of France (including 24 hour front desk).
When: just listed
Who: agent = Ross Kaplan; broker = Edina Realty
How much: $373,900

Please join me at my broker open tomorrow at Point of France ("POF").

This unit (#401) is a terrific choice for someone who wants to combine plenty of living space with a carefree lifestyle in a location close to everything.

Highlights include the two (!) master suites, each with a walk-in closet and private balcony; the updated Kitchen with granite countertops; and miles of storage.

POF offers everything under one roof, including a state-of-the art exercise room; heated pool; party rooms; and library -- all on a pretty, 8 acre setting overlooking tranquil Point of France pond (pictured above).

Hope to see you tomorrow! (non-Realtors welcome)

Grist for the Mill?

Something New Under the Sun (Son)

So, Son #2, about to be 8 in December, "will only tell Mom" what's bothering him, not me.

Why?

A. "I wouldn't understand."
B. "It's none of my business."
C. "I don't really care."
D. "I'll put it on my blog."

Answer: D

Ouch!

Dads didn't hear that one until recently.

(And no, I won't -- except for this. Promise.)

Realtors in Modern Culture

"Modern Family" Realtor

Think of doctors in modern culture, and what comes to mind?

Characters from sitcom's and movies like "ER," "House," "Scrubs," and, if you're old enough, "Marcus Welby, M.D."

For lawyers, the list would include "Law & Order," "Boston Legal," "LA Law," and "Allie McBeal." (OK, I'm dating myself).

Now, when you think of Realtors, who do you think of?

Drawing a blank?

So am I.

About all I can come up with is Paul Rudd's character in "I Love You, Man," and the creepy, repressed Annette Bening character from "American Beauty" (I'm omitting Mamet's "Glengarry, Glen Ross" because it dealt with commercial real estate).

To that list, add the uncool "cool" Dad from "Modern Family."

I only saw the pilot last night, so it's too soon to say if his job selling real estate intrudes on any plot lines.

As they say, "stay tuned."

P.S.: the dearth of Realtors on TV and cable is especially puzzling given all the reality TV programs devoted to real estate ("Flip this House," "House Hunters," "Sell This House," and on and on -- none of which, as a practicing Realtor, I find watchable).

Sunday, September 12, 2010

"Microchips vs. Poker Chips"

Engineers, Financial & Otherwise

OK, so I'm not coming down on the side of buying more Intel stock (vs. selling what I did buy, way back in 1995; see, "To Buy Intel (or not) . . . that is the question").

But I still like what Intel does a whole lot better than what Wall Street does:

For a decade we sent our best minds not to make computer chips in Silicon Valley but to make poker chips on Wall Street, while telling ourselves we could have the American dream — a home — without saving and investing, for nothing down and nothing to pay for two years. Our leadership message to the world (except for our brave soldiers): “After you.”

--Thomas Friedman, "We're No. 1(1)!"; The New York Times (9/12/2010)

Brain Drain

My only quibbles with the above?

First, Friedman's casting his lot with the "we're all to blame" camp ("Wall Street may have been dealing the dope, but our lawmakers encouraged it").

I take strong exception to that analysis, for reasons discussed in "No (Financial) Cure Without Proper Diagnosis."

Second, Friedman's timeline.

I'd substitute "a generation" for "a decade" to describe how long Wall Street has been vacuuming up our "best and brightest" (albeit most morally bankrupt).

One of the more dismaying things about Wall Street continuing "business as usual" -- notwithstanding the economic carnage it's wrought on the rest of the economy -- is that it leaves that "brain drain" dynamic intact.

As Dan Quayle might put it, "what a waste it is to lose one's mind . . "

Saturday, September 11, 2010

To Buy Intel (or not) . . that is the question

Investors' Conundrum, circa 2010

In a nutshell, here is the problem confronting the stock market:

World-famous, blue chip stocks -- companies like Intel, to pick one example -- certainly look cheap.

At $18 a share, Intel, the world's leading manufacturer of microprocessors at the heart of every PC -- is trading at a surprisingly conservative P/E (Price Earnings) ratio of 12.

The problem I'm having -- and I suspect millions of other investors are having as well -- is that it also looked cheap . . . back in 1995.

That's when I bought it, for about $8 a share.

So, after 15-plus years riding a stomach-curdling roller coaster, adjusting for inflation . . . I've just about broken even.

And that's before paying taxes on my "gain" if I ever sell.

While Intel's senior management has been paid hundreds of millions.

So, time to double-down?

Or say "enough is enough," cut my losses, and put the money somewhere else (but where?).

Two Realtors for the Price of One

Co-Listing Agreements

Realtors share a listing ("co-list") for a number of reasons:

--The homeowner has ties to two Realtors, and doesn't want to offend either;

--The two Realtors work together as part of a "group" or "team";

--One Realtor has the tie to the client, while the other Realtor is strongly established in the particular neighborhood.

It was this latter scenario I encountered recently.

Which made it ironic that, because the "neighborhood" Realtor was on vacation, the co-listing agent and I negotiated the deal without them (I was representing the Buyer).

The experience recalled an anecdote about the Vikings' trade for quarterback Fran Tarkenton, way back when.

On the opening play of the first game following Tarkenton's return, the Vikings' return man ran the kickoff back 99 yards for a touchdown.

Tarkenton supposedly turned to then-head coach Bud Grant and said: 'See, I told you I'd be good for your offense.'

Friday, September 10, 2010

Michael Lewis' "Beware of Greeks Bearing Bonds"

"THESE Guys are Good for $250k Apiece?? C'mon" *

Like a lot of people who come to Vatopaidi, I suppose, I was less than perfectly sure what I was after. I wanted to see if it felt like a front for a commercial empire (it doesn’t) and if the monks seemed insincere (hardly). But I also wondered how a bunch of odd-looking guys who had walked away from the material world had such a knack for getting their way in it: how on earth do monks, of all people, wind up as Greece’s best shot at a Harvard Business School case study?

--Michael Lewis, "Beware of Greeks Bearing Bonds"; (Vanity Fair, October, 2010)

It takes away nothing (OK, just a little) from Lewis' insight-filled take on an obscure group of Greek monks living in a remote Greek monastery called "Vatopaidi" to give away the answer.

Namely, the reason the monks warrant an HSB case study is, they amassed a real estate empire by learning comproming things about high-placed Greek officials, then leveraging that knowledge --plus possibly some bribes -- into a string of sweetheart government deals.

Not much more to it than that.

But how Lewis lays bare Greek culture, and in particular how it was perverted by the world boom in cheap credit, is certainly worth the trip.

Plus, lots of piquant Lewis-ism's like the following:

The monks eat like fashion models before a shoot. Twice a day four days a week, and once a day for three: 11 meals, all of them more or less like this. Which raises an obvious question: Why are some of them fat?

If you want to find out the answer to that one . . . you'll have to read the full article.

*That's how much Greece's $1.2 trillion national debt come to per person.

How to Read Vanity Fair

(Pretty) Picture Book

Before I bought the current issue of Vanity Fair (to read Michael Lewis' new article), I never understood why the cover included not just the featured articles, but their page numbers: because the cover is also the table of contents.

Or more accurately, it's one of two tables of contents; the second one appears literally 45 pages into the magazine, preceded by 44 pages of various beautiful people modeling lots of beautiful clothes.

Then, you discover that the interior table of contents is divided into pieces, with still more advertising squeezed in between.

Finally, somewhere around page 100 -- the actual articles begin.

It's annoying only until you realize that the editors have given readers a way to circumvent all those ads, via their cover/table of contents.

But I've got a guess, they don't (skip all those beautifully shot, fetching ads -- that is).

Next: Michael Lewis' article: all journey, no destination

$11,000 per Block?

Putting a Price Tag on
Proximity to Cedar Lake

A client of mine says his engineer son-in-law has done a regression analysis calculating the premium associated with proximity to Minneapolis' Cedar Lake.

His number?

$11,000 per block.

If that's correct, that's a very valuable number to have, because lots of Realtors, appraisers -- and their clients! -- spend a lot of time and money trying to quantify just such variables.

"Ceteris Paribus"

And yet
. . . as I discussed in The Art of Doing Comp's ("How Big a Premium for Small Lakefront?"), isolating and quantifying such adjustments is more difficult than it sounds.

That's because it's never the case -- at least outside new, tract developments -- that two homes, identical in every respect but their location, sell at exactly the same time.

To use a fancy term, they flunk the "ceteris paribus" test ("everything else held equal").

So, if the two homes are the same size and style, one's much more updated; if they're equally updated, one's substantially bigger; if they're the same style, size, and condition, they sold two years apart, in different market conditions.

Theory vs. Practice

Which doesn't mean that Realtors and others don't estimate premiums and discounts, for many variables, every day.

It's just that it's more a "gut," judgment call than a hard-and-fast objective number.

P.S.: my number for Cedar Lake proximity? I'd start with 2% per block, but would tweak that depending on which block (some are clearly nicer than others).

I also know that the East part of Fern Hill -- between Monterey and France -- commands a bigger premium than "West" Fern Hill, and that a handful of homes on Glenhurst and Huntington with lakeviews command much bigger premiums.

Thursday, September 9, 2010

Fern Hill for (Just Over) $200k!

Where: 2615 Monterey in St. Louis Park's Fern Hill neighborhood
What: 2 BR/1 Bath stucco cottage on a private, 140' deep lot.
Who: listed by Ross Kaplan; Edina Realty City Lakes
How much: $209,900
When: market time = 30 days

You'll love this updated, character-filled stucco cottage in high-demand Fern Hill.

It has over $20k in recent improvements, including a new roof, all new windows, interior painting, and gorgeous, refinished hardwood floors.

Just down the street from Twin Lakes Park; blocks to Cedar Lake.

You can't live on a nicer block -- in a nicer area -- for less.

Please call or email me for more info.

Tra . . dish . . .on. . . Tradition!!

Jewish New Year Tie-Tying

A longstanding, Kaplan family tradition got passed down today -- kind of.

To get ready for synagogue, my 10 year-old son needed to put on a tie. A real tie.

While I was upstairs fumbling with mine . . . he looked up how to do it on the Internet, and did it himself!

Wednesday, September 8, 2010

"Seller Financing" Terms

More Seller Financing --
& More Flexible Terms

Sellers Terms: Cash, Contract for Deed, Contract/Deed w/Assumption, Conventional, DVA, FHA

--MLS listing

I'm seeing lots more listings like the one above.

If you don't speak "Realtor," here's a quick glossary:

Contract for deed: Buyer makes monthly payments to the Seller, who retains title; title transfers when the last payment is made.

DVA: Department of Veteran Affairs loan. Great terms, zero down -- for those who qualify.

FHA: Federal Housing Administration. FHA-insured loans are the source of financing in today's housing market.

Conventional: a traditional bank-originated mortgage, typically packaged and re-sold to the secondary markets -- at least when the amount is less than $417k (called "conforming") in most parts of the country.

"The Plot Against America" Redux

Schwarzman's "Nazi's" Comparison

We have met the enemy, and he is . . . us.

--Pogo

Stephen Schwarzman, a Wall Street honcho, made headlines last month for comparing President Obama's proposal to raise (the absurdly low) tax rates on hedge fund compensation -- called "carried interest" -- to Hitler's invasion of Poland.

Funny, I had another Hitler reference in mind.

Specifically, Philip Roth's provocative and very unsettling "The Plot Against America."

No George Bailey's

The book's central premise is that a politically weakened FDR is defeated by Charles Lindbergh, a Nazi sympathizer. Once elected President, Lindbergh first appeases, then cooperates with Hitler in what is effectively a bloodless takeover of America (sorry, Lindbergh relatives).

In my economic version of Roth's nightmare, I imagine what The Great Depression and the following decades would have looked like if there'd been no FDR, no New Deal, no Securities Act of 1933, no Glass-Steagall, etc.

Instead of reform and recovery, Wall Street uses its financial and political muscle to lay claim to the (remaining) public resources it hasn't yet appropriated.

And the result would have been what?

Potterville, writ large?

Unfortunately, as you read today's headlines discussing Too Big to Fail financial institutions, (still) obscene Wall Street pay, devastated savers, etc., this alternative, nightmare scenario hardly seems imaginary at all.

Re-read your Pogo, Mr. Schwarzman.

Scientifically Proven Home Valuation Formula

"Fair Market Value," Defined

I, along with thousands of other agents, have developed a scientifically proven, 100% reliable way of establishing a home's value.

Ready?

Here's how you'll know any given home is priced at fair market value:

It sells.*

Defining "Fair Market Value"

That may seem unduly glib (if not harsh).

Unfortunately, for many as yet unrealistic Sellers, it also happens to be true.

In fact, the foregoing is the very definition of "fair market value."

Until a Buyer appears who's willing to pay a given price, everything else -- the comp's, what your neighbor got, how much you have into your home (i.e., purchase price + improvements) -- is just noise.

*Of course, that isn't meant to let the listing agent off the hook. I'm presuming that the home's condition, appeal, and marketing are already optimal.

Crash!!!*

Make That a 4 Day Weekend

There was a major crash yesterday (Tuesday) morning.

The stock market?

Nope, at Edina Realty.

"ProKit," the proprietary software platform that all 1,800 Edina agents log onto and use day-in, day-out, was out of commission from at least 8 a.m. yesterday, when I first tried to log on, till about 7 p.m. last night (when the predictable avalanche of emails began arriving).

(Note: if you were trying to call my desk line (vs. my cell) or sent me an email yesterday and I didn't respond . . . now you know why.)

Other side effects: counter-offers that will now get delivered this morning instead of yesterday; a listing that will "go live" on MLS this afternoon instead of morning; and for one very understanding client of mine, a showing that she found out about . . . when the agent opened her front door (her contact information was online -- and inaccessible).

All in all, annoying but survivable.

Edina Realty . . . vs. Wall Street

Which underscores the bigger point -- namely, an Edina Realty system crash is: a) extremely rare; and b) promptly fixed.

Try saying either of those things about Wall Street.

In fact, in my almost 9 years with Edina Realty, I can't recall another business day -- scheduled maintenance aside -- when the system was off-line for more than even an hour.

That's against the backdrop of an excellent tech support department that's both accessible and user-friendly.

And that's coming from someone who knows their number by heart.

Now, if only City Lakes' HVAC was as stable as Edina Realty's computer platform.

*My alternative title for this post: 'Who Knew Edina Realty Celebrated Rosh Hashanah??'

(If you weren't aware, Rosh Hashanah, the beginning of the Jewish New Year, begins tomorrow night. More observant Jews spend the day at synagogue instead of working.)

Tuesday, September 7, 2010

"Arabia" at the Science Museum IMAX

Hopeful Precedent

See if you can guess what epoch I'm describing:

The West's thirst for this commodity made its Middle Eastern purveyors rich beyond belief, and financed a campaign of conquest and terror that helped undermine it.

The U.S.-led West and its demand for Middle Eastern oil?

That, too.

But before that, it was Rome's demand for frankicense, to perfume its many temples.

What happened next?

Rome gave up idolatry, and its demand for frankicense plummeted.

Which caused the fortunes of its Middle Eastern suppliers to also plummet.

Think there's a precedent there??

(At least, that's what I got from the movie "Arabia," which I saw at the Science Museum IMAX yesterday).

"Agent Remarks" by Ross Kaplan

Proposed Book Title

I know you're supposed to come up with the book before you come up with a title, but never mind.

If I ever write a real estate book -- and with something like 1,500 blog posts under my belt, I probably already have -- I know what I'll call it: 'Agent Remarks.'

That's a very "inside baseball-y" reference to how home information is presented on MLS.

In one field, called "Public Remarks," the agents extol all the home's virtues.

Meanwhile, in the field immediately above, called "Agent Remarks" -- intended only for agents -- they provide any 'dish': available selling bonuses, the Seller's true circumstances and motivation; a (more) honest assessment of the home's strengths and weaknesses.

P.S.: and if you're a Realtor reading this blog, remember that everything I write is copyrighted, and that I'm friendly with lots of the attorneys I used to practice corporate law with.

That would be Moss & Barnett -- not just very good lawyers but also "mentches" (Yiddish for "good, principled people"). You're welcome for the plug, guys . . .

P.P.S.: As any Buyer who's ever worked with me will vouch for, I always print out what Realtors call the "Unabridged Full" MLS report for my clients, so that they see and know everything I do.

Hmmm . . . "Unabridged Full . . . I think I know what to call the sequel!

Monday, September 6, 2010

The Seed Bank

You Should See the Phone Bank

Once upon a time, this building in Petaluma, CA housed a real bank.

Then, a seed company bought it.

Yup.

Now it's a seed bank (is that what they mean by "going to seed?").

"How much does that home rent for?"

How to Predict (House) Rental Rates

Want to know the best predictor of what a given home rents for?

Figure out when the owner bought.

If they bought between 2004 and 2008 -- especially if they didn't put much down -- they want an arm and a leg.

Or more accurately, they need an arm a leg.

That's because they bought at the peak.

And since they bought at the peak with little down, they're now underwater.

Which means they can't refinance to take advantage of today's shockingly low rates.

So, to cover their monthly "nut," they need to collect a hefty monthly rent check.

Financial Wherewithal + Patience

At the other extreme, there are other would-be "home landlords" who bought decades ago, and now owe little or nothing on their homes.

Some are earning essentially zero on their retirement savings (remember those shockingly low rates); others are convinced that the market will be higher in 2-3 years than it is now.

In either case, they're looking for a renter to tide them over till the markets -- investing and housing -- improve.

Throw in a renter who might be a family friend (or a friend of a family friend), and suddenly such homes can be rented at very attractive prices.

So, what are market rental rates?

Somewhere between these two extremes.

Sunday, September 5, 2010

Open House Traffic Report

Motivated Buyers

In my post, "Labor Day Weekend Traffic," I offered up the (Realtor) conventional wisdom about open houses during holiday weekends and other traditionally slow periods.

Namely, that such open houses often make up in quality what they lack in quantity.

So who came through my Golden Valley open house today?

--A "downsizer" who closes on the sale of their Minnetonka home at the end of September, and needs a place ASAP;

--A prospective Buyer who just relocated to the Twin Cities from Atlanta.

--A renter whose lease is up Sept. 30.

Good prospects, all!