I’m cheap on spending money on real estate stuff from vendors promising all kinds of things, whether it is leads or exposure. But, I went ahead and tried out a real estate search utility that is setup for WordPress. There were three reasons I chose to do it: 1) They would program it to work with our itsy-bitsy MLS at Lake Chelan (no other vendors, IDXPro, etc. support such a tiny market). 2) Each listing in my MLS, and every saved search I did, became a page indexed to my web site. 3) They are less expensive per month than my current vendor with no setup fees.
Sure enough, I now have 4380 pages indexed to my site in little old Chelan. I’ve moved up one spot in the top 5 Google results in a week. I do have a nice real estate search for browsing properties with a photo type of interface. The vendor is Spot-on Connect.
I have saved a bit of money in that they replaced part of what my former vendor did. However, I haven’t been able to shut off my older IDX service because their searches allow more user choices to create more specific searches. Yes, there have been a few bugs, but the Spot-on people have been pretty quick in fixing them.
I’m even getting search traffic, for searches like “9607 sr 17, coulee city, wa 98851” coming to my web sites that did not arrive before.
I wouldn’t plug a vendor normally, but I’m getting fond enough of this approach to hope Spot-on connect survives and prospers.
Like many things, the service hasn’t been everything I could wish for, but it is a pretty effective way to get your SEO juice up if you use WordPress. If that and the ability to have beautiful custom neighborhood searches, like the one pictured above appeals to you, they are worth checking out. This is one of the better things I’ve done for improving my web page ranking, ever.10 comments
Greg posted a photo of snow, showing it as a great closing argument for Phoenix. As usual, he’s right! We had our first snow of the year at Lake Chelan and I just have to share it! While Greg has a great point about the snow, take a look at these beautiful scenes. For many, snow doesn’t mean being indoors at all. Some of us like the snow!
The first snow means no lawn mowing for months! People were out all over town enjoying the beauty of the day. With the right equipment, it is hardly a hassle at all to deal with a little snow. I have a big driveway, but a snow blower on the front of a tractor clears it quickly.
Arizona is a popular spot this time of year, even for folks from our area. The snow does make walking more challenging. This is not Seattle, and we have efficient plows that clear the roads, although they too are more of a challenge than dry pavement. But, it is beautiful and we could not do our skiing, snowmobiling, snow shoeing or just playing around in all the white without it. I just had to put up a few pictures for the other side of the story when it comes to snow! With that, enjoy the warm Phoenix weather!2 comments
While reading Jeff’s post asking about how people can justify theft from others in the name of government, I was most stricken by the absolute denial from those who defended more and more taxation have over their own beliefs. Even though they clearly support socialism, and can put forward tales of great woe over why they believe socialism is needed, nowhere would they agree that what they espouse is socialism.
Sure, socialism has been demonized by conservatives over the years. But does that surprise you? Socialism is the opposite of what many conservatives profess to be. Yet, socialists, most of whom prefer to be called liberals, just can’t admit that they support theft by government force. None of the liberals who commented would admit they believed “from each according to his ability, to each according to his need.” They just don’t go there.
People are full of these contradictions. Warren Buffet was mentioned as an example in the comments of Jeff’s post, about his supposed concern about paying less in taxes than his secretary. Yet, this same Warren Buffet has been fighting against paying taxes he legally owes for years! What is that all about if he supports more taxation so much?
In the video above, Bill Maher, calls out Americans on what he calls their secret love of socialism. In the video Bill Maher says “It’s time to stop fighting it and just come out of the closet, and the group I’m talking about is the American public and the love they’re denying is their love of socialism. Now I know that there are few words in America more toxic than socialist, and these days big government spending is about as popular as Casey Anthony at a Chucky Cheese. Yes, Americans say they hate socialism but when it comes to Social Security, Medicare, unemployment, Fannie Mae and Freddie Mac, corporate welfare, bailouts, and farm subsidies, what we really say to socialism is I can’t quit you.”
He goes on from there. In this case, I agree with Bill Maher.
Certainly there is a disconnect between what many Americans say versus what they actually support. Liberals seem happy to point out that they want to use money confiscated through taxes to pay to take care of the poor, the elderly and for education. They are happy to point out that these socialistic programs pay for medical care, environmental regulation, and protection to make sure consumers have protections from their own decisions. So, if these socialist programs are so great, why can’t folks just admit, what they support is socialism? It should be a badge of pride if you believe it is really morally correct to confiscate money from some for the benefit of others. The story is really Robin Hood, right? The difference is the people that the money is being stolen from may not be evil rulers, they just might be your hardworking neighbors. But what difference does that really make? Liberals, including those who now prefer to be called progressives, are really just socialists, so why can’t they just admit it?13 comments
If Galt’s Gulch is going to exist in this century, might it be called Seasteading?
Peter Thiel has given $1.25 million to an initiative to create floating libertarian countries in international waters, according to a profile of the billionaire in Details magazine.
Thiel has been a big backer of the Seasteading Institute, which seeks to build sovereign nations on oil rig-like platforms to occupy waters beyond the reach of law-of-the-sea treaties. The idea is for these countries to start from scratch–free from the laws, regulations, and moral codes of any existing place. Details says the experiment would be “a kind of floating petri dish for implementing policies that libertarians, stymied by indifference at the voting booths, have been unable to advance: no welfare, looser building codes, no minimum wage, and few restrictions on weapons.” – Yahoo.com
A floating haven for Libertarians. It sounds like freedom. I wonder where they could find real estate expertise for such a venture?
Galt’s Gulch had one big advantage over Seasteading, it was beyond detection of government.8 comments
I haven’t been posting much at Bloodhound lately, or really for awhile. Professionally, I did not make the progress last year I usually do. I went backwards and was simply distracted by other things. By this time last year, I was a very sick boy and it took until nearly Christmas to be back to having much energy or vitality. But, it wasn’t time wasted. From a personal standpoint, it confirmed what I already know, and that’s to just do the things that I want to do. Since that’s pretty much how I’ve always lived, I looked at my life and decided it was perfect.
So, about January, I had the energy to get back to speed on business. My brokerage wasn’t doing what I wanted it to do. It wasn’t doing much at all. So, I decided to fix it. I did some Ryan Hartman type of web marketing and got the leads flowing again. In my market, a market that hasn’t seen over 150 homes sold annually since 2007, I was getting 2 to 5 real buyers per week asking to do business and sending me their contact information. That was a good start.
But, that wasn’t enough. I’m the rural hound in this crowd. We have a group of brokers really happy with their own little MLS system that doesn’t track much data. It would look pretty 1992 to the rest of you. So, by digging into it and looking at what was actually selling, I noticed that foreclosure sales, bank owned and short sales, had gone from a handful of percentage of the market to at least 20%. Even more instructive, the number was growing quickly.
While I had a bunch of buyers calling, I was having issues getting folks who could get loans and get deals done. By dipping my toe in marketing foreclosures I found that most all of them were looking to spend cash. And, in this resort market, most were wanting premium properties. Awesome! That solves the qualification problem
So, I found out that lakechelanforeclosures.com and chelanforeclosures.com were available. In a matter of a few days I had 5 of the top 10 spots on google searches for foreclosures in the area. I now have a great bunch of buyers, new leads coming in looking for properties of all types in the area and deals getting done.
It took about 6 weeks from the decision to change the outcome I was getting in my brokerage to a complete turnaround in results. I would love to tell you I thought of some new marketing secret. I didn’t. The mechanics of doing it can all be found in the pages of bloodhound. I didn’t do anything new but set up a web site that catered to the happening part of my local market. Since then, I have been working the leads. If you’ve been looking at all the information on Bloodhound and wondering how effective it is, I can tell you yet again: This stuff works.7 comments
But I do question whether prospecting using facebook is the most efficient way to prospect. I’m sure everything Brian Brady said is correct, he’s just that kind of a guy! I’m also a one person office and time spent trolling facebook for leads isn’t as quick as calling up expired listings in my area, or working the internet where buyers are looking for homes!
For me, there are just quicker ways of getting calls from interested buyers than slogging through my facebook friends’ friends, tracking down phone numbers and calling them. If there was some clever tool to just get those folks names and numbers (Greg has probably written one), with some sort of a relationship graphic so I have something to chat with them about, count me in on the calling. I don’t mind cold calling. Expired listings are quick to get and easy for me to call. They can be pretty productive too.
I spent some time playing on Ebay’s classifieds today. I’ll tell you how that works out when I know, but being where buyers are looking usually works pretty well for me.
So, I’m not disagreeing with Brian, I’m just wondering, like apparently the Zillow CEO is, if facebook is worth the time. I haven’t found it to be the most productive way to do business prospecting.
“We’ve taken a number of swings at social (networking) that have not paid off. We might have invested less,” said Spencer Rascoff, chief executive of Zillow.com.
His site has some social networking features and some integration with Facebook and Twitter – mostly as a result of following the conventional wisdom that any vertical could benefit from a social emphasis.
What Rascoff discovered, however, was that real estate is one area that truly doesn’t lend itself to social.
“In our category, we have not found it to be a social experience,” he said. “When you’re looking to buy a home, your network is small – it’s you, your spouse, and your real estate agent. You don’t tell your 300 friends, ‘I’m looking at this house.’ And especially in this market, where people are selling homes for prices that they are not that proud of.”
In retrospect, Rascoff said, those early attempts to make Zillow a more social experience distracted the company from things it should have been doing instead. “We might have focused more on mobile earlier. We’ve been in it for 12 months, but maybe we should have been there twelve months earlier.” – WSJ
The founder of Yelp had comments on Foursquare and Groupon in the same article. Facebook prospecting isn’t the path I’ve chosen. Brian’s marketing works great for Brian and he can prove it. Facebook isn’t the only way to skin cats!10 comments
From the Wall Street Journal, complete with video, is Brett Arends take on why now might be a great time to buy a home. This is the action item to follow Greg’s last post on Why Housing will come back. I’m in a very seasonal, resort type of market. A buyer’s negotiating position right now, when a seller who doesn’t have a deal is likely going to still own their home next spring, is amazing. Make that reason eleven.
Enough with the doom and gloom about homeownership.
Sure, maybe there’s more pain to come in the housing market. But when Time magazine starts running covers that declare “Owning a home may no longer make economic sense,” it’s time to say: Enough is enough. This is what “capitulation” looks like. Everyone has given up.The Sept. 6 cover of Time magazine: This is what capitulation looks like.
After all, at the peak of the bubble five years ago, Time had a different take. “Home Sweet Home,” declared its cover then, as it celebrated the boom and asked: “Will your house make your rich?”
But it’s not enough just to be contrarian. So here are 10 reasons why it’s good to buy a home.
1. You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor’s Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it’s mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.
Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.
2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What’s not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won’t see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.
3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains–if any–when you sell. Sure, you’ll need to do your math. You’ll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.
4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You’ll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. “You can tell the ones that have been bought,” said my local guide. “They’ve painted the front door. It’s the first thing people do when they buy.” It was a small sign that said something big.
5. You’ll get a better home. In many parts of the country it can be really hard to find – read the rest, see the video at the WSJ
When the National Association of Realtors and the American Land Title Association claim to be doing something to benefit consumers, those same consumers can expect to be fleeced once again. Currently, they are trying to ban private transfer fees by getting the Federal Housing Finance Agency to amend rules so that almost defunct Fannie Mae and Freddie Mac can no longer back properties that have private transfer fees covenants recorded against them.
I’ve written about private transfer fees on Bloodhound before. At the time, I promised to do more work with them and report back. Since then I have looked at them, and received proposals from Freehold Capital, on implementing them on two of my own projects. I haven’t recorded their instruments on my projects even though I do like the concept. As a developer, private transfer fees would be great if they could be securitized so the money was available up front to pay for infrastructure costs. My issues with the Freehold proposal is they currently do not have a securities market for the instruments and I believe their cut of the action is too rich for what they are providing. So, I have made a private decision that I do not see enough value in their proposal.
That does not mean that I think Private Transfer Fees should be banned. It does not mean that a competitor, or Freehold themselves, might not have a proposal in the future I would like to be able to do. The concept, used as I described it, could be fantastic and help create more valuable properties we can all sell!
Jeremy Yohe, spokesman for the American Land Title Association, claims that “The casual homebuyer would have no clue that these fees are even attached to the property that they’re going to purchase” as his reason that these fees should be banned. He forgets to mention that the members of his association have the job or providing accurate title information for things recorded on the title, like covenants. I just love it when people argue their own incompetence is a reason that something should not be allowed.
There are already three groups that take a percentage of the price of a home at each closing that have no ownership interest in the property. The real estate agents (NAR), the title companies (ALTA) and the government with excise taxes. This is the same triad that doesn’t want anybody else to be able to do something similar, even if they are just financing the very infrastructure that that created the development in the first place!
I’m sure there are ways that private transfer fees can be abused. Pretty much anything can be abused. However, that doesn’t mean I don’t want to have the right to make my own choices. I also want the NAR and ALTA to quit trying to justify the protection of their pocketbooks while claiming to be watching out for consumers, when they aren’t.
Without private transfer fees, fewer developments will get done and consumers will have fewer, and more expensive options. The FHFA has submitted the proposal to the Federal Register for public comment, which will be open for 60 days. If you want to comment on private transfer fees one way or another, email: firstname.lastname@example.org. Please include “Guidance on Private Transfer Fee Covenants, (No. 2010-N-11)” in the subject line of the message.5 comments
I’ve been a bit quiet on BHB due to some personal issues I’ve been working through. But, I was very happy to see Greg’s latest post on challenging everything! I had a little holiday brainstorm today and wrote a post on my local Lake Chelan blog on a Real Estate Declaration of Independence for the consumers of services from Real Estate Professionals.
I want to share it here on BHB and get your thoughts on what I missed, should add or could have said better! So, without further ado here is my Independence Week start to the Real Estate Declaration of Independence:
Real Estate Declaration of Independence
We, the people who buy and sell real estate, hold these truths to be obvious:
- We the people believe that information on real estate for sale should be readily accessible without surrendering our private information. We reject having to register on a web site in order to view listings in an area. We value our time and will contact a real estate professional when we are good and ready for their services.
- We the people reject all policies of the National Association of Realtors that are not in the best interest of the real estate buying and selling public. Limiting our access to information, restricting our ability to a free and open market through regulation and limiting our market choices are all examples of policies we reject that are designed to line Realtors pockets at the expense of the public.
- We the people reject “Dual Agency,” where a real estate agent has an inherent conflict of interest with his agency and fiduciary duties by attempting to represent both the buyer and seller in order to earn a larger commission on our transaction. If the agent is truly delivering value, both parties of a transaction have an equal right to that value without a conflict of interest and each party deserves their own agent in the transaction.
- We the people reject the practice of real estate agents trying to “Buy the Listing” by telling a potential seller an above market price in an attempt to secure a listing. This practice costs sellers time and money while their home sits on the market as the agent waits for the seller to cut the price to where it should have been to start.
- We the people reject the practice of real estate MLS systems that limit a home seller’s exposure to potential buyers in an attempt to control access to a market. A listing agent’s responsibility is to market a property to the best of their ability and limiting the exposure of our home costs us money.
We the people are independent in a country that still allows us to make market choices. We the people demand better service and will exercise our freedom of choice and only choose Real Estate Professionals who deliver better value.
You might want to have a look at the entire post and give me feedback on it as well. Feel free to use it as your own if you agree to it and I would truly love suggestions to improve it.7 comments
I’ve been a bit slow on this one. I have been wondering what sector of the economy was going to over inflate and burst next. The answer has been right in front of me the whole time but the reason I did not see it very clearly is because I was wondering what part of the private economy would burst next. Sure, I knew the government was in trouble, but I did not think of it as a “bubble”, like real estate or the dot.com era.
A simple headline today put the perfect perspective out there for me to get it. If I apply “bubble economics” to the government sector, it is perfectly clear.
The economic collapse of Greece is a wake-up call. The unsustainable combination of a bloated public bureaucracy, high deficit spending and unfunded pension obligations busted Greece’s government bubble. Now the birthplace of modern democracy is on the brink of becoming a failed state.
The Bank of England recently warned that the U.S. is on the road to the same fiscal failure as Greece, and the Obama administration’s insistence on massive public spending and increasing deficits is the reason.
At this rate, the U.S. government will be the next economic bubble to burst. We’ve seen similar downturns: the information technology bubble in 2000, housing in 2007 and Wall Street in 2008. If unchecked, America’s government bubble will depress our economy with higher interest rates and defaulting state and local governments.
Politicians Aren’t Businessmen
Federal spending alone this year accounts for 25% of our nation’s gross domestic product. If you add state and local spending, the number is closer to 50%. No economy can thrive when nearly half of all economic output is directed by politicians rather than entrepreneurs and small businesses.
After big government spending, government employee unions pose a serious threat to America’s fiscal health. Over the past 30 years, union membership has declined significantly, from 23% of all workers in 1980 to about 12% today. But the percentage of union members working for government has soared: Over 50% of all union workers in the U.S. are employed by the government compared with only 17% in 1980.
In addition, government workers make about $10 per hour more than the average private sector worker.
And when they retire, taxpayers are on the hook to pay for lucrative pensions promised by a generation of politicians trying to win the next election. America’s small-business owners could only dream of providing the type of pensions that government workers take for granted. – IBD Editorials
Due to social media, I prayed for Anna to have the grace of god with her this morning. I did not feel like I was damaging the fabric of our country by my simple action. So, I was surprised to learn our president laments that the new media is not “a tool of empowerment.” I translate his words to mean that such things are not yet a tool of his empowerment. If you haven’t seen his comments, here they are:
BlackBerry-loving President Barack Obama declared war on technology, singling out Apple’s super-popular iPods and iPads for criticism at a commencement ceremony in Virginia, the New York Post reported Monday.
Obama — whose election was credited in part to his skillful use of modern media, from smartphones to Twitter to Flickr — on Sunday told college graduates that high-tech gizmos and apps were straining American democracy.
“With iPods and iPads and Xboxes and PlayStations — none of which I know how to work — information becomes a distraction, a diversion, a form of entertainment, rather than a tool of empowerment, rather than the means of emancipation,” Obama said at Hampton University in southeastern Virginia.
Obama described the most popular offerings of companies like Apple, Sony, Microsoft and Nintendo as distractions that are putting unnecessary pressure on the country.
Obama also lamented the spread of social media and blogs, through which “some of the craziest claims can quickly claim traction.”
“All of this is not only putting new pressures on you,” Obama said. “It is putting new pressures on our country and on our democracy.” – FoxNews
Do you think patriots should drop their iPads?14 comments
Think about this:
If one has no financial stake in our country, how much of a say-so should he have in its management? Let’s put it another way: I do not own stock, and hence have no financial stake, in Ford Motor Co. Do you think I should have voting rights or any say-so in the management of the company? I’m guessing that the average sane person’s answer is no.
Walter Williams is becoming one of my favorites. He is certainly thought provoking. The quote above is from an Investors Business Daily editorial by Walter Williams on Linking Voting Rights With Taxes Paid.
This week there has been a bunch of consternation in the press about 47% of the population not paying income taxes. The question, Bloodhounds, is do you think “taxes paid in” or “ownership of real estate” or something else altogether would be a better way to encourage voters to support policies that strengthen and are good for the country rather than just protecting their handouts?14 comments
In one of Greg Swann’s posts on finding splendor for yourself he came to the conclusion that we don’t have to get there, we are already here! Here’s what Greg said towards the end of that post:
Good news: We’re already here. You’re already a sane, normal person, and you already live among your neighbors in peace and prosperity. Yes, the state preys upon you like a vast, hideous vampire, reeking of death, impetuously random in its predations. But it matters less and less to civilized people with every passing day.
I don’t ever favor trying to defeat or take over evil institutions. It is sufficient to supplant them. And this sane and civilized people are already doing, just by living their sane and civilized lives. Consider eBay. Consider PayPal. Now think of a clearinghouse like PayPal unknown to anyone except its depositors. Does anything like this already exist? How would you know if it does? How hard would it be to create, now that you know it could exist?
I love the idea of supplanting systems that have lost their utility. I read that and wondered. Does anything like this already exist? Is there a world, in reality or in cyberspace where civilized people are able to engage in commerce freely? The answer is of course there is!
In previous career choices I used to do business with entrepreneurs and business people from Europe and Asia. They were from some of the highest taxed economies in the world. To me, it appeared they spent considerable time and effort structuring their businesses to keep assets in various places worldwide so they did not have to realize the taxes on them in their home countries. It seemed like a bunch of trouble compared to just living somewhere where tax rates were acceptable, like the United States in those days.
Since then, we’ve had the internet revolution. The tax climate in the United States is changing. So, I wondered how those folks might function today. What I found is that their goal of earning and keeping assets in various places and countries has become much easier. There are tools today I wouldn’t have dreamed of 20 years ago. Of course, those trying to track and take assets have new tools as well.
I love profits, earning profits and having them to do with as I wish. With the weekend’s events, I’ve been thinking how do people, like the Europeans I used to see, find ways to “make themselves unappetizing to predators.” With just a few minutes on the internet I found I was extremely behind the times and naïve as to the options out there.
Yes, there is electronic money. iGolder, WebMoney, Liberty Reserve, Pecunix, ECU Money, GlobalDigitalPay and EuroGoldCash to name a few. There are debit cards that draw directly from that money and hand it to your from your local cash machine! There are stores that access electronic money and send you products anywhere in the world! Businesses doing international purchasing and sales no longer need to go through all the delays and expenses of letters of credit like we did in the old days. I’m no expert in international finance, but I was conversant in the business transactions of twenty plus years ago. It looks like things have changed.
Of course, there are potential problems too. Having assets isn’t much good if the IRS decides you belong in jail, their ultimate coercion system, because you did something that they don’t approve of. There are other issues to consider with electronic currency, potential for fraud, ease of money laundering, hacking, exchange rate instability and the stability of the providers themselves. Some of these systems are supposed to be backed by gold and some are backed by currencies. They all have their own approach to providing their services.
There are also electronic stores, debit cards and exchanges that will convert electronic money to currencies in almost any country.
Is there risk in these electronic currencies? As in all things in life, certainly there is. Am I recommending any of these services? Nope. I just find it fascinating that there are markets and currencies that can operate with a degree of privacy outside the mainstream systems. With our government’s current approach to governing, I am sure they will find many more customers from the less and less free United States looking for ways to do things to improve how much of their profits they get to keep.
I’ll leave it to others to suggest how e-currencies might be used legally and effectively. Personally, I’m still trying to figure out if and how to use Private Transfer Fees!2 comments
Have you heard of Private Transfer Fees? A private transfer fee is a fee that is required to be paid each time a property is sold at closing. The transfer fee is attached to the property as a covenant that can run for a period, often 20 or 100 years.
The fees are being used for a variety of purposes. In some cases, they have been used to satisfy demands from environmental groups. Developers have also used them, by securitizing them up front, to help pay mitigation costs and up-front infrastructure costs on new developments. Supposedly even private home owners might be able to add a 1% transfer fee to their homes with revenues serving as future household income.
The NAR, American Land Title Association and the NAHB are all looking at ways to prohibit or limit private transfer fees. While that tends to make me like the idea of transfer fees on its own, I really don’t see issues with them. Admittedly, I develop properties from time to time. Yes, I am frustrated with impact fees, mitigation and infrastructure fees that have climbed to the stratosphere in my little part of the world. This approach could really help to create some affordable homes that people might actually buy.
Freehold Capital Partners is active in the reconveyance fee financing arena working with developers to structure financing for infrastructure improvements.
Essentially, the concept is based on the premise that improvements which enhance real property are in the immediate and long-term public interest; and a system enabling present owners of private property to better and more fairly apportion present costs and profits amongst multiple future beneficial owners increases economic efficiency.
Traditionally, initial buyers shoulder 100% of the burden of amenities, infrastructure and other improvements, which creates a high barrier to entry into the development. By utilizing this funding tool, developers can now more fairly apportion expenses incurred for permanent improvements among successive owners of the property who will be enjoying the amenities and improvements for years to come. (A familiar example would be bonds issued to finance new schools, where the bonds are paid off over time by the same families whose properties continue to benefit from having a school in the community.) In fact, Transfer Fee financing has often been referred to as the creation of a “mini-bond”. However, unlike traditional bond financing, the transaction costs associated with creating Transfer Fees Rights are minimal.
Flowing from this premise, reconveyance fee financing enable institutional owners and developers to allocate costs amongst future willing buyers by requiring, in connection with each subsequent transfer of title, the payment of 1% of the gross sales price.. – Freehold Capital Partners
The NAR, ALTA and others cite concerns about disclosure. However, a properly recorded covenant should show up in a title search so I think that cannot be the real concern. They cite concerns that people never read covenants. That floors me! I can’t imaging buying a home without reading the covenants.
The National Association of Realtors and the American Land Title Association, for example, are asking their members to persuade legislators to prohibit or limit the use of investor-oriented private transfer-fee programs. Even the National Association of Home Builders, some of whose members reportedly have signed up to offer transfer fees, isn’t convinced the idea is sound.
“It’s a very creative concept,” said David Ledford, the builder association’s senior vice president for housing finance, “but it’s largely untested and controversial politically.” – Seattle Times
Homes that are subject to a reconveyance fee should sell at a lower price due to the reconveyance fee. That lower price should be reflected in assessments and lower property taxes. So, all those infrastructure improvements the developer had to put in wouldn’t show up completely in the taxed value of the property. I like that the property owner may not end up paying property tax on improvements which are typically deeded to the local government which was simply double taxation before.
California has laws that require upfront disclosure of reconveyance fees. Texas has some prohibitions on them. Kansas, Oregon, Florida and Missouri do not allow them.
So, here’s a method that helps developers fund projects, lowers the price of housing and lowers the ongoing cost of property taxes for a home. The instrument of this tool is recorded on the title of the property for all to see. Tell me. What’s not to like?11 comments
Mr. Obama’s latest program for the foreclosure crisis attempts to stabilize the market in a different way than his previous attempts. Before, the feds tried to keep people in their homes by negotiating reduced payments through loan modifications. Few people were able to use the programs and of those that did the rate of default recidivism was 50% within six months. The “new” approach is to help those in trouble get out of their homes by streamlining the short sale process and adding requirements that will force banks to accept many more short sales. Basically, the feds will pay owners to sell at a loss and give them a little cash in the process.
Starting April 5th, hundreds of thousands of delinquent borrowers will be encouraged to sell their homes through this process. Since the basic laws of economics still apply, that flood of inventory at fire sale prices will create heavy downward pressure on other homes in their markets. Prices should fall.
That’s just one problem with this approach. The Home Buyer’s Tax Credit was already a magnet for fraudulent filings. The government mandated short sale process could be even worse.
Short sales are “tailor-made for fraud,” said Mr. Lawler, a former executive at the mortgage finance company Fannie Mae.
Last year, short sales started to increase, although they remain relatively uncommon. Fannie Mae said preforeclosure deals on loans in its portfolio more than tripled in 2009, to 36,968. But real estate agents say many lenders still seem to disapprove of short sales.
Under the new federal program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept. This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it. – MSN
With the high regard that the public holds for real estate agents, they should be a pinnacle of integrity when it comes to setting values for lenders. Or, could that be a problem? I’ve found that real estate agents offer different values, at times in spite of the comparables, to suit their desired outcome to get a listing. Also, there is rarely enough information on comparable properties, particularly in a small market like Lake Chelan, to make a realtor’s Comparative Market Analysis statistically meaningful (for those the agents that understand statistics) making the estimate, at best, a hopefully educated guess. How much of your tax money do you want to see spent this way?
For responsible home owners who might be looking to sell if this new program actually attracts sellers, you could be facing sales competition from subsidized homeowners in as little time as one month.6 comments