Property Grunt

Friday, March 31, 2006

FSBOS: This is how you do it

This will be my third entry regarding fsbos. The first was FSBOs unleashed and the second was What's it worth.

I stumbled upon this fsbo on Curbed and it is by far the best FSBO site I have seen in awhile. The site addresses every detail in the fsbo process and is absolutely perfect from the photographs to the user interface. I contacted the owners who were quite gracious and agreed to my answer my questions. Below is my invterview them.

1. What made you decide to do a fsbo?

We felt that buyers for our EV place would be similar to us, tech
savvy internet users and would start searching for apartments online
before calling a broker. We also work from home (and only part time)
so we have the time to invest in showing/marketing our apartment.
For all the legal stuff we have to use our attorney anyway so brokers
don't add any value there.

2. Would you use a broker if the commission was right?

If they brought value to the deal, i.e. found a buyer that would pay
more than we could get on our own (more than cover their commission)
we would consider it, but they have to WORK for their fee.

3. How long did it take for you to prepare the website? Did you get
any professional advice?

About 4 hours. I did it myself using Apple iWeb/iLife software. I
already owned the domain name from when I sublet our apartment a few
years ago. I have zero design talent, but using Apple's templates I
made the site look ok....lot's of people have written positive
comments about the site, zero criticisms received.

4. There is a section of your site listing other fsbos. Do you know
any of these owners personally? How are they faring?

I didn't know any of them before we launched our site. I've been in
email contact with a few of them. 2 or 3 of them have already gone
to contract.

5. How do you handle showings and open houses? Do you do it yourself or do you have someone else do it?

My wife and I do it. We know the apartment and building better than
any broker could. We may be too honest and tell the buyer more than
a broker would, but we feel potential buyers respect our "all our
cards on the table" approach.

6. For anyone who is doing a fsbo, what advice would you give them?

Be realistic with your asking price. Spend a few weekends looking at
Open Houses in your area first, try and determine what has sold and
for how much.

Keep your home clean and presentable. Get rid of clutter. (hard to
keep up for every weekend). Expect quite a few "tire kickers" just
checking out your place. Be prepared to give up a few Sundays, have
a good web site, tell everyone you know you are selling (especially
your neighbors), people will forward your web link to friends and
colleagues looking to buy.

Put an add on CL (free right now) and NYtimes (expensive but still
seems to be where most people look). There's a buyer for every place
in NYC, they just have to find you! Be prepared to get phonecalls/
email from every broker in the city. 90% come across as idiots.
Some are professional and worth noting their information in case you
need them in the future.

7. What difficulties did you have putting your fsbo together?

The worst has been the weather. We pay for ads to have an open
house, then mother nature gives us a crappy day. Not many people
show up. That has been the biggest hassle (and brokers calling but
we screen most calls with caller ID).

8. There is an unofficial statistic that is thrown around by
brokers that 80% of fsbos fail and owners hire a broker. How do you
feel about that statistic?

It could be true, people with career jobs don't want to invest the
time.... Doing a FSBO is like anything, the more effort you put into
it the more success you'll have. If you have the time, try it. You
can always hire a broker if things don't work out.

9. Do you feel doing a fsbo justifies the cost?

If we sell close to our asking price, absolutely.
We expect to save $30-$50k in commissions. That buys us a new car or
a hell of vacation for a few weekends work.

My favorite aspect of this website are the pictures. They are absolutely pristine and they are done in the most professional manner. In fact when I first saw the site I thought they brought in a professional photographer since all of the photos were well staged and properly lit.

There is a standard rule among brokers that photographs should be treated as teasers and should only have limited shots of the apartment. Some brokers only put up one good photo of the apartment using it as a lead generation tool. The objective is to entice buyers to contact the broker or to come to the open house. Even if the buyer rejects the listing then the broker has a chance to make an impression and create a connection with the buyer.

However in the case of this FSBO, the owners could probably care less about lead generations and want people who are genuinely interested in buying the apartment so they ar emore than happy to show everything. Besides, being honest and straigthforward with their apartment will work in their favor.

Sunday, March 26, 2006

Casualties of War

My comrades in arms are slowly turning in their walking papers. I know one agent who gave up his desk and is working part time for his brokerage company. Another amigo is doing the same thing. A third left last year to start his own business. But is thinking about returning because real estate is alot easier.

It seems alot of us are becoming burnt out over showing apartments and dealing with idiots who want to negotiate fees.

So where does that leave the Grunt? Let's just say I am looking over my options. I'll let you all know what the gory details are.

Wednesday, March 22, 2006

Life is too damn short.

Life is too damn short for anger.
Life is too damn short for regret.
Life is too damn short for doubt.
Life is too damn short to care what others think about you.

Tonight I was leaving my local grocery when I was approached by an elderly gentleman. He asked if I could help bring a bag of chicken to his apartment a block away. I'll be honest. I didn't feel like doing this since I was cold and tired but I figured what the hell. To make things more interesting he needed to grab my hand as we walked for balance. And for a senior citizen he had an iron grip.

As we got nearer to his home I had a series of ephianies. One day, God willing, I will be as old as this man. I maybe in the same position asking for strangers to help me carry my groceries. Eventually I will become dust.

I am not trying to be morbid but honest. Once we are old and gray it is pretty much too late to do what we want.

This evening I asked somone to assist me in contacting a set of individuals for business opportunities. That person refused, not out of malice, but because of politics. We reached a compromise but after our conversation I realized the compromise was unacceptable sicne I would have to go through two channels and there was no guarantee that my message would get through to them.

So I have decided go over everyone and contact the parties directly. When I first thought of this option I realized I might draw the ire of alot of people even thought I wasn't doing anything illegal. But after meeting this senior citizen I realize, who gives a f**k? I might piss off some people and maybe burn some bridges. What I think is worse is being a senior citizen and regretting not taking that chance.

When he got to his building he thanked me profusely but I responded by thanking him back.

Tuesday, March 21, 2006

Holy Crap! Tax data for sale

I am really not to keen on this idea. It is only a matter of time when real estate data, e.g. mortgage information, is for sale.

IRS plans to allow preparers to sell data
Critics said the proposed regulation could lead to a loss of privacy for clients.
By Jeff Gelles
Inquirer Staff Writer

The IRS is quietly moving to loosen the once-inviolable privacy of federal income-tax returns. If it succeeds, accountants and other tax-return preparers will be able to sell information from individual returns - or even entire returns - to marketers and data brokers.

The change is raising alarm among consumer and privacy-rights advocates. It was included in a set of proposed rules that the Treasury Department and the IRS published in the Dec. 8 Federal Register, where the official notice labeled them "not a significant regulatory action."

IRS officials portray the changes as housecleaning to update outmoded regulations adopted before it began accepting returns electronically. The proposed rules, which would become effective 30 days after a final version is published, would require a tax preparer to obtain written consent before selling tax information.

Critics call the changes a dangerous breach in personal and financial privacy. They say the requirement for signed consent would prove meaningless for many taxpayers, especially those hurriedly reviewing stacks of documents before a filing deadline.

"The normal interaction is that the taxpayer just signs what the tax preparer puts in front of them," said Jean Ann Fox of the Consumer Federation of America, one of several groups fighting the changes. "They think, 'This person is a tax professional, and I'm going to rely on them.' "

Criticism also came from U.S. Sen. Barack Obama (D., Ill.). In a letter last Tuesday to IRS Commissioner Mark Everson, Obama warned that once in the hands of third parties, tax information could be resold and handled under even looser rules than the IRS sets, increasing consumers' vulnerability to identity theft and other risks.

"There is no more sensitive information than a taxpayer's return, and the IRS's proposal to allow these returns to be sold to third-party marketers and database brokers is deeply troubling," Obama wrote.

The IRS first announced the proposal in a news release the day before the official notice was published, headlined: "IRS Issues Proposed Regulations to Safeguard Taxpayer Information."

The announcement did not mention potential sales of tax information. It said the proposed rules were guided by the principle "that tax return preparers may not disclose or use tax return information for purposes other than tax return preparation without the knowing, informed and voluntary consent of the taxpayer."

IRS spokesman William M. Cressman defended the proposal in similar terms.

"The heart of this proposed regulation is about the right of taxpayers to control their tax return information. The idea is to emphasize taxpayer consent and set clear boundaries on how tax return preparers can use or disclose tax return information," Cressman said in an e-mail response to questions.

Cressman said he was unable to explain "why this issue has come up at this time other than our effort to update regulations that date back to the 1970s and predate the electronic era."

Not all the changes have drawn opposition.

Beth A. McConnell, director of the Pennsylvania Public Interest Research Group (PennPIRG), said she welcomed a requirement that a taxpayer would need to consent to overseas processing of any portion of a tax return.

"That's a positive development, but I don't think it's worth giving up our tax returns' privacy for," said McConnell, who plans to testify on behalf of the U.S. Public Interest Research Group at an April 4 IRS hearing in Washington on the rule changes.

McConnell accused the IRS of using the new limit on overseas processing to dress up changes that would chiefly benefit tax preparers, marketers and data brokers.

"That's a disturbing trend among Washington officials lately," McConnell said. "They'll offer a modest consumer protection in one area in exchange for dramatic weakening of consumer protections in another area, and then try to convince the public that it's all in our interests."

Critics of the proposal said it could do more than open up sales of tax information to data brokers and marketers, because it could undermine taxpayer confidence in the entire tax system.

"Privacy protections for tax information are especially critical given the largely voluntary nature of the U.S. tax system," said Chi Chi Wu, a tax-law specialist at Boston's National Consumer Law Center.

Wu and other critics said they were uncertain who or what was behind the proposed changes in IRS privacy rules, which currently prohibit tax preparers from selling returns to third parties for marketing purposes, and require written consent if they want to use it for marketing by companies under their own corporate umbrella.

Officials at H&R Block and Jackson-Hewitt, two of the nation's largest tax-preparation firms, did not respond to requests for comment. Cressman said the IRS had so far received only about a dozen comments on the proposal.

"I think this just flew under the radar screen for so many people," McConnell said.

Although the formal comment period ended March 8, Cressman said late comments "may receive consideration if they are sent to the IRS promptly." Consumer advocates are urging taxpayers who oppose the changes to contact the agency and Washington lawmakers.

Where to Write

It's too late to comment electronically, but the IRS may still consider written comments. Mail them to:

CC:PA:LPD:PR (REG-137243-02)

Room 5203

Internal Revenue Service, Box 7604

Ben Franklin Station, Washington, D.C. 20044.


Read the IRS's proposed new rule via:

Sunday, March 19, 2006

Lockhart Steele on Jane's New York

Once again another media outlet has grabbed the teet of the real estate market and has proceeded to milk a story that is as about as dry as an armadillo's ladyflower.

Jane's New York did their own take on the current real estate market titled Hot Properties. If this is the best title of a show on real estate that Colubmia Journalism school can produce then it looks like Akron, Ohio is on its way in becoming the media center of the world. Btw Jane, never wear black or dark colors again. You blend into the background and look like a disembodied head. Didn't you ever watch the Kennedy/Nixon debates?

Lockhart was absolutely great. Not only was he knowledgeable but in my opinion Lockhart has a strong screen presence and excellent vocal skills. I would not be surprised to see him hosting a Curbed tv show in the near future.

As for the rest of the show, I was not dissappointed since I was not expecting much. It was the usual song and dance about how there was no bubble and Manhattan was invulnerable to the bubble. Anyone who says there is a bubble should be dragged out into the street and beaten with a chair. Manhattan in the long run is the greatest investment in the universe. And if you can't buy in Manhattan then buy in Brooklyn. All hail Manhattan.

Below are quotes of interest.

Pam Liebman

"There's no way the real estate market can in any way be referred to as a bust."

Channeling our inner Barbara I see. I guess the prince of darkness stopped taking your calls. He doesn't need to since you already sold your soul to him.

"We've been on a fifteen year ride and while that ride may slow down and may have a valley here or there. Its not going anywhere but a positive direction in the future."

WE DON'T KNOW THAT! In fact it looks like it will all go to s**t. Our debt limit has been raised, interest rates are definitely going to get raised and our international situation is looking very grim including the oil market. All these variables will make the future rather complicated for the real estate market. So to say that the market will only face a positive direction is oversimplying the nature of the beast of real estate.

The most realistic perspective on real estate

Lockhart Steele
"It's market is where well priced property are very likely to sell really quickly, And people who who have an inflated idea of what their properties are worth are probably going see their property sit on their market for awhile."

Right on Lock. Fight the power.

I think that Jane should have made a reference to Curbed particualry with the segment on new areas because they were using terms like So Bro and Bel Del. In fact they should have just call it the Curbed segment.

And I don't care how big and luxurious a bathroom is. If it takes up 200 square feet of a 600 square foot studio then it has functional obsolescence written all over it. We do only two things in a bathroom and unless you are some perv or Chuck Barry, they do not involve eating or socializing in large groups.

Of course there was the obligatory listings porn where brokers publicly masturbated over their exclusives and how you wish you could be them. But they popped their wad a while ago and all that is left is for the industry to wipe up the splooge.

There will be more real estate tv specials underway however as the adjustments take hold of the market I suspect the segments will take on a more grimmer tone like how to survive a foreclosure and how to do a fsbo.

Thursday, March 16, 2006


More debt for everyone.

The Senate has approved a bill permitting the government to borrow another $781 billion, bringing the limit on the national debt to nearly $9 trillion.

Can we say "Reganomics"?

Seriously folks, share your comments and opinions of what this means for the economy and housing market.

Tuesday, March 14, 2006

FSBOS UNLEASHED: What's it worth?

After committing yourself to a fsbo you have to figure out how much to price your apartment. This a very tricky matter. Price it to high and no one will show up. Price it to low and you will rip yourself off.

The most common technique utilized to acquire a price is called "Comparables" or "comps."

Before I go any further I want to make it quite clear that comps are not an average price.

According the Fundamentals of Real Estate Appraisal

The appraiser collects sales data on comparable nearby properties that have sold recently then makes market derived adjustments reflecting individual differences between the subject and comparable. After necessary adjustments have been made the appraiser selects the resultant value idnicaiton that best reflets the market values of the subject property. As a formula, the sales comparison approach is

Sales Price of Comparable Property + or - = Indicated value of subject property.

For the ordinary person to get this data you have two basic sources. One is to call a broker and see if they are members of REBNY. If they are they will have acccess to R.O.L.E.X. which is the residential database of Manhattan Let them know that you are interested in selling your property and and want to see how much it would bring on the market. Ask them if they could give you a list of comps of what has sold on the market that fits your apartment.

This is a free service that brokers provide in hopes of getting an exclusive. Take advantage of it, however I do recommend that you do not make any promises to the broker if you decide to go fsbo.

Or you can talk to the main man Jonathan Miller and he can hook you up with some of his groovy appraisers and for a couple of bucks they can do a most triumphant appraisal of your apartment. This is will be probably more accurate since appraisers are trained for this type of work.

You should also look through the New York Times, Craigslist and other real estate sites to get an idea of what the market is offering. And exercise a little shoe leather by going to open houses in your area and talking to supers and doormen in your building to see what has been sold. This will give you an idea of where the market is going.

As you can see this is not rocket science. All it takes is a little effort to get the information you want. After you have acquired this data you couldput it into an excel spread sheet and figure out where you stand. It is up to you. Your main objective is to make an educated decision about pricing your apartment.

Free Coffee

Not a hoax

Starbucks will host its first-ever National Coffee Break, inviting customers in for a complimentary cup of freshly brewed coffee, on March 15 from 10 a.m. to 12 p.m. In more than 7,500 stores, partners (employees) will pour tall (12-ounce) cups of coffee for surprised customers and delighted commuters.

Grab your thermoses.

Saturday, March 11, 2006


Oh, how long can trusty Cadet Stimpy hold out? How can he possibly resist the diabolical urge to push the button that could erase his very existence? Will his tortured mind give in to its uncontrollable desires?
(Announcer grabs Stimpy, forces him closer to the button.) Can he resist the temptation to push the button that, even now, beckons him even closer? Will he succumb to the maddening urge to eradicate history? At the MERE...PUSH...of a SINGLE...BUTTON! The beeyootiful SHINY button! The jolly CANDY-LIKE button! Will he hold out, folks? CAN he hold out?

-Ren and Stimpy

When I first saw this article my initial REACTION was "What the f**k is the matter with THESE people?"

I thought I could lay to rest the subject of ignorance in real estate after this entry. But it appears this topic is like Paris Hilton's career. It refuses to die.

However I realize with the introduction of a new medium, there is an initial period where people drop their guard and make mistakes. But folks, I am just flabbergasted about how naive people are.

March 11, 2006
On the Internet, Some Home Buyers Find a House of Cards
For the last few years, real estate transactions over the Internet — where buyers need never set eyes on the property they purchase — have become increasingly common.

On eBay, the biggest online marketplace, and dozens of other Web sites with names like and, sales involving tens of thousands of dollars can occur entirely online. EBay, for example, may have more than 1,800 residential properties listed on any given day — from multimillion-dollar vacation houses in Florida to thousand-dollar fixer-uppers in the rural Midwest.

But now, with plenty of buyers eager to get in on the real estate boom, such online sites have become perfect places for unscrupulous sellers who have bought dilapidated houses at, say, foreclosure auctions, to resell, or flip, them quickly for inflated prices. Many of the deals sound too good to be true. But the gullible are lured by nice photos and a belief that online transactions on big Web sites are generally safe.

Let's get something straight. Bait and switch tactics and other types of con artistry are par for the course in real estate. People were getting ripped off waaay before a government brain trust decided to create a communications system that would survive a nuclear holocaust and be used for porn. What is happening to these people is, unfortunately, normal.

Online flipping is happening in economically distressed cities in New York, Ohio, Michigan and Pennsylvania. The practice, local government leaders say, is destabilizing already weakened urban neighborhoods by displacing legitimate investment.

Buffalo has been particularly hard hit by online flipping, as the city's persistent population decline and high foreclosure rates have created a glut of some 20,000 vacant houses.

"Ninety-nine percent of these online ads have some kind of fraud or lies," said Tracy Krug, a building inspector in Buffalo. "They paint a nice rosy picture: 'on a bus line, near a nice market.' They don't tell you you're going to be across the street from a crack house."

Buffalo. Buffalo. Good old Buffalo. I remember a certain group of real estate zealots who were pushing Buffalo as the next big thing. I am not surprised that it has become a hotbed for scam artists due to the fact it is one of the few places in the country where people aren't priced out in buying properties. Coupled with irrational exuberance you have alot of idiots running around writing checks they can't cash.

Does not anyone read the newspapers? If they did they would know that Buffalo is suffering from a huge brain drain to the point that hospitals are starting to close up. In order to rent out homes, you need a population to rent to. Buffalo is lacking that.

Safeguards that protect buyers, like state laws requiring disclosures about a property's condition, are rarely effective when the transaction is online. Although such laws apply to most transactions, online or not, a long-distance buyer will not necessarily know about them.

Government safeguards will probably be one of the driving forces for taxing transactions on the internet. If Ebay and other e-commerce sites want to avoid losing a chunk of their profits to taxes, they will have to take every iniative to protect their customers since the government will most likely demand compensation to fund any type of protection they create for consumers.

This might help explain why Greg Tanner, who says he has a knack for "turning one dollar into two dollars," is now more than $30,000 in debt.

He should have stuck to making two dollars.

Three years ago, Mr. Tanner, a pawnbroker in Salida, Colo., hoping to make money in real estate, went to eBay and found low-price houses for sale in Buffalo.

One ad, for a house at 173 Paderewski Drive on the city's East Side, read: "Attractive, warm, two-story home has great potential."

Forty years ago, that might have been true. Through much of the 20th century, the residents of Paderewski Drive, most of them Polish immigrants, took pride in their hard-earned homes.

But since the 1980's, as working families fled the East Side, a neighborhood increasingly vulnerable to crime, many of the houses on Paderewski and the surrounding streets have been abandoned or demolished.

Although Mr. Tanner, 48, had never set foot in Buffalo, he called the seller, a real estate investor named Scott Burton, who had paid $1,000 for the house a few months earlier. Based on what he learned from Mr. Burton, Mr. Tanner said he believed that the house was in decent shape and needed only minor repairs. Mr. Burton, who has bought and sold dozens of houses in Buffalo, could not be reached for comment.

Mr. Tanner made two key errors. He did not do his due diligence. He did not stage any type of personal recon of the area in question. He did not talk to locals or do a search on the web for the property. If he did, he would have figured out that this was a bad investment.

His second error was being too trusting. When you buy real estate you want more than one source of information and the last thing you want to do is rely on the seller's data alone. I mean seriously, Mr. Tanner is a pawnbroker so he has probably developed a very strong BS detector dealing with customers hocking their valuables. I am surprised it didn't work this time.

Mr. Tanner and his business partner paid Mr. Burton $3,000 for the house on Paderewski Drive, and $10,000 for two other houses in the same area, on Lombard Street. They paid with a credit card, using PayPal. Eventually, the deeds were transferred and recorded in the Erie County clerk's office.

Two of the houses were considerably run-down, Mr. Tanner said, but it was the 130-year-old two-story house at 173 Paderewski that was to become his albatross.

Over the next few months, he paid nearly $7,000 to a Buffalo contractor, recommended by Mr. Burton, who told him that all that was needed were a few thousand dollars in repairs. After a while, the contractor reported to him that the work had been completed, Mr. Tanner said, and the house was ready to be rented. The contractor e-mailed photos to Mr. Tanner to show his work.


Counting on a profit, several months after buying the Paderewski Drive house Mr. Tanner advertised it for sale on eBay. He quickly found a buyer in Britain: Claire Fennelly, a residential landlord in West Yorkshire who was looking for investment property in the United States.

Ms. Fennelly paid $14,900 to Mr. Tanner and his business partner, and $2,500 more to the same contractor for further repairs.

Then Ms. Fennelly decided to do what Mr. Tanner had not: she and her husband got on a plane and flew to Buffalo in November 2003. When they took a cab to Paderewski Drive and arrived at the house, the cab driver refused to let them out. The neighborhood was just too dangerous, he said. When she saw the house, Ms. Fennelly said, it had missing windows, holes in the roof and the siding was gone.

This is what Ms. Fennelly should have done in the first place.

"You've never seen anything like it," she said. "We sat there in the cab thinking, 'What have we done.' "

You f**ked up. Now get over it.

Ms. Fennelly called Mr. Tanner immediately. He said hers was the first true description of the house he had heard. He promised to pay her back and called the county clerk's office to make sure that the title would not be transferred to her. Ms. Fennelly said she was still waiting for a refund and had not taken legal action against him.

Consider that money gone. Tanner is already $30,000 in the hole. Even with the more rigid bankruptcy laws he probably will go that route to avoid refunding her money. No blood from this stone.

A few months later, Mr. Tanner received a Housing Court summons for a lengthy list of code violations, so he drove the 1,600 miles from Colorado to Buffalo. He said he received little sympathy from the Housing Court judge. Mr. Tanner called Mr. Burton to demand his money back, but could reach only Mr. Burton's business partner, Stephen Fox, who, Mr. Tanner said, hung up on him.

Of course the judge has no sympathy for Mr. Tanner. If Mr. Tanner had just made a call to the county clerk he would have discovered his investment was a money pit. Burton and Fox are under no legal obligation to even listen to him so why bother calling them?

Calls placed to Mr. Burton's home in Gulfport, Miss., seeking comment about his real estate transactions, were not returned. Mr. Fox, reached in Roseburg, Ore., said Mr. Burton had no interest in commenting. (Mr. Tanner said recently that he was not pursuing any legal action against Mr. Burton or the contractor. "I'm already too drained, financially," he said.)

This is actually the smartest thing he has done. Litigation is not cheap so Mr. Tanner is better off letting his pride go and cutting his losses.

Sam Hoyt, a Democratic state assemblyman and co-chairman of the Buffalo mayor's task force on real estate flipping, whose aim is to educate consumers on the destructive effects of the practice, blames eBay, saying it enables dishonest flippers to lure buyers.

Mr. Hoyt said he had repeatedly appealed to eBay officials, asking the company to make specific changes, like informing sellers that they must comply with New York State disclosure laws and requiring a copy of written sales contracts. But Mr. Hoyt said he had received little cooperation from the company.

"What eBay is doing, in my opinion, is immoral," he said. "They have a responsibility to not facilitate activity like this."

Representatives of eBay say the company has few legal obligations to buyers of real estate on the site. "The people responsible for house flipping," an eBay spokesman, Hani Durzy, said, "are the people selling these houses and the people buying them sight unseen. How these sellers and buyers are connecting is not as important as the fact that the buyers are not doing the proper due diligence when buying a property."

All eBay is doing is facilitating the sale. That is why they feel they are under no obligation to listen to Mr. Hoyt. However as I have stated before they might want to initate a series of protocols to protect customers because if the government gets involved they may demand e-commerce serivces to pay up for the cost of protecting customers online.

(Although eBay holds real estate licenses in many states, it does not act as a real estate agent and does not charge a commission. Instead, it charges a flat listing fee of $100 to $300 for residential property, depending on the duration and the type of listing.)

Joe Tseng, a real estate investor from San Marino in Los Angeles County, also saw what looked like a great deal on eBay — in his case, an apartment building in Youngstown, Ohio. Mr. Tseng did fly to Ohio to inspect the property, which turned out to be a run-down and nearly vacant 11-unit building.

He withdrew from the deal, lost his $5,000 deposit, and learned a hard lesson about buying real estate online. "It's very dangerous," Mr. Tseng said.

Mr. Tseng, with all due respect, real estate is always dangerous. Even before the internet. If you had simply applied the same skillsets you utilized investing in San Marino I am sure you would have never lost your $5000.

Richard W. Hayman, president of Bid4Assets in Silver Spring, Md., agreed with Mr. Durzy that buyers needed to be cautious. "Some of this actually amazes me," he said. "People seem to think 'caveat emptor' doesn't apply when you're sitting at your computer."

You and me both. I think by now people should know that the internet is privy to all sorts of big bads ranging from spyware, adware, viruses and child predators. Online real estate is not immune to that.

Yet Ms. Fennelly, who has been shopping on eBay for years without a problem, said it was the feeling of safety she got from eBay that made her buy property before setting eyes on it. "You get lulled into a false sense of security with the name eBay, then get scammed in a big way," she said. "If it wasn't eBay, I wouldn't have gone ahead with it."

She is not alone. Mr. Krug, who has been a building inspector in Buffalo for 18 years, said he was now dealing with online buyers as far away as Australia and Israel. "You're talking all over the world, people buying stuff in Buffalo, saying, 'Nine thousand dollars. I can't beat that.' "

In other words people are treating real estate like an all you can eat chinese buffet. As long as it is cheap and they can fill themselves up to their heart's content they are happy. It doesn't matter if the food is substandard and will give them the mud butt. A brand name can only do so much. People need to make the effort to protect themselves.

Michele Johnson, a resident of Buffalo's East Side and one of the founders of the task force on flipping, said she had reported hundreds of misleading real estate listings to eBay, with little effect. Still, Ms. Johnson said: "It's hard to say that taking the listings off eBay would fix the problem. These sellers are just going to find another avenue."

Where there is blood there are wolves. Where there is money to be made, there will be scam artists and unethical behavior.

The house at 173 Paderewski, which was claimed by the city for back taxes Mr. Tanner had not paid, was deemed a safety hazard and razed several weeks ago. The cost of the demolition, which Buffalo expects Mr. Tanner to pay, is $9,000.

Mr. Tanner's two houses on Lombard Street were also taken by the city. They, too, are in line for demolition. Mr. Tanner, whose business partner has declared bankruptcy, said he lay in bed at night, wondering where he went wrong.

Mr. Krug said Mr. Tanner had asked him the same question. "I told him the first thing he did wrong was buy a computer," Mr. Krug said.
David Staba contributed reporting for this article.

No. The first thing he did wrong was not to use his computer properly. A simple Google search would have opened up a plethora of information that would educate him and prevent him from doing anything stupid.

Real estate investing beyond your local area is very difficult because you have to hire someone to keep an eye on things and sometimes you have to hire somone to keep eye on the person who is keeping an eye things.

It is a standard rule in real estate not to overpay. But for the love of mike, if a property is selling below market then something isn't right. Just a simple indication of the cap rates of that particular area should give you an indication what to expect in price.

Remember. Before you even put a dime down for a property you should do your due diligence. Which means actually going to the property and examining every nook and cranny. It also means talking to neighbors and researching the area. This is all common sense. If you don't follow procedure and screw yourself over, I can guarantee you that no one will shed any tears for you. SO DON'T BE STUPID!

Friday, March 10, 2006

Just Bring It!

you've been mouthing off about it for quite awhile... read it and
weep... along with all the others that read your blog and waited for "blood in the streets"...

Now I was preparing a velvet glove response to this comment with witty repartee about not eating red meat and putting together a power point presentation until I went over to the main man himself Jonathan Miller. And let me tell you good people his words brought out the bad mother****** within the Grunt. That ruthless, relentless force within all of us that lays waste to any jabronis who challenges us and tries to punk us out. So let's get this clear folks, velvet gloves are officially off. Anyone challenges me on whether there is a bubble or not is going to be tasting the iron fists of the Grunt.

This what this reader was referring too:

Manhattan condos up 20 pct in 2005, report says Thu Mar 9, 5:09 PM ET

Median prices for condominiums in Manhattan rose 20 percent to $770,000 in 2005, while cooperatives rose only 6 percent to $649,000, according to reports on Thursday by the Real Estate Board of New York (REBNY).

REBNY's Cooperative and Condominium Reports said the downtown area south of 42nd Street had the highest price for condos at $849,000, a 27 percent increase from 2004.

Northern Manhattan condos saw the highest percentage increase, climbing 46 percent to a median of $364,609.

Co-ops on the West Side rose 19 percent to a median of $722,000. For the first time, the average sales price in this neighborhood climbed above $1 million to $1,087,950.

The median price per square foot for Manhattan condos rose 25 percent to $951.

"The downtown market, which hit a 10-year high in 2004, continues to flourish, and price increases in all neighborhoods demonstrate the continued desire to live in New York," REBNY President Steven Spinola said in a statement

I am sure the offices of REBNY were giving each other high fives as they launched another public relations coup slapping away any fears of bubble trouble. But here's the problem with this data. It is doesn't dictate what is happening now. That is bigger issue. In fact I am a little more alarmed about what they have presented because it means that the market is really overpriced and that we are definitely due for a correction. What we need to be focusing on is with the current situation which it is no longer a seller's market. I wouldn't even call it a buyer's market. It's more like, let's not do anyhting stupid and see what happens market. So REBNY can play the whirling dervish card all they want. What they are presenting does not represent the here and now.

Jonathan Miller has got my back on this one. Just read his latest entry where he put his foot up the ass of Time Magazine's article on the real estate bubble.

From the Matrix:

The tag line Despite dire predictions ahead, U.S. home prices continue to soar is very misleading. The price differential over the past year was largely due to the spike in prices in the first half of 2005. Prices are not soaring today.

As I have stated before.
IT IS ALL ABOUT THE NOW! Because what happens now will play a critical role of what will happen later.

One of the maddening aspects about real estate is that you never know how bad things get until they actually happen and by that point it is really too late to do anything about it.

That is why there is an army of real estate Hessians who refuse to believe we are in a downturn since in their minds there is no hard evidence supporting this trend. Although it is enjoyable to go toe to toe with this group it is a bit disconcerting to see that a Lemming mentatality has still take hold of a certain segment of the population. I am curious about how they will get themselves out of this jam once the check comes due.

Thursday, March 09, 2006


Okay. This is absolutely atrocious. I mean, don't these people have any pride? I have been thinking about this for awhile but I have decided to do a series of entries on how to properly execute a FSBO.


Unlike most of my brethern, I am not looking to convert FSBOs into sellers for brokers. I have no desire to pick up any FSBOS as exclusives. I strongly believe that owners have the right to do whatever they want with their property within law and reasons.

I know some brokers are going to be extremely pissed at me. But as far as I am concerned the information I am presenting is pretty much common sense and anyone with a GED could figure out how to do this. Besides, I think everyone should have the right to be as miserable as a broker.

Before I begin, I would like to ask a series of questions.

1. Why do you want to do a FSBO?

The only answer you should have is because you want to save money. That is the only right answer. Nothing else will be accepted.

2. Is it worth your time?

One of the great reasons in using a broker is that they are the ones dedicating their time and resources to selling your home. So you should ask yourself is it worth your time to engage in our duties? Is it worth your time to get up early sunday morning at 6 am to get an open house started? Is it worth your time to field calls from buyers who demand to see your apartment at ungodly hours? Is it worth your time to get cold calls from brokers who will try to beat your spirit into submission so you will sign an exclusive? Is it worth your time to clean your apartment everytime buyers have trampled in? Is it worth your time to answer the same questions over and over again? That 6% is a mighty big chunk of change however the time it saves you may be worth it.

3. How thick is your skin?

My first experience in retail was working at a comic book store and I don't care what anyone says, comic book customers can be really nasty. All employees can do is just take it. The only time an employee can physically vent their frustrations is when a customer steals something.

If you go FSBO, you will be just like me when I was working in the comic book store, dealing with with idiots and rejects of all different sizes. You are going to have complete strangers who are going to scrutinize and ridicule every detail of your home. They are going to ask every personal detail of your life, no matter how personal it is. They will scoff at your asking price and make outrageous claims that your home is worth lower than that. Then they will laugh at you for spending so much.

Every word will slash away at your very soul and will bring you to despair. You will learn the horrible truth which is a representation of yourself. Therefore they are attacking you.

If you are willing to get your ass kicked for the mighty dollar, then proceed. If not. Find a broker.

Wednesday, March 08, 2006

What is going on here?

Below is an article I found on the drudgereport.

Mar 6, 1:18 PM EST

Treasury Dept. Moves to Avoid Debt Limit

AP Economics Writer

WASHINGTON (AP) -- Treasury Secretary John Snow notified Congress on Monday that the administration has now taken "all prudent and legal actions," including tapping certain government retirement funds, to keep from hitting the $8.2 trillion national debt limit.

In a letter to Congress, Snow urged lawmakers to pass a new debt ceiling immediately to avoid the nation's first-ever default on its obligations.

"I know that you share the president's and my commitment to maintaining the full faith and credit of the U.S. government," Snow said in his letter to leaders in the House and Senate.

Treasury officials, briefing congressional aides last week, said that the government will run out of maneuvering room to keep from exceeding the current limit sometime during the week of March 20.

Snow in his letter notified lawmakers that Treasury would begin tapping the Civil Service Retirement and Disability Fund, which Treasury officials said would provide a "few billion" dollars in extra borrowing ability.

Treasury officials also announced that on Friday they had used the $15 billion in the Exchange Stabilization Fund, a reserve that the Treasury secretary has that is normally used to smooth out volatile movements in the value of the dollar in currency markets.

Treasury has also been taking investments out of a $65.3 billion government pension fund known as the G-fund.

Officials have said that once the debt limit is raised, the investments taken out of the pension funds would be replaced and any lost interest payments would be made up. The formal title for the G-fund is the Government Securities Investment Fund of the Federal Employees Retirement System.

Democrats hope to use the upcoming congressional debate over raising the debt limit to highlight what they see as the failings of the administration's economic program with its emphasis on sweeping tax cuts.

An actual default on the debt, a situation when the government misses making payments to current bondholders, is a doomsday scenario considered highly unlikely given what it would do to the government's credit rating.

It is expected that after intense debate, Congress will approve an increase in the current $8.18 trillion debt limit by perhaps $781 billion.

But Rep. Charles Rangel, the top Democrat on the House Ways and Means Committee, said Monday that any further increase in the debt limit should be tied to legislation that would get future deficits under control.

"Simply raising the limit on George W. Bush's credit card and crossing our fingers won't solve anything," Rangel, D-N.Y., said in a statement. "Any long-term debt limit increase must be accompanied by a serious effort to bring our budget back to the balance we achieved under the Clinton administration."

Treasury Department spokesman Tony Fratto said it was critical for Congress to act before leaving for a spring recess on March 17. He said Snow planned a number of meetings with lawmakers this week to discuss the urgency of taking action.

The administration has sent Congress a budget that on paper would cut the deficit in half by 2009, the year President Bush leaves office.

But Democrats contend the administration met its deficit-reduction goal only by leaving out major spending items such as the full costs of the Iraq war. They say the deficit will not improve unless Bush abandons his effort to make his first-term tax cuts permanent.

Sen. Max Baucus, D-Mont., said last week that under President Bush the total of the deficits has increased by $3 trillion, a 40 percent increase from where the national debt - the total of previous deficits - stood when Bush took office in January 2001.

Okay. When the government starts to tap into pension funds, well that just really scares the crap out of me. I believe this is how Enron got started and we know how that movie ended.

I do not have a finance backgroung but I know what the governemnt is doing is very risky. When you mess with people's retirement you are walking on very shaky ground and you need to be extrememly careful because you literally have the future of the masses in the palm of your hand.

We should all be concerned because the housing market has been driving our economy for quite some time. One of the key components of the market has been mortgages which have been bundled up and sold overseas to Asia as bonds. Perhaps this is the administration's way of extending our credit in order to make our debt more acceptable. Any finance people want to chime in?

Maybe this was what Mr. Roach was talking about.

Stephen Roach:
Economic `Armageddon' Predicted
BRETT ARENDS / Boston Herald 23nov04

Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish.

But you should hear what he's saying in private.

Roach met select groups of fund managers downtown last week, including a group at Fidelity.

His prediction: America has no better than a 10 percent chance of avoiding economic "Armageddon."

Press were not allowed into the meetings. But the Herald has obtained a copy of Roach's presentation. A stunned source who was at one meeting said, "it struck me how extreme he was — much more, it seemed to me, than in public."

Roach sees a 30 percent chance of a slump soon and a 60 percent chance that "we'll muddle through for a while and delay the eventual Armageddon."

The chance we'll get through OK: one in 10. Maybe.

In a nutshell, Roach's argument is that America's record trade deficit means the dollar will keep falling. To keep foreigners buying T-bills and prevent a resulting rise in inflation, Federal Reserve Chairman Alan Greenspan will be forced to raise interest rates further and faster than he wants.

The result: U.S. consumers, who are in debt up to their eyeballs, will get pounded.

Less a case of "Armageddon," maybe, than of a "Perfect Storm."

Roach marshaled alarming facts to support his argument.

To finance its current account deficit with the rest of the world, he said, America has to import $2.6 billion in cash. Every working day.

That is an amazing 80 percent of the entire world's net savings.

Sustainable? Hardly.

Meanwhile, he notes that household debt is at record levels.

Twenty years ago the total debt of U.S. households was equal to half the size of the economy.

Today the figure is 85 percent.

Nearly half of new mortgage borrowing is at flexible interest rates, leaving borrowers much more vulnerable to rate hikes.

Americans are already spending a record share of disposable income paying their interest bills. And interest rates haven't even risen much yet.

You don't have to ask a Wall Street economist to know this, of course. Watch people wielding their credit cards this Christmas.

Roach's analysis isn't entirely new. But recent events give it extra force.

The dollar is hitting fresh lows against currencies from the yen to the euro.

Its parachute failed to open over the weekend, when a meeting of the world's top finance ministers produced no promise of concerted intervention.

It has farther to fall, especially against Asian currencies, analysts agree.

The Fed chairman was drawn to warn on the dollar, and interest rates, on Friday.

Roach could not be reached for comment yesterday. A source who heard the presentation concluded that a "spectacular wave of bankruptcies" is possible.

Smart people downtown agree with much of the analysis. It is undeniable that America is living in a "debt bubble" of record proportions.

But they argue there may be an alternative scenario to Roach's. Greenspan might instead deliberately allow the dollar to slump and inflation to rise, whittling away at the value of today's consumer debts in real terms.

Inflation of 7 percent a year halves "real" values in a decade.

It may be the only way out of the trap.

Higher interest rates, or higher inflation: Either way, the biggest losers will be long-term lenders at fixed interest rates.

You wouldn't want to hold 30-year Treasuries, which today yield just 4.83 percent.


Yesterday, Frontline broadcasted "The Storm which examined the aftermath of Katrina and how everything went horribly wrong in New Orleans.

Let's be frank. Not all administrations are perfect but from watching this episode it scares the crap out of me how disorganized and oblivious all parties were about this situation.

FEMA has been a dumping ground for buddies of the administration who are about as qualified to run a disaster agency as Michael Jackson is qualified to run a child day care center. And the people have suffered from these decisions.

Despite the need for FEMA, there has been a recent push to further gut the agency and changes that are still needed have yet to take place. If you have not seen this episode of Frontline, I highly recommend you watch it because of the revelations it presents.

The question I pose is that could another Katrina happen in the real estate market? I found this article from Housing panic about a recent appointee to the Federal Reserve who's resume is comparable to Michael Brown.

Fed rookie's financial resume is short


Kevin Warsh, President Bush's recent appointee to the Federal Reserve's Board of Governors, has thin qualifications for the job — to put it mildly. What message the president is trying to send in nominating someone with so little relevant experience or education is unclear, but speculation abounds.

The appointment also illustrates how little the general public cares about the Fed Board. Warsh's nomination is somewhat akin to Bush's failed nomination of Harriet Miers to the U.S. Supreme Court. Like Warsh, Miers worked in the White House and gained the president's confidence. By all accounts she was intelligent, hard-working and competent. But it also was clear that she was not well-qualified to sit on the nation's highest court.

Warsh apparently is bright — he graduated cum laude from Harvard Law School. He may have been quite competent in the few jobs he has held since leaving Harvard in 1995. He apparently earned the president's confidence in the three years he worked in the White House. No one alleges any wrongdoing on his part at any time.

But in terms of education and experience, Warsh is much less qualified than any other recent Fed appointee. He has a law degree but little training in economics. His experience consists of seven years with investment bank Morgan Stanley and three years in an administrative position on the National Economic Council. At 35, he is the youngest person ever nominated as a governor since the Fed was created in 1913 and the one with the fewest evident qualifications.

Yet, in contrast to the firestorm of criticism ignited by the Miers nomination, Warsh was confirmed without ever appearing on the national radar screen. Specialized business media like the Wall Street Journal and Bloomberg News did cover his nomination and raised the issue of his qualifications. Some quoted harsh comments by former Fed Vice Chairman Preston Martin, a Reagan appointee, on Warsh's inexperience.

Others noted the new governor's father-in-law, Ronald Lauder, son of cosmetics entrepreneur Estee Lauder, has donated large sums to the Republican Party in recent years. This is the first time in history that there is even a hint that campaign contributions played any part in a Board of Governors appointment. But general news media didn't pick up on the story.

The interesting backdrop is that Roger Ferguson, the sitting vice chairman, resigned at the same time Warsh was confirmed. Ferguson was the last Clinton appointee on the board. When he is replaced, President Bush will be the first president since Franklin Roosevelt to have appointed all seven governors.

This is not the intention of the law. Governors theoretically are appointed to 14-year terms. One such term expires on Jan. 31 of even-numbered years. Even two-term presidents can only nominate the majority to the board near the end of an eight-year presidency.

In practice, few governors stick out a full term, however. Most resign to pursue other interests. Thus, Bush not only has named a four-vote majority, but also all seven members. And, he has nearly three years to go as president.

That brings us to what message the Warsh appointment sends. Critics warn that the board will now be a complacent lapdog of the administration, keeping quiet about budget deficits and suppressing interest rate increases that might be unwelcome at 1600 Pennsylvania Ave. The fact that three Bush appointees served directly on the White House's economic staff compounds such anxieties.

A few supply-side gurus share the same belief, but hail it as good news. For them, all of the old academic fuddy-duddies have been swept away. The coast is now clear for a supply-side campaign — i.e., continued tax cuts for the rich and a blasé attitude about budget deficits — unhampered by a benighted central bank.

Others interpret the appointment as a sign that the administration has scant respect for the Fed Board. Some think it is considered an unimportant backwater, like the Federal Emergency Management Agency, that can serve as a haven for political favorites who need a cushy position.

Still others see evidence that the Bush administration is hard-pressed to find respected economists who support its economic policy. Even many economists who are staunch Republicans are uneasy about the administration's expansion of non-defense spending and its unwillingness to rein in deficits.

I don't worry that the Fed will become a complacent respondent to White House economic initiatives. Despite the fact they are Bush appointees, new Chairman Ben Bernanke and new governor Randall Kroszner of the University of Chicago are fine economists. And Donald Kohn, promoted from the ranks at the Fed, is no dove in monetary policy matters.

In any case, the District Bank presidents who also participate in Federal Open Market Committee meetings are not political appointees, ideological flakes or fools. Once again, the dispersed power structure of the Fed system will safeguard the nation.

St. Paul economist and writer Edward Lotterman can be reached at

Bernanke comes from the Greenspan school of economics and his qualifications are unquestionable. So I don't forsee him getting into a pissing match with Warsh. Let's face it, he could probably crush Warsh with just one of his testicles. I have to admit I would love to see a fight break out between the Bush appointees and Bernanke and his crew.

Tuesday, March 07, 2006

Here and now

What I find absolutely fantastic about this weekend’s New York Times Magazine is that it is presenting stories about issues that the real estate blogging community has been writing about for quite awhile. Because it is coming from such an esteemed publication it just gives all of us bloggers more legitimacy for our work.

The Freakenconmics article is a brilliant expose on why agents will be come an endangered species because of the herds of people joining the procession, the unwillingness to embrace the discount model and the emergence of Zillow and Craigslist acting as the middleman.

Battle for the Burbs is something I know about first hand from my own upbringing and from people I know who are seeking houses instead of apartments but are priced out of a market that is just bubblicious as Manhattan and just as stressful. Contrary to popular belief it is not all rain and sunshine in the burbs. There are certain towns that are experiencing decay but you need to take a closer to see beyond its veneer.

I would like to take a moment to address the status of this blog starting with this email I received from a reader.

You blog seems to be languishing. You should strive to be less of an aggregator about RE topics, and instead offer more of the front line in the trenches perspective you had 6 months ago. Just a thought.

Ouch. Languishing?

Another esteemed blogger also express their concern albeit in a kinder and gentler tone.

"you've been quiet lately - I miss your insight."

I have actually been laying low for a several reasons. First of all there have been a ton of new broker bloggers coming onto the scene. So I have been quite discerning with my blog since I do not want present redundant content. However that esteemed blogger made a point when I mentioned this to him.

I don't see you as a broker blogger. You have been providing a broker's perspective on the market in a candid way since you have maintained anonymity.
for what that's worth,

It is worth alot. Thanks amigo.

So here's the deal. By no means am I going to discontinue the residential beat, however I will use the blog as a forum for other areas of real estate including foreclosures, environmental and social issues. I strongly feel these issues need to be explored because they will become more relevant in the near future.

I know I risk alienating and losing readers with this new approach but I can no longer ignore certain matters that have come to my attention. Some of these subjects may seem completely unrelated to real estate but I assure you all the connections will become more apparent.

Friday, March 03, 2006

Property Grunt featured in the Real Deal

Check out this month's The Real Deal! I am quoted in Tom "The Titan" Acitelli's article The last honest man or Mayor Doom-berg? It presents two perspectives on Mayor Bloomberg's assessment of the real estate market and not only features moi but the great Jonathan Miller.