Property Grunt

Friday, June 30, 2006

Requiem for Brokered and cheap oil

Remember Brokered? Well I got an email from my compadre in crime informing me that the Brokered Blog is no more. Brokered's motivation for shutting down operations is that an entry hasn't been in awhile and didn't see the point of hanging on if nothing was driving it.

As far as I am concerned Brokered was a damn good commercial real estate blogger and I am sad to see that blog gone. However do not fret, Brokered does have plans for a comeback in the near future whether it is in blog form or another format. We eagerly await your return my friend.

Yesterday the Fed raised the rate a quarter of a point and beat down any concerns of inflation which led the stock market into a massive orgy of buying. Oil prices have also been raised just in time for the 4th of July weekend which is probably going to lead more consumers in cutting back.

A couple of days ago I saw a Robinson oil truck pumping black gold into a sidewlak tank. I found this quite puzzling since it is summer and I approached the serviceman and inquired why the heating oil was needed. He replied "Hot water." Ohhhhhhh.

I guess even during the spring and summer landlords can't fully evade the oilman. It is no wonder landlords feel the increases are too low. Do your landlords a faovr and limit the amount of hot water you use. If you are able to help decrease operating expenses, the landlord might have more flexibility with your rent. Either way, waste not, want not.

Wednesday, June 28, 2006

Reader question: Should I go to the auction?

Below is an email I received regarding an entry I did about auctions.

Below is an email email which I have modified to protect the identity of the reader about auctions and also includes my response.

Dear Property Grunt: I’ve just read your article “Irrational Exuberance” and was hoping to get some insight from you regarding the auction process. I put a house on a 1 acre lot at a dead end about sometime ago. Behind me are several separate 1 acre lots that are essentially landlocked with no utilities. I always considered buying one or two closest to my house so that I could prevent a developer from building townhouses in my back yard. I have found out that an auction company has bought one of them and is auctioning it off. My question is, having been to one of these do you think it’s worth trying to bid on this land – is it possible to get it at a reasonable price will they sell it near that price if nobody else bids on it? Do any properties ever get just one bidder? What about shills – do they run auctions without them? Anything you can offer would be greatly appreciated.

Thank you for reading my blog. I am not familiar with property law because I am not a lawyer but I will do my best to help you out.

First you should consult a lawyer, particularly one that specializes in zoning and easement law and you should also check with your local government what the laws are regarding easements before taking any action.

Depending on the laws it may work out in your favor. When you say landlocked I am assuming that accessibility to these acres has to be through your property. If am wrong please correct me since I am basing my information on this premise.

If the laws dictates that the new owner requires your permission for an easement then you are sitting on the catbird seat and the new owner is dead in the water because they are at your mercy in terms of accessibility.

Here are two examples of this type of situation. During the height of the recent boom a buyer got bit by irrational exuberance at an auction in Brooklyn and ended up the owner of a lot. Unfortunately he did not do his due diligence or was simply caught up in the fever because the lot was smack dab in the middle of a group of brownstones. The only way to get access to the lot was through one of the brownstone, which the owners refused which left the buyer SOL.

Another story I heard was a couple who used eBay to buy a piece of land in Vegas sight unseen. After packing up their stuff and moving to Vegas they got a very unpleasant surprise when it turned out there was a small valley between them and their property and required them to build a bridge. What ended up happening was a neighbor either took pity on them or was required by law to assist them and gave them access with their bridge.

If it turns out that the new buyers need your permission for an easement then you have the advantage since they can't do anything because they need your permission. And if they attempt do anything illegal all you have to do is call the cops, lawyers and public officials and they will lay the hammer down on the buyer.

The beauty is that you won't have to spend a dime at the auction. Or better yet if you want to buy the property you can take the new buyers to the cleaners because they need to get rid of it since it is sucking money away from them.

If the easement laws are in your favor, then this acre could used in a game of musical chairs where it is passed on to unsuspecting buyer to unsuspecting buyer.

However if the laws dictate you are required to give passage to the new owner you might consider purchasing that property to protect yourself.

Once again, I implore you to consult a lawyer, particularly one that specializes in zoning and easement law and you should also check with your local government what the laws are regarding easements before taking any action.

Below is a link regarding easements.

My information on auctions is quite limited so I am unsure what their back up plans in case no bids are made. I do know that their business model is simply buying as much cheap land as possible and then utilizing the irrational exuberance of an auction to jack up the price of the property. They are sort of like the "National Liquidators" of real estate so they do not make any money if they have to hold onto the property so whether they buy it for a buck or a billion they need to get rid of that property.

I would also recommend contacting your local government to find out how that acre was sold to give you better insight on the process.

Monday, June 26, 2006

It must be summer because my neighbors have opened up a night club

It never fails. Right around about this time of year my next door neighbor pumps up the bass and begins the assualt on my ear drums.

Why can't she go to a club like a normal human being? Why can't she invest in headphones? Surely if you can afford a couple of hundred dollars worth of stereo equipment you can buy a pair of head phones.

Bloomberg. Where are you when I need you? Where are the lords of gentrification when I need them when they unleash the police powers of the city to smite those who endager the quality of life of the people of New York City who actually contribute something to the community?

Saturday, June 24, 2006

Eminent Domain Wars: White House throws the gauntlet down.

I got this off the Drudgereport

Here is the link

Executive Order: Protecting the Property Rights of the American People

By the authority vested in me as President by the Constitution and the laws of the United States of America, and to strengthen the rights of the American people against the taking of their private property, it is hereby ordered as follows:

Section 1. Policy. It is the policy of the United States to protect the rights of Americans to their private property, including by limiting the taking of private property by the Federal Government to situations in which the taking is for public use, with just compensation, and for the purpose of benefiting the general public and not merely for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken.

Sec. 2. Implementation. (a) The Attorney General shall:

(i) issue instructions to the heads of departments and agencies to implement the policy set forth in section 1 of this order; and

(ii) monitor takings by departments and agencies for compliance with the policy set forth in section 1 of this order.

(b) Heads of departments and agencies shall, to the extent permitted by law:

(i) comply with instructions issued under subsection (a)(i); and

(ii) provide to the Attorney General such information as the Attorney General determines necessary to carry out subsection (a)(ii).

Sec. 3. Specific Exclusions. Nothing in this order shall be construed to prohibit a taking of private property by the Federal Government, that otherwise complies with applicable law, for the purpose of:

(a) public ownership or exclusive use of the property by the public, such as for a public medical facility, roadway, park, forest, governmental office building, or military reservation;

(b) projects designated for public, common carrier, public transportation, or public utility use, including those for which a fee is assessed, that serve the general public and are subject to regulation by a governmental entity;

c) conveying the property to a nongovernmental entity, such as a telecommunications or transportation common carrier, that makes the property available for use by the general public as of right;

(d) preventing or mitigating a harmful use of land that constitutes a threat to public health, safety, or the environment;

(e) acquiring abandoned property;

(f) quieting title to real property;

(g) acquiring ownership or use by a public utility;

(h) facilitating the disposal or exchange of Federal property; or

(i) meeting military, law enforcement, public safety, public transportation, or public health emergencies.

Sec. 4. General Provisions. (a) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(b) Nothing in this order shall be construed to impair or otherwise affect:

(i) authority granted by law to a department or agency or the head thereof; or

(ii) functions of the Director of the Office of Management and Budget relating to budget, administrative, or legislative proposals.

(c) This order shall be implemented in a manner consistent with Executive Order 12630 of March 15, 1988.

(d) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity against the United States, its departments, agencies, entities, officers, employees, or agents, or any other person.



June 23, 2006.

I have to be honest I did not see this coming. Considering that our president has a full plate I am surprised he made this announcement.

So why did our commander in chief take such an action? Here's my assessment?

1. He wants to get in good with the voters so they vote Republican for the upcoming election.

2. He is abiding by the Republian party's creed of limiting governemental powers.

3. He realizes the aftermath of the bubble will be huge and people will be unable to pay their real estate taxes so he wants to make sure they are protected from losing their homes.

What is really odd is that the Supreme Court already ruled on this issue and they were on the side of the government.
And from I remember from AP American History their authority is higher then the CAC.

If anyone else has any ideas of why the head honcho issued this order feel free to comment or email me. Constitutional lawyers are welcome.

Friday, June 23, 2006

Mo Money, Mo Money, Mo Money: Seller jacks up the commission

I received this link from the Sellsius crew. What is really special about this particular ad is that the seller is offering a 10% commission which means that if it is a cobroke it means 5% a piece for each party.

RDB analysis is this a way for the seller to set themselves apart from the pack and motivate buyer brokers to bring their buyers to this listing. Could this work? Possibly, it will definitely get the attention of brokers. However some buyers maybe a little miffed that the reason they were shown this property was because of the large commission their broker can cash in on.

Also buyers might get a little cute and put in lower offer arguing that the reason why the price is so high is that the commission is built in the asking price so why should they pay such a high price when the seller should just lower the price by reducing the commission?

I am curious to see if this works.

Thursday, June 22, 2006

AOL throws a fork into the bubble

I go this email from K of AOL regarding the real estate bubble. According to K 60,000 people participated in the poll. Along with the poll he sent me an interesting article of hibernating bear awakening from the housing market.

Do You Believe the Housing Bubble Will Burst in the Next Year?
Yes 51%
No 37%
Don't know 12%
Total Votes: 61,229
Note on Poll Results

It appears that public's taste for real estate appears to be waning and has become more aware of housing market's current condition.

This has poll has also shed some light on an idea I have been playing which is to create a bubble betting pool. Readers can send in their predictions of when the bubble will officially pop and whoever is closest gets a cheesecake. What do you think?

Thanks again K for the information.

Btw, CNBC is doing a survival guide on real estate tonight 8pm EST.

Monday, June 19, 2006

Auctions: The next big thing.

Real estate auctions are often associated with foreclosures or undesirable properties that couldn’t be sold through normal channels, according to the NYT the rich are now starting to get into the act.

IT took three years for John F. Welch Jr., the former chairman of General Electric, to sell the house he bought in 1990 in Fairfield, Conn. Initially on the market for $13 million, the property twisted in the wind like the corporate kingpin's scandal-laced divorce proceedings, which were settled in 2003. The 10,700-square-foot Georgian-style estate finally sold this April for about half its original asking price.

Apparently determined not to get burned again — at least not slow-roasted, rotisserie style — Mr. Welch has decided to auction a second property that he also got as part of the divorce settlement: a three-year-old, 16-room waterfront mansion in Southport, Conn., which is expected to bring in at least as much as the Fairfield house. Sealed bids and certified or cashier's checks for 5 percent of the price offered are due on this 9,100-square-foot trophy house by 4 p.m. on Tuesday, according to Sheldon Good & Company Auctions, the national auction firm hired by Mr. Welch, who would not agree to an interview for this article.

His surprise maneuver could help raise the visibility of residential real estate auctions. But whether the business-savvy Mr. Welch is in the forefront of the latest trend in real estate depends upon where you live, what the terms of engagement are, whom you ask — and how many slings and arrows sellers have taken (or expect to take) in a turning market.

When someone like Jack Welch, who can sink the economy of Latin America by simply having a heart murmur, decides to put use an auctioneer instead of a broker, you realize how f**ked up this market is.

Like Mr. Welch, whose other Connecticut house lingered so long unsold, many sellers who are now dipping their toes into auctions have first thrashed about in the riptide of what is increasingly a buyers' market. They have suffered the emotional distress of an extended listing, and if they have already bought their next house, they are battered by double mortgages.

To them, an auction's speed (often 45 to 60 days from first showing to closing) and finality (no further negotiations may occur after the gavel comes down or a sealed bid is accepted) outweigh the negatives: marketing costs ranging from several thousand dollars for a four-bedroom tract house to $100,000 for a Welch-sized estate, usually paid by the seller whether or not the auction succeeds; negotiable commissions as high as 10 percent; and a selling price that typically lags 10 percent below the last listing.

Still, the concept is intriguing enough that at least one major Manhattan company, Prudential Douglas Elliman, is considering opening an auction division. "It's an art, it's a skill, it's really a lot more complicated than anybody thinks," said Dottie Herman, the company's chief executive and one of the city's few real estate brokers who appear to favor the concept. "And if it's done right, it's great."

Dottie doesn’t strike me as somone who would take this development lightly, in fact I would not be surprised if she’s got a group of tech monkeys from India in the back room putting together some type of online solution.

Still, David R. Kaplan, a financial service adviser from Huntington, N.Y., on Long Island, is fully conversant with the muted joys of auctioning. He and his wife, Ilene, listed their four-bedroom Cape Cod a year ago with a big-name brokerage for $465,000. Expecting a third child, the couple bought a center-hall colonial about a mile away for $525,000.

They spent six months shackled to one brokerage by an exclusive listing agreement. "For some reason, this particular house had some type of stigma, and no one seemed to know what to do," Mr. Kaplan said. "The market had begun to turn downward and inventory upward, and there were just other choices in the same price point, homes that suited people better. We lowered the price three times, to $339,000."

Through an acquaintance, Mr. Kaplan heard about Robert H. Baker, the owner of 1,2,3 Realty Auctions in Bellport, N.Y. Mr. Baker was having some success auctioning houses from Brooklyn to Eastern Long Island in the $300,000-to-$500,000 range and the $800,000-and-up range. (The $500,000-to-$800,000 category accounted for most of his company's 30 percent failure rate, which he attributed to a glut in inventory.)

The first auction on the Kaplan house was scheduled just after the New Year's holiday.

"It was a bad time — nobody showed up," Mr. Kaplan said. "It was a severe disappointment, obviously. Emotionally, we'd been a wreck for a year. Owning two houses was not supposed to happen. It dragged us down terribly financially."

At the second auction a few weeks later, four or five bidders materialized with the $10,000 bank checks required to participate.

The Kaplans walked away with just $375,000 — "nowhere near" what they needed to pry themselves out of their financial tar pit, Mr. Kaplan said.

On the other hand, the house was sold. "I think if the economy had been a little different — if we had gone to auction immediately instead of taking the traditional Realtor route, I'm positive we would have gotten our price," Mr. Kaplan said.

These people got a great deal. Despite the price reductions they were able to get their money out without paying a broker, which is a luxury especially in this market.

Indeed, as inventory continues to bloat (there are more Manhattan listings than at any time since Miller Samuel, the appraisal and consulting firm, began tracking them in 1999), wallflowers are left wondering whether it would have been better to have gone directly to auction.

Auctioneers say yes and add that they are seeing more fresh listings as people assess growing competition in the traditional market.

"We'd prefer there to be an environment where there hasn't been an asking price on the property," said Michael A. Fine, the executive vice president of Sheldon Good & Company Auctions, which is handling the bids on the Welch mansion. Otherwise, he explained, the buyer might not "pay more than the last asking price on the property."

Mr. Fine and other high-end national auctioneers like the J. P. King Auction Company of Gadsden, Ala., say that trophy homes are particularly well suited to auctions, fresh or not.

They argue that comparables can be more difficult to obtain for highly individual homes and that even in good markets, their time on the market can range from months to years. They contend that their meticulous attention paid to glossy and detailed marketing materials can attract a wider range of asset-soaked buyers than traditional brokerage firms.

The last argument convinced one pair of Sheldon Good clients, Lynn Krominga and Amnon Shiboleth of Manhattan, that their traditional brokerage firm, which had listed their Hamptons weekend home unsuccessfully at $18.5 million last fall, wasn't attracting the right sort of buyer.

Built in 1904, the Arts and Crafts-style house, designed by Wilson Eyre, on seven waterfront acres in Quiogue, just isn't the sort of place to quicken the pulse of the usual big-ticket Hamptons buyer, Ms. Krominga said.

"Most of the buyers here are looking for something big and new," she said. Ms. Krominga and her husband, both lawyers, decided to sell last fall because the hectic schedule of their 13-year-old daughter, Karen, kept them from using the house. It has a new 57-foot swimming pool, spa, tennis court and backup generator for the entire property. (The home can be purchased furnished, with the option of including a 1987 Bentley and a pair of Jet Skis.)

Ms. Krominga said that the marketing fees she will be expected to pay were less than $120,000. But she expressed confidence that the auctioneers "can deal with the uniqueness of the house and structure the sale in a way that we can reach those people quickly" who would be interested in this sort of property.

The bid package, which costs prospective buyers $100 apiece, entitles them to attend the seven public viewings from June 3 to July 8, during which they can bring their inspectors, architects, decorators and advice-spewing relatives. Sealed bids and a deposit of $250,000 (refundable to losers) are due on July 13.

If Ms. Krominga wanted to cut down on her overhead she could put a couple of ads on craigslist and send a blast email annoucing the auction and viewing and use eBay instead of using an auctioneer.
Manhattan and certainly its brokers aren't embracing auctions to the same extent as, say, Long Island or virtually the entire Midwest, where auctions have a long history in every category.

As for the auction of Mr. Welch's house in Southport, the owner's notoriety is everything, in one broker's view. "To me, that's a ticket for immediate excitement," said Diane M. Ramirez, the president of Halstead Property in Manhattan. "But for anything short of that, you're not going to get the kind of press this particular auction might get. I don't think it's going to make auctions a viable option in general."

Explanations diverge for Manhattan's longstanding resistance to auctions. One is that 75 percent of the city's housing stock under individual ownership is co-ops, and this negates the major asset of an auction: its certainty. When auctioning a co-op, auctioneers have some idea about the financial pedigree necessary for the winning bidder to win board approval, but approval is in no way guaranteed. The bidding populace is still weighted more toward investors, but co-op boards favor owners who will actually occupy their apartments and usually limit subleases.

Approval is always contingent on the board’s approval of the buyer. And even brokers can be blindsided by a buyer’s financial pedigree so as far as I am concerned the risks are the same whether you go with a broker or the auctioning venue.

That still leaves condos and town houses. But their owners may still not be willing to price the properties low enough to incite bidding.

"When people call me and say, 'We want to sell it at auction because we're not getting our price,' I say, 'Your price is too high, no doubt,' " said William Mannion, the president of the JP&R Advertising Agency, which specializes in auctioning off distressed properties in the New York area.

And then there's a sort of rivalry between brokers and auctioneers, a "kind of an us-versus-them mentality that we're trying to shake," said Jan Hope, the managing director for business specialties at the National Association of Realtors. The association has operated an auction division since 1990, a de facto endorsement of the real estate auction market, put at $14.2 billion a year in a 2005 survey by the National Auctioneers' Association.

Some New York area brokers say they conduct "sealed bid" auctions similar to those auctioneers hold. And they tend to dispute the idea that auctioneers use more structured bid documents that leave less to quibble about after a bid is accepted. Auctioneers, meanwhile, cite their broad marketing reach and their ability to stage a live "open outcry" auction when sealed bids are close.

The real estate residential transaction and the auction involve the same process. The difference lies in the execution, but the product of real estate is transferable to either process. I think that is why brokers are resistant to this trend since they could be replaced.

Brokers here also contend that a historic predisposition toward auctions for distressed properties has produced bottom-feeding bidders, and traditional sellers are still more likely to get the best price when they aim for the ceiling instead of the floor.

"For a really good auction dynamic, you start low to get people interested, and if the marketing is done well, you work up to the eventual sales price," said Stuart N. Siegel, the president and chief executive of Sotheby's International Realty. It is by design that this affiliate of the fine arts auction house has only auctioned six houses in its 30-year history, most of them historically or architecturally significant.

"Unfortunately, in this country, auction does have a taste or a scent of distress," Mr. Siegel said, echoing a commonly held notion.

There is going to be a lot of distress in the near future anyway so they might as well examine the option of using an auction. In terms of the barriers of entry in the Manhattan market for auctions, if the residential market takes enough of a beating and sellers are desperate to cash out, they will be more than happy to fulfill the requirements of an auction including lowering their prices.

A decade ago, in a bottomed-out market, Dr. Gayle Grenadier, a former oral surgeon who is now the president of Gayle Grenadier Design, a Manhattan jewelry company, and her husband, Kenneth Richman, the chief executive of Threadtex in Manhattan, decided to auction their town house on East 62nd Street. It had been on the market for two months and had an offer of $2.9 million, but "the buyers seemed sketchy," Dr. Grenadier recalled. She decided to hire Sheldon Good to auction the property after attending one of the firm's auctions in the Hamptons.

"Everybody tried to talk me out of it," Dr. Grenadier said. She went ahead and paid a $40,000 marketing fee, which brought "a world of exposure," she said. There were 10 active buyers competing. in the auction, and the property sold for $3.5 million. She paid the auctioneer a 6 percent commission.

Now, another seller is betting on making a splash.

Thomas Leli, a hospital engineer, has had his four-bedroom, 2,200-square-foot Cape Cod in East Quogue, on eastern Long Island, listed for a year, cutting the price from $699,000 to $649,000.

"They showed it millions of times," he said. "I never even had an insulting offer."

Then a colleague told Mr. Leli how 1,2,3 Realty auctioned her house in Southampton for $450,000, which was $75,000 higher than her minimum. Mr. Leli and his wife, Deborah, are closing on a new home in Florida, and they will auction off their house in East Quogue on Wednesday.

"Right now I think people think it's a novelty because it's so new around here," he said, referring to auctions rippling through what he views as an increasingly listless market. "I think people who get in early will do well."’

Novelty? Haven’t these people ever heard of eBay? This reminds me of those short bus riders who are raving about a new service that will send live content to their iPods. It's called a radio folks.

If the Bernanake see the economy is going to pull a Titanic with inflation acting as the iceberg he will raise interest rates and people with interest only and balloon mortgages will have no choice but to liquidate if they can’t cover their payments. As I have stated repeatedly in the past, sellers will do everything in their power to lower their overhead and if that means replacing the broker with a more cost efficient solution like auctions then so be it.

Brokers need to remember that customers have more options at their fingertips and they are willing to explore them.

Time is a huge factor in the real estate transaction and if you can present a solution that can streamline the process then and allow them to get their cash ASAP then sellers will firebomb an army of brokers to use that service. Even if sellers decide to utilize a broker they can use these options as leverage against the broker to lower the commission.

Brokers that ignore auctions are doing it at their own peril, NAR has already proven it to be a very lucrative. If eBay doe not do the full court press and expand their real estate services, then it is possible that that Zillow, Propertyshark, Sellsius or some other upstart is going create an online auction site that is devoted exclusively to real estate resulting in darke ages for real estate brokers.

Friday, June 16, 2006

Save Screech

Dustin "Screech" Diamond of Save by the Bell is in danger of losing his home to foreclosure.

The bell may not save him this time
'Screech Powers' could lose his home
Posted: June 14, 2006
On the front porch of the Port Washington home he may be thrown out of, the actor Dustin Diamond tried Wednesday to calculate how his kitsch celebrity might stave off a foreclosure.


Millions could remember him from his role as the geeky Screech on the early '90s sitcom "Saved by the Bell," and its perpetual syndication. Close to 100,000 computers had logged onto his Web site at within a few hours of his Tuesday morning appearance on Howard Stern's satellite radio show. Diamond figured that selling 30,000 T-shirts to save his gray, two-story suburban home might be within reason.

"If the public didn't care, I as an entertainer wouldn't have been a success," he said.

Personal issues in adulthood have become commonplace for former child actors. But Diamond, who was 12 when the Saturday-morning sitcom first aired on NBC, boasts that he doesn't drink or use drugs, has never been arrested and has only two traffic tickets in his life.

"I'm the poster child for everything child stars aren't," he said, allowing one caveat: money problems.

Diamond, 29, faces losing the home under a foreclosure order filed in Ozaukee County Circuit Court on May 4. It demands that he kick up the remaining $250,000 he owes under a land contract, which Diamond said was one of the few options available for him in 2003 because of a bad credit record, which includes a 2001 bankruptcy filing in California.

A land contract is a contract between a landowner and a buyer, in which the buyer agrees to make an initial payment and regular subsequent payments until the purchase price is paid. No loan or mortgage is involved.

He claims he kept up on the $2,400 monthly payments.

The landowner's attorney couldn't be reached for comment.

Diamond called the situation "an injustice that could happen to anyone" and his $15 T-shirt "a potential cult classic" for an audience he thinks will give him the kind of money his career hasn't.

"I just don't get paid $250,000 in 30 days," said Diamond, who said his savings have been drained over the years.

"It's not retirement money, OK? It's supersize-it money, if anything."

'Definitely a low point'
He works as a ribald stand-up comedian now - asked to tell a joke to a television reporter, he demurred, claiming he didn't have anything appropriate - and said he gets enough work from it to stay on the road virtually the whole year.

"I'm doing great with my comedy, but this is definitely a low point," Diamond said. "Real life comes in and affects you."

There have been, he said, other issues, including a failed 2005 pregnancy by his girlfriend, Jennifer Misner, that left the couple with high medical bills. A pending small-claims suit in Ozaukee County alleges that Diamond and Misner owe $800 in landscaping bills, which Diamond claimed in a court filing came from a contract signed in 2004 without his knowledge by an ex-girlfriend. He wrote that they went through "a very ugly breakup" that November.

The ex-girlfriend, Beth Musolff, said news of the foreclosure didn't surprise her.

"He doesn't handle money very well," Musolff said.

And then there's his career.

Diamond's acting roles have been sporadic since "Saved by the Bell" went off - and will be even more sporadic if roles as Samuel "Screech" Powers in reunion specials and spinoffs are tossed out.

He is cagey about giving specific information about both his current income and the home, which he declined to allow reporters into. On the 2001 bankruptcy filing, he listed his employer as NBC and his take-home income, at the time, as about $5,300 a month.

The active run of "Saved by the Bell" happened before Diamond turned 18, and he said that problems with both his parents spending his money, and substantial tax miscalculations, left him in a hole as a young adult.

Now, he says, he has reconciled with his father, owes money only for his home and car, and needs mainly to find a way out of foreclosure to move on with life. His best plan for it, he said, is the $15 T-shirt, on which a disheveled Diamond is pictured, as he described it, "in the Wisconsin woodlands in front of a shack," holding a "Save My House" sign.

The back reads "I paid $15.00 to save Screeech's house," with the third "e" added, he said, to offer at least a technical separation between the fund-raising shirt from the "Screech Powers" character on a copyrighted show.

"I think there's a lot of people who think it's funny," Diamond said. "It's not a hoax. I wouldn't draw this kind of attention to myself for nothing."

Yes. I used to watch Save by the Bell. And yes, I lusted after Tiffany Amber Thissen. And yes, I did watch Showgirls. It is the same old story when it comes to entertainers but it just goes to show they are just as vulberable as all of us.

Wednesday, June 14, 2006

Bubble Babs.

I guess this is her way of admitting there is a bubble. Thanks for the link TK.

This will be the probably the closest Babs will ever say there is a bubble.

I haven't persued Bab's blog in a while and I kind of wished I stopped with that picture after seeing the latest entry S&M BARBARA

I wonder when the action figures will come out.

Tuesday, June 13, 2006

Manhattan Market: Monkey wrenches of doom

Tom Acitelli and the Real Deal have presented an excellent set of articles on the current state of the market. I really commend the Real Deal crew for their in-depth perspective on the market.

One of the articles by Vanessa Londono examines the trend of brokerages hiring more agents in the face of a cooling market.

My only conclusion why real estate brokers are not downsizing and cutting costs is that they are counting on the sellers losing the game of chicken.

Real estate brokerages want to have their armies in places when sellers blink and the panic sets in. As soon as they feel the heat of the fire sale brokers will march in with their buyers and exclusives agreements in hand. There is alot of money trapped in those properties and with exotic interest only mortgages, those sellers will be hard pressed to get rid of them.

I know it doesn't make sense but remember real estate is illogical in many respects. Usually when an industry realizes their market is going to take a hit the last thing they want to do is expand their operations but real estate brokerages view hot and cold markets as a profitable theater because whether it is a buyer’s or seller’s market, a broker is always needed to close the deal.

However there are three potential monkey wrenches that can be thrown into the works.

First of all when will the sellers become lucid? It appears never according to NY1.

These stratospheric prices are caused by a variety of factors including seller denial and seller’s who need the money to cover their mortgage or for their down payment their next home.

The second thing that can screw up the perfect storm is how sellers will try to lower their overhead by outsourcing brokers through FSBOs, online e-commerce solutions e.g ebay, craigslist and zillow.

If they have the luxury of time, they might just pull their properties off the market and wait for the next cycle which will probably occur two presidencies later.

A third uncertaintiy is how buyers will react when they smell blood in the water. Will they jump in as soon as they see the prices drop or will they wait in the wings while watching sellers slowly die on the stage of the market begging for them to take their cue?

If either of these factors occur, I would not be surprised that some brokers forego REBNY health insurance and opt for the Starbucks plan.

It's going to be a long summer.

Monday, June 12, 2006


Hello WG. Welcome to the family.

Herald Towers: Condos of doom

The New York Times has revealed that the Herald Towers is a complete and utter cluster f**k. I am not surprised since it always had a infamous reputation even before the condo conversion. I figured something was up was when I saw their own blog, which they have now taken down probably because of the litigation.

I could write a freaking dissertation on this abortion of a development because everything that has went wrong did. But I would like to focus on the two parties that got royally screwed which are the buyers and brokers.

"I feel that I am getting ripped off," said David Yoon, a 25-year-old manager in the garment district, a few blocks from Herald Towers. After learning of the price cut, he found himself unable to back out of the contracts he had signed to buy two apartments for his family. Then, he said, when he tried to buy another apartment for himself at the discount price, he was turned down.

But many of the early buyers have been Korean families, familiar with the neighborhood because of the concentration of Korean stores and restaurants nearby, particularly on 32nd Street. The Korean-speaking brokers who represented them say they are still angry and embarrassed by what has happened, though some are afraid to speak out publicly for fear of losing out on future sales.
John Jun, a broker formerly with Citi Habitats and now with the Corcoran Group, said he completed deals for six apartments at Herald Towers: two buyers backed out, and four have already waited a year or more to buy, only to see the prices drop.
"New York City developers have credibility," he said. "But these buyers are angry. People who stayed in and didn't give back their apartments deserve some kind of discount. It really is unfair."

I can only imagine the anger and frustration the buyers are feeling right now especially those like Mr. Yoon that were prevented from buying another unit at a discount. What I do find ironic is that Korea is one of the biggest holder of U.S mortgage debt, yet even they are not immune to what happened to them.

Brokers have also been screwed over because not only for lost commissions but their buyers are probably screaming at them or leaving them venomous voice mails. Their reputations are completely trashed because they couldn’t protect the interests of their buyers.

"It's definitely a thrill," Mr. Montaña said. He said that from the time he graduated from college, he had a passion for New York and wanted to put down roots here, but he believed that buying an apartment in Manhattan was beyond his means. "I thought I would have to wait years before buying anything," he said.

If a judgement is issued against the developers responsible for this debacle Mr. Montaña’s thrill will be short lived because I am sure the developer’s lawyers will figure out a way to pass the cost onto the residents.

And while I am playing Debbie Downer, have we all read the recent issue of the New York Times Magazine covering debt? I found their assessment on mortgages and borrowing in general quite sobering.

The trouble is that the officially stated borrowings of the federal government are only one part of the U.S. debt problem. For it is not only the government's debt that has grown large of late. Ordinary American households have also gone on prodigious borrowing sprees.

In the past five years alone, the value of U.S. home-mortgage debt has increased by nearly $3 trillion. Not all of that borrowing went to pay for real estate, the traditional function of mortgages. In 2004, net mortgage borrowing not used for the purchase of new homes amounted to nearly $600 billion. The International Monetary Fund estimates that this kind of equity extraction has risen from less than 2 percent of household disposable income in the year 2000 to more than 9 percent in the third quarter of last year.

And let's not forget those other debts that families did not formerly run up. Consumer credit in the 1960's and 1970's averaged less than 13 percent of G.D.P. In the past 10 years it has climbed to around 18 percent.

Not only do Americans borrow as never before; they also save remarkably little. The impressive resilience of American consumer spending in the past 15 years has been based partly on a collapse in the personal savings rate from around 7.5 percent of income to below zero. The aggregate national savings rate, which includes the public sector and corporations, averaged 13 percent in the 1960's. Last year it was just 0.8 percent.

Let the foreclosures begin!

Monday, June 05, 2006

The Manhattan Report: What the hell?

As many of you have noticed I have switched gears by focusing on the national perspective of the real estate market. I am a big believer that what happens in one place will probably affect another.

As for Manhattan, at the risk of sounding redundant it is still a buyer’s market with more residents hitting the street it’s going to be for quite awhile. However things that are priced properly are selling. I have encountered at least one listing where there were two back up offers.

Several articles raised some eyebrows across the real estate landscape including the Office of Federal Housing Oversight on the real estate market. At first glance it appears to be a very positive report, however as Jonathan Miller has pointed out there are some inconsistencies.

The PR efforts that go into this report appear overly optimistic in their spin, along the lines of the releases by NAR each month. The premise and emphasis is on the change over the prior year. That does not give the proper impression of the current market to readers. In addition, the appreciation rate is boosted about 2.5% with the addition of refinance data (note: this is not sales data of the subject property used in the repeat sales analysis of the study).

· U.S. home prices were 12.54 percent higher in the first quarter of 2006 than they were one year earlier. Its a 10.04% increase if you exclude refi data.
· Appreciation for the most recent quarter was 2.03 percent, or an annualized rate of 8.12 percent, the lowest rate since the first quarter of 2004. The lowest since 2004? Thats barely more than a year ago - why is this important?

Another article that is making the rounds in brokerage offices is the NYT update on the residential market which in my opinion describes the market as bi polar. There are still interested buyers out there but a significant amount of customers are renting.

So far this quarter, which began on April 1, those most affected by the market are the people who are first-time home buyers or those just barely able to afford to buy. Because of rising mortgage rates, these would-be buyers (the kind who made up a good part of buyers in the real estate frenzy of the past few years) are often now renting instead.
"There's been a tremendous surge in people signing leases," Mr. Miller said. "Landlords, especially in new buildings, are ratcheting up rates and reducing enticements almost as fast."
The upturn in the rental market makes sense, he said, because mortgage rates and rental demand correlate almost directly.

As the I word becomes more prevalent people are starting to get gun shy and not even New York is invulnerable to that.

Unlike other markets, New York has always been somewhat insulated because of the range of buyers it attracts, from foreigners looking for pieds-à-terre to the superrich to artists and dancers with songs in their hearts and little cash in their pockets. Of course, if too many people become so fearful of a slowdown that they stop buying, they could create a self-fulfilling prophecy.
"The biggest unknown is what's going to happen with inflation," said Gregory Heym, the chief economist for Halstead Property and Brown Harris Stevens, adding that when it comes to interest rates, it is not so much the amount that they go up, but what an increase symbolizes. "As they creep toward 7 percent, it has an effect on the psyche of both buyers and sellers," he said.

Now I love hearing this.

While some people do not think the economy is as healthy as others have painted it, Mr. Heym is optimistic that New York's economy will grow, that schools will continue to improve and that the crime rate will further decline.
"There's still such a strong desire for homeownership in this country," he said. "People want to own something tangible that doesn't disappear overnight. Like Enron stock."

If hear another jabronis screaming the party line abut how real estate is a better investment than stock I will f**king scream. Ladies and gentleman, all investment vehicles have their strengths and weaknesses. Real estate, although quite viable, has several obvious weaknesses including its illiquid nature. If something goes wrong with the market, it is very difficult to dump instead of stock. As the 80’s demonstrated, appreciation can also disappear overnight.

Rich people can afford to make these types of purchases. Why? Because they are rich. They have the money to take a hit if they have to. That is one of the reasons why a lot of first time buyers are bowing out because they can’t afford to get their asses kicked in.

If there is one group that is coming ahead in this market it is landlords and investors of residential rental properties. NYT recently tried to find the $1000 apartment and found that they existed but they were far and few betweeen because demand is on high.

"They are out there, but they are good deals so they don't last long," said Mary Guevara, an agent at MQ Realty, which handles rentals in Queens and Manhattan. Two of her recent listings were newly renovated one-bedroom units for $1,100 in Astoria, Queens, both with hardwood floors, and a third at the same price in Sunnyside, Queens. That apartment was a walk-up, but it was just two blocks from the No. 7 train to Midtown.

This reminds of the state of the market two years ago when sales inventory was low and buyers were opting for rentals. I knew of one founder of a rental firm who declared a “rental perfect storm” where rental agents would be making money had over fist because of this new dynamic. Unfortunately, he overlooked one minor detail, those people who decided to rent simply to resigned their leases instead of looking for another place to live. Resulting in a shortage of rental apartments. It was a complete nightmare for rental agents and their clients as they saw prospective apartments literally snatched from them.

Joyce Cohen latest Hunt was about Elizabeth Anne Birch and Brendan McGrath, a lovely couple who learned that the rental market waits for no one.

AS they hunted for a one-bedroom rental in the East Village, Elizabeth Anne Birch and Brendan McGrath felt real estate agents were determined to teach them a lesson: he who hesitates is lost.
"All these guys made me feel so picky about stuff," Ms. Birch said. "I didn't need to be scolded. I got so ingrained in my head to be apologetic" for not leaping at every possibility, she said.

It seems the summer of 2003 is repeating itself.

Is the market on the verge of stabilizing or is this the sign of market prices dropping further? If there isn’t a spike in sales by the end of this summer, then I think that sellers should expect the worst. In fact all the bell weathers indicate rough seas ahead.

The economy has displayed some weakness in the last month, oil prices are as stable as Tara Reid’s movie career and if anyone thinks that Bernanke is done with interest rates, well I want to know what they're smoking. These conditions are going to impact the Manhattan market and not in a positive fashion.

On a personal note I have noticed that my email box has been carpet bombed with open house tours from the upper west side to Tribeca. Usually some brokers are not as open about their listings with other brokers in hopes of getting a direct buyer. However they have changed their tune because it is now co-broke or go broke.

Real estate is subjective. Everyone has different needs and means when it comes to purchasing a home. Especially during these times, buyers should be aware of they can or can’t afford. If the amount of new inventory continues to increase, the winter might be an opportune time for buyers since that is considered the dead time for the residential sales season and sellers are apt to make more concessions.

Those of you who own residential investment properties including condos, take advantage of this period because there are more people seeking rentals in Manhattan and due to the shortage of inventory, they will have no choice but to pay a premium.

I am not saying you should be a scumbag, just charge the appropriate rent and present your property in a positive manner, do your credit reports and you will find the right tenants. But if somone is trying to play deal or no deal, don't feel scared about telling them to f**k off. There are a ton of more clients out there.

Sellers, price your apartments appropriately and be patient with your brokers. They are undergoing one of the most stressful times in their careers. However, let them know that although you are aware of current market conditions, you are expecting them to put in every effort to sell your apartment. Also examine other ways to sell your home including craigslist or creating your own website. If you feel your broker is not with the program, ditch them and find someone else.

May the force be with you.

Thursday, June 01, 2006

Introducing the Bullseye Tax Cut

Let's all let loose a a collective wail of agony as once again the office Washington has f**ked us over.

So why? Why has Washington forsaken us? Why are cities like Omaha and Louiville are higher on the list of priorities for terror funding? What is the logice behind these decisions. Here's what I have come up with.

1.Since New York City is the epicenter of finance, there is a ton of rich people living here and everyone wants to live here because those other cities that higher up on the list suck ass, Washington probably thinks that the big apple moneybaggers can surely make up for the loss of funding with their own deep pockets.

Yes, it is true, there is alot of money in this town but that doesn't mean people are going to share it. Some of the smartest financial wizards work in this town and one of the reasons why they stick around is because of the incentives. And as much as they love New York, if another place offers them a better deal and NYC is pressing for them to put more in the kitty, they are out of here.

2. Our president hates New York City. No. I'm kidding. He just strongly dislikes it. No. I'm kidding. Joke. Joke. Laugh with me folks. I don't think he hates New York City, is just that protecting it is not a high priority on his list. However this could be a grave miscalculation on his part because if, god forbid, another terrorist attack were to occur in NYC he most likely would not last the remainder of his term. There would be a vote of no confidence across the board including his own party and the country would demand that he turn in his keys for the White House. And no photo op with the NYFD will change that.

3. With the November election coming up this could last one for the road for the Republican party. With the situation in Iraq, Afghanistan, a potential front opening up in Iran and let's not forget those oil prices, there are alot of voters spoiling for a change. Which means there maybe alot of Republicans out of work after November, so they better line up to the trough before the check comes due.

This all looks like a complete killshot for the Democrats but this is actually a double edged sword for the Jackass party, particularly for Hillary Rodham Clinton. If they do manage to takeover the House and Senate, there will be a huge expectation that New York City will be bumped up the top of the guest list for terror funding. If that doesn't happen and New York City gets overtaken by Omaha again, Hillary might as well pucker up her lips and kiss her presidential aspirations goodbye because New Yorkers will be beyond pissed and she has hard enough time looking good nationally. Hell, New Yorkers might even show up in Omaha and turn the city upside down just to make sure the city uses those funds properly.

So what do we do in the meantime? Well funny you mention that. I actually have a suggestion that could bring us out of this terror fund funk. Inspired by our President's fondness for tax cuts I propose that New York City receive the Bullseye Tax Cut.

I call it the Bullseye Tax Cut since New York City has already been proven to be a bullseye for terrorist activity and since we are forced to fend for ourselves because Washington is unable or unwilling to assist us financially, it is only proper that a tax cut is given to New Yorkers to give them further leverage to fight terrorism. Hence the term Bullseye Tax Cut.

For whatever reason Washington deems that Omaha and Louisville take higher precedence over New York City, which has already experienced terrorism unlike these cities. Who are we to argue with the political braintrust that has a track record for dealing with disasters including Katrina.

I am sure those cities will not miss our share of the pot. Afterall they are getting more than enough from Washington and there is no reason for them to complain since they are not even sharing the fraction of the risk that New York City deals with on a daily basis.

What do you think folks? Should we send this to our representatives?