Entries from February 2008 ↓

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“If the Realtors are so concerned, why don’t they lower their 6 percent [commissions]?” James Finley, Connecticut Conference of Municipalities chief lobbyist.

This folks is what you are fighting when I bitch about government greed. The example of Connecticut fighting Realtors over a short term transfer tax that the cities and municipalities want to maintain. Connecticut put in a short term increase in the conveyance tax that was paid when the home transfered title. Now that it is up for renewal the state and cities want to keep it in place (what a surprise).

But what is really offensive is this horrid lobbyist saying that real estate agents should bear the brunt of it. Mr. Finley, you think you are so smart, but do you realize that the so called 6 percent also pays a hell of a lot of taxes across the state and country. I throw country in there because these cities and states live off the federal tit for much of their money already.

The pittance they are raising is nothing compared to the myriad of taxes, sales taxes, and other government fees that real estate agents pay in earning that “6 percent commission.”

The thing we have to remind all of the bureaucrats and all of the sucker fish (lobbyists) that hang on to the sides of government is that it is our money that funds government. The taxpayers are too busy to focus on governmental officials to get all their transgressions, but when they get us riled up by rubbing our noses in it, we will go after them.

It looks like the Realtors in Connecticut have awoken to the bloodsucking nature of their state and their minions lobbyists do not like it.

The Realtors have been locked in a five-year battle with the Connecticut Conference of Municipalities, which says that cities and towns need the extra $40 million generated by the increased tax on the sale of all properties. The municipalities group is fighting back hard, saying the cities and towns have come to rely on that money to fund local services.

“It’s part of the transaction price. It’s the cost of doing business,” said James Finley, CCM’s chief lobbyist. “If the Realtors are so concerned, why don’t they lower their 6 percent [commissions]?”  via Courant.com.

I was forwarded this powerpoint presentation on the subprime mess and how a bad loan from a mortgage broker ends up bringing the economy to a precarious position.

Click on Image to Download Powerpoint Presentation.

I do not know who did this originally but if anyone can point me in the right direction I would be grateful and give them their props.

Ah, the power of a police force. The Kane County, Illinois government is in a quandary. They signed a long term lease on an old Montgomery Ward to house their government offices. But then decided they wanted to buy the building.

If it was a deal with anyone but a governmental agency, the process would have involved negotiations and paying a fair market price. But not to these fine governmental officials. Instead when they were told that the lowball offer they made was not good enough they decided to vote for an eminent domain takeover.

How is that for negotiating power. I could see if there was no other space in town and Montgomery Ward refused to rent the space to them, then there would be a specific need. But instead they have a 20 year lease.

A twenty year lease, that I guess is not with favorable enough terms, that the fine elected governmental officials will be willing to bring the full police force of the government to take the building from private citizens.

That is what is wrong with eminent domain laws in the country. It allows government to make bad decisions and then have the citizens pay for it.

Kane County and the New York-based limited partnership that now owns the property reportedly are several million dollars apart in their respective appraisals on the property that for tax purposes is assessed at slightly more than $8 million.

Tuesday’s vote to file an eminent-domain lawsuit to acquire the property came after an executive session at which board members reportedly were told that talks between the two sides over selection of an independent appraiser to review the situation had reached an impasse.  via the chicagotribune.com

An interesting interview with Robert Shiller on how the homebuyers are viewing the high inventory and the psychological response to the marketplace.

Reading through the local paper I came across an article on how Buckhead is about to have a glut of Class A office space in the coming year. For those of you that do not know, Buckhead is “the place to be” in Atlanta business these days, just north of downtown.

With all of the cheap money that has been floating around the past few years development has been rampant. So now the question is, if the best area in down is going to see price deflation in commercial space, what is that going to do to the rest of Atlanta’s commercial rates?

Or put it this way. If the prime rates in the best area are lower than those in less desirable areas, why would anyone sign a lease till the smoke settles? If I can have a prestigious address for less than my present address, will I move? And what will my landlord have to do to keep me?

These are questions that the rest of the country is going to run into as the boom in commercial construction comes to a head in the coming years. It is not just Buckhead in Atlanta, but most other cities as well. When new construction lease rates are cheaper than old construction, how will the market find equilibrium?

Almost 2 million square feet is under construction and scheduled to come online next year, but the vast majority of that space is unleased.
That’s “definitely a cause for concern” for the building property owners, David Demarest, managing director of tenant representation with Jones Lang LaSalle, told commercial real estate representatives.
Jones Lang LaSalle hosted a breakfast meeting to unveil its analysis of the intown office market.
Demarest mentioned three large buildings that are under construction without any prelease agreements: Terminus 200, 3630 Peachtree Road and Two Alliance Center. Another Buckhead building, 3344 Peachtree, which is mixed use, is about half leased.via the ajc.com.

Sam Zell thinks a Spring recovery in the domestic housing market is probable. While counter to the masses, it would be very hard to bet against Zell’s market timing. Remember, he is the one who sold his Equity Office empire that he spent decades on at the top of the commercial market.

“I think starts have already pretty much bottomed out,” Zell said. “I think the housing market this spring will begin its recovery phase.”

Last year Equity Office Properties, a real estate investment trust founded by Zell, was sold to the Blackstone Group (BX.N: Quote, Profile, Research) for $23 billion in one of the largest-ever leveraged buyouts. via  CNBC

My feelings are you do not bet against guys like Sam Zell, they tend to see things that regular folks do not.

You as real estate professionals are facing a dilemma.

The internet is chock full of sites giving your guild information away for free. Competitors are putting extreme price pressure on your income.

Add to that a glut of new real estate agents on the market living off of beans and rice trying to take business away from you. Let’s not even talk about the discount real estate agencies out there.

You are faced with a quandary.

How am I going to earn a living.

Well, here is some counterintuitive advice.

• Give something worthwhile away.
• Give it away for free.
• Find someone who is giving something away and subsidize it so that you are associated with people getting something for free.

Notice the emphasis on free. Getting something in front of the customers that will build an affinity to paying you your commission.

Don’t believe me, then take a few minutes and read this article at Trendwatching and learn.

You will see how:

• An airline gave away 1 million seats for free and still made money.
• Rental Cars in Austria and Germany are rented for free.
• A Vending Machine in Japan gives free coffee while a message is being played.

If you do you may get far enough ahead of the curve that you could be a big winner by giving away something for free.

PS That is the basis of this site. I have been giving away my writing for free to hopefully attract enough valuable readers that people will advertise to get their attention. I firmly believe in free.

The time that a home has to be off the market for it to be a new listing has been cut in half in Washington DC. Having a home appear newly listed is a benefit to the seller as they do not seem nearly as desperate as someone whose home has been for sale for a long period of time.

Metropolitan Regional Information Systems, the Washington area’s multiple-listing service for real estate, made a rule change that allows sellers to withdraw their home from the market for 90 days, then put it back on as a new listing. Previously, the wait was 180 days. via WashBiz Blog.

Here is a question to the media.

Why is it when residential sales drop it is because of the fault of the housing industry, but when sales of commercial properties fall it is because of the credit crunch?

I know I am seriously generalizing the issue but that is how the media is approaching this.

• All residential problems are reported as based upon upon greed, subprime problems, and fraud.
• All commercial real estate problems are based upon the credit markets falling apart.

Yet both market problems were created by prices soaring too high and money that was too easily given. The dynamics are not that different but the reporting is.

Sales of US hotels are expected to fall as much as 50 per cent this year because the credit squeeze has reshaped investors’ ability to purchase real estate, says a report due for release today.

The value of hotel property sales is expected to fall to $23bn-$26bn, down from a record $45bn in 2007, as deals become more difficult, according to real estate brokers Jones Lang Lasalle. The expected slide in sales would more than undo last year’s 38 per cent rise.

“The credit crunch has halted mega-deals and many portfolio deals,” the report will say. via the Financial Times

It looks like there is one good real estate market left in America, and that is online. The views of real estate sites and traffic coming into them is growing as America tries to come to grips with the slowdown in the real world.

This does make sense as real estate is the one asset that most Americans hold and all Americans use. The need to understand even vaguely the market will drive readers online forever more thus making the online real estate market a solid bet.

That is unless this market also gets overbuilt.

Executives of Trulia, Zillow and Terabitz said they, too, were encouraged by recent results. Online real estate companies, they added, could be today’s version of the online travel agencies that flourished after the Sept. 11 attacks: A cheap alternative for suppliers looking to market a product that is suddenly in low demand.

In this case, brokers and agents have seen their marketing budgets shrink in lockstep with their commissions as they struggle to sell homes.

“There’s no doubt that a lot of brokers are feeling some pain right now,” said Pete Flint, chief executive of Trulia, a real estate search service in San Francisco. “They’re spending less on advertising than they were, but they’re spending a significantly larger portion online, because it’s cheaper, and it’s where the audience is.” via SFGate.