Daily Archives: April 21, 2010

Tea Party radicals

Or perhaps just a refreshing change. New Jersey schools face huge cutbacks after voters reject budget proposals.

Residents went to the polls in record numbers for the normally low-profile school-budget elections, and rejected 316 of the 541 budgets on the ballot. They were angered by higher property taxes that were sought to make up for unusually large state aid reductions proposed by Gov. Christopher J. Christie, along with resentment toward teachers’ unions for not agreeing to wage freezes or concessions. [emphasis added]

The message of “enough is enough” resounded across the state, from urban to rural districts, and even in well-to-do suburban communities like Ridgewood, where residents are particularly proud of their schools. It was a drastic change from a year ago, when voters approved nearly three-quarters of the school budgets during the height of the economic downturn.

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Gee, this guy is just going to wreck comparable values!

Last holdout in Brooklyn’s Atlantic Yards sells out to developer for $3 million. He paid $590,000 for the condo in 2003.

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What’s 6″ long, has a big head, and drives women wild?

U.S. introduces new $100 bill.

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This is neat

Fordham University baseball – greatest move you’ll see all season.

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A breach of trust

I just heard one half of a telephone conversation between my partner Fudrucker and another agent who, until today, I considered a respected colleague. Not only did the man know nothing about short sales, his comments: “you’re a crook, a criminal and everything that’s wrong with this country” and “you’re destroying our industry” made me realize that it’s not just stupidity that is keeping short sales from clearing our inventory but rather a complete abandonment of the duty agents owe their clients.

This man obviously feels that he owes his loyalties to two separate entities: the banks, who he is determined  should recover the maximum recovery on their loans, and his other clients, who he must fear will lose value in their own homes if another sells cheaply. I wonder how the client he claims to be representing feels about either loyalty – this guy’s action will ensure that the homeowner will be foreclosed on within a month with nothing to show for it, and does the homeowner really care whether, a year or three from now, his lender sells the foreclosed house for more money than it could have sold for today? I doubt it, just as I doubt he cares whether his agent’s other clients sell their houses at a higher price.

I can overlook stupidity and ignorance, but to hear a supposed professional betray his own client and then call my partner a criminal is beyond the pale. This man, and others of his ilk, are determined to protect their commissions by sabotaging low-priced sales. Nothing will be done to them, of course, but they should be ashamed of themselves.

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Market activity

The day is still young (2:15) but so far this week, at the height of our spring market, we have three recorded contracts, none over $1 million. Just so you know.

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If we’re going to shield banks from their stupidity, I guess all dumb investors deserve the same

Grocery Ponzi scheme exposed. But maybe we should let economic Darwinism weed out the fools?

Only in South Florida can a guy dupe investors out of $900 million by promising guaranteed annual returns of 10-26 percent from profits on arbitraging groceries.

Reminds you of the Seinfeld episode when Kramer and Newman decided to collect empty bottles in New York and drive them to Michigan to get the extra deposit money. But, that’s exactly what Nevin Shapiro, a 41-year-old Miami Beach businessman, did from 2004 until the feds caught up with him.

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Well that’s better than turning his back (side) to it!

Pope will confront pedophile problem.

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Attention, Walt: more on Teri Buhl

Fairfield Weekly has a mostly accurate account of Teri Buhl’s firing. It certainly adds no luster to the fading image of Greenwich Time.

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Idiot agents – morning rant

The only viable market in Greenwich, these days, is composed of underwater homes – houses that owe more than they’re worth. It’s hard enough to get through the layers of bank bureaucracy to find somebody with authority to make a deal, but even more frustrating is finding a listing agent who knows anything about the short sale process.

And their ignorance is fine – we can take care of the deal, if they’ll just lend their cooperation – but instead Fudrucker and I meet hostility, suspicion and non-cooperation from silly people so determined to hang onto their imagined commission that they hang up on us, refuse to respond to our written offers (a violation of GAR rules) and, in general, act like dummies.

We’ve dragged other agents along during the past year, making sure they were paid because we didn’t want the reputation that we screwed other agents out of their commission. So far, our reward has been scorn, anger and just general jackass behavior.

So maybe we won’t deal with these fools – there’s no need for the agents on the other side and we can do deals with the banks. The quaint notion of bringing our colleagues along for the ride seems to be producing nothing but anger and sullen resistance, so why do we bother?

UPDATE: Last fall, I bent over backwards to keep a colleague in a deal, at a cost of $70,000 in commissions paid to him and his employer. He repaid me by screwing up the deal, incurring an extra $30,000 in unnecessary costs and then dissing me with the GMLS recording service by crediting someone else with the sale. The last part is pretty meaningless, but $100,000 out of my pocket makes me rethink doing business with his type, eh?

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The same all over

My pal Peg from Minnesota reports:

Here in the hinterlands, Christopher, I see a quite bifurcated market. Our moderately priced housing is close to a “balanced market” – favoring neither seller nor buyer. Well-priced homes sell fairly rapidly and close to asking price.

For our upper bracket homes, quite a different story. Even if they are stunning and priced below the competition, sometimes they just sit. Far more inventory “up there” than there are buyers.

I dunno if you HAVE any “moderate housing” where you are! My guess, however, that this may be the story in a number of markets.

Another web friend, John Schneider in Tucson would probably agree. We’re seeing a genuwine, national pheeenomeon here, I think!

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We’re going to be a long time getting out of this mess

Fudrucker and I are working on a deal that, since it’s ongoing, I have to be vague about, but suffice to say, the mortgage debt is about 3X what the property is worth. When we contacted the lender, we discovered that they had no idea what their collateral was worth – they’d never seen it, never appraised it – not objectively, anyway.

So we have to wait for a representative to come down from wherever to actually look at the property and either agree or disagree with us as to the land’s value. I suspect that they will agree with us, and a deal will be made, but imagine how many assets are being carried on bank’s books that are valued this way. There’s gonna be a whole lot o’ s’plaining to do, down the line.

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The hype continues

Realogy (mother ship of Coldwell Banker, Sotheby’s etc.) poll: time is right to buy now, because prices are going back up.

NYT: In some markets, buying now beats renting.

The Times article is not hype, in my opinion – it’s looking at devastated markets like California, Florida and Las Vegas and applies real numbers to the calculations. But the Realogy press release quotes a broker in New Jersey and in our area, at least, I don’t believe that shift has yet occurred. What I am observing is that there are indeed some well priced houses on the market and they tend to sell quickly because of it. But at least here in Greenwich, we’re still overstocked with hugely overpriced homes and I’d be in no rush to buy them. The sellers are still delusional and rather than buy one of them, you’d be far better off renting for another year or so.

My advice? Look for bargains and if you find one you like, grab it. But don’t go for the 90% of our inventory that’s still priced at 2007 levels.

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Here comes the future:

Majority of New Jersey school budgets rejected by voters.

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John Paulson – I was smart, they were stupid

Paulson has sent a letter to investors in his fund explaining his CDO trades and I think it sums up the situation nicely. Certainly it cites the same factors also seen and exploited (in the sense of “taken advantage of”) by other sharp guys mentioned in Michael Lewis’s book, The Big Short. This same information was available to all those smart institutional investors. That they chose to ignore it and bet the other way isn’t Paulson’s problem, as I see it.

He writes:

We believed that the two-year adjustable rate mortgages made to lower income borrowers with poor credit history, little or no documentation, no down payment and rates that would shortly reset at usurious interest rates set the stage for significant delinquencies and foreclosures, thus eroding the value of these securities.”

As Lewis explains, the shorts saw all this mortgage debt as setting up a nationwide wave of foreclosures. The longs took comfort in the belief that all housing was local and couldn’t collapse across the country at the same time. Sometimes it lands on red, sometimes black.

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