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Blogs for May 2006
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5/28/2006
Stossel and Flood Insurance
We love 20/20 and they have been doing some engagingly entertaining real estate pieces in the last month.
Such as:1) An entire show devoted to real estate
2) Coverage of Freakonomics
3) Robert Kiyosaki - exposed But what we love most about the show is John Stossel. We can look over at his book on our bookshelf, remember having read it over a weekend - its a quick read.
We remember most his gleeful recounting of federal Flood Insurance on his vacation home. He found it ridiculous. Utterly ridiculous.
After the recent storms, it looks our Flood Insurance program is about to change.
Owners of vacation homes in high-flood risk areas will no longer get federally subsidized insurance rates.
John Stossel undoubtedly will be happy. And he already collected his money and sold the property anyway.
| | | Minority Investing
In a recent NAR study, minority investing was show to increase by more than 50% since 2002 as a percentage of all investment.
In 2002 or earlier, minorities were responsible for 11% of investment transactions.
Between 2003 and 2005, that percentage share increased to 17%.
Real estate and the American dream go hand-in-hand.
| | | Marketing is the Name of the Game in Retailing
We were once again honored to be a guest "expert" on the only* Foreclosure Talk Radio show in the nation.
When asked to boil down our success selling, i.e. retailing, properties, we answered the truth - Marketing.
Host J.T. Foxx noted that he was known as a "great marketer" - which he undoubtedly is.
More pointedly, we want to draw our reader's attention to the Weekend Edition of the Wall Street Journal. In it, we read of the marketing of Condo Developers - bringing Pamela Anderson to a party, Wyclef Jean, and spending $250,000 for a four-hour party.
Our own unique marketing change this weekend was slightly less expensive.
As noted on the radio, we hired a dancing clown.
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5/22/2006
Foreclosure Talk Radio  | | Chicago station with Foreclosure Talk Radio |
In our Equity Locking article from last week, we noted that Foreclosure Talk Radio on 560 AM WIND in Chicago "claimed" to be the only foreclosure talk radio show in the nation.
We parried with our usual pat response that "It is true. You did 'claim' to be..."
They responded, "We are. Find another."
We did a Google search on:
"foreclosure talk radio"
and indeed, J.T. Foxx's show is the only result.
We presume, when a copycat comes in that we will have to change our nomenclature to the "First Foreclosure Talk Radio Show." But for now, we will have to call it the nation's Only talk radio show.
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5/21/2006
Renting to Illegals a Crime?
We have commented on many occasions that immigrants, both legal and illegal are integral to the Houston real estate construction boom.
Immigration both drives demand for the product and produces supply of labor.
A recent San Bernardino, CA proposal moved to our community would be disastrous. They were proposing to fine landlords $1,000 for renting to illegals.
Currently, landlords can rent to whomever they please, subject to Fair Housing laws.
Under the San Bernardino proposal, employers get punished even worse.
As much as we dislike the act of crossing the border illegally, once here, immigrants need a place to live and work.
And landlords have homes to rent - they are not the INS.
| | | Texas Will Rise in Rankings Of...
According to the Wall Street Journal, Texas has the 9th lowest tax rate in the nation. Based on our new business tax, our increasing property values (which will make up for the lowered tax rates) and our continued profligate, under-performing education spending, we are guessing that within five years, Texas will no longer be in the lowest 10 taxed states.
Your thoughts?
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5/18/2006
Investigating Equity Locking
Our newspaper has gotten rave responses on the Equity Locking piece. Our endeavours in this regard appear to be leading us into starting a non-profit research institute whose primary mission is the study of Equity Locking Legislation (ELL).
The scope is intended to be national, with studies of local and state legislation.
Our newspaper has informally committed resources to the creation of this institute. Any reader thoughts would be appreciated.
Current prospective names for the institute are:
- National Association for the Study of Equity Locking Legislation (NASELL)
- Center for the Study of Equity Locking Legislation (CSELL)
- Institute for the Study of Equity Locking Legislation (ISELL)
We particularly like ISELL. But wethinks we are stuck in the -ELL suffix.
Any other ideas are welcome.
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5/17/2006
Texas Spending Plan
We received property tax relief.
Some relief.
The plan that was passed and sent to the Governor is a spending bonanza, including teacher raises which are not tied to teacher performance.
This plan lacked any provision whatsoever that will keep Texas from running into the EXACT SAME Constitutional problem again.
We think short-sightedness and spending increases are a particularly prudent mix for politicians.
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5/14/2006
Reader Complaint 2: Invading Personal Boundaries? We received a second weird complaint regarding our satirical look at gaining Supra-access - an item we blogged several weeks ago, based on an expose by Channel 2.
The first complaint we received was slightly off-base, yet it came from the heart - and we appreciated it. We also poked fun that the argument itself was almost childish, since both the blog and the complainant were in agreement on fundamentals. [Editor's Note: We suggested to the complainant that we had been specific with word choices that he had misread.]But this new complaint steps the criticism up a notch.I think your little childish article on obtaining a Supra was offensive. Then, you seem to think that the Exam is a piece of cake. Go for it!
I assume that you have problems with boundaries in other parts of your life also. But oddly, the author of those comments has a tag line under his email signature worthy of note:"WE MAKE REAL ESTATE REAL EASY" Given his comments to us, we find that ironic.
Ad: Houston's Only Graphic Designer with McDonald's, Phillip Morris, and Keebler in her Portfolio. Services at Investor Prices. 832-233-6432
| | | Esther Gift Letter
The IRS ruling banning downpayment assistance programs in conjunction with FHA loans has more than one organization fighting against it.
One of the recognizable few downpayment assistance organizations that argues that they do MORE than just downpayment assistance is the Esther Foundation.They sent a letter last week showing their stance. We post it here for your review.Dear Community Partners and Professionals:
I am writing this letter in light of an applicable revenue ruling issued by the IRS on May 4, 2006 as Revenue Ruling No. 2006-27 (the "Ruling"). The Ruling sets forth the IRS' position with respect to charitable organizations - like Esther Foundation - that provide seller-assisted down-payment grants to home buyers. The Ruling states that such organizations do not qualify as a tax-exempt organization under Internal Revenue Code Section 501(c)(3) because such organizations are not operated exclusively for charitable purposes.
Although we disagree with the essence of the Ruling, we look forward to working with the IRS to a complete resolution of this matter. While we do so, it is important to note that Esther Foundation continues to operate as a tax-exempt organization for purposes of Section 501(c)(3) and will continue to fund down payment assistance grants to qualified borrowers. You may confirm our tax exempt status on the IRS website, http://apps.irs.gov/app/pub78. The Department of Housing and Urban Development ("HUD") and the Federal Housing Authority ("FHA") have both confirmed that Esther Foundation's down payment assistance grants continue to be insured under the FHA loan program.
Our mission is to find successful solutions for women, children and families. We hope for a speedy resolution of this matter, which will allow us to continue working with you to passionately accomplish that mission.
Should you have any questions or concerns regarding this matter, please feel free to contact us directly at the number below.
Sincerely,
L. Graig Taylor
President
Esther Foundation
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5/10/2006
Congratulations Mr. Beasley
Our congratulations to the new President (and still CFO) of ZipRealty, Gary Beasley.
The company's financial results took a hit this year as the hot markets have cooled. As Warren Buffett recently noted, it has happened across the board.
ZipRealty recently added Houston to its list of markets and is already successful here.
Because we know Mr. Beasley personally, we would like to take this time to congratulate him on his new post. Your shareholders, agents and most importantly, clients will continue to be well-served by you.
| | | Reader Complaint: Be Careful About Being Careful
We had a reader complaint about the tongue-in-cheek "Our Top Five Ways Real Estate Investors Can Get 'Supra-access'" piece.Number Five reads:5) Work for a Pest Control company, inspector or appraiser (this one might be legal) The complaint from Fred Lapham reads:I take exception with your comment that inspectors and appraisers "may be legal" as far as getting a supra key. I am an appraiser and have a supra key and feel that I have more rules and regulations than realtors do, and I am licensed by the state of Texas. I am not sure what you meant by "may be legal" but I think it would be wise to watch what you say when you make such blanket statements. It is my understanding of this issue that the felon was a "realtor"!! Mr. Lapham has a point. It is perfectly legal for appraisers to have a Supra key.
We suggested working FOR an appraiser, not AS an appraiser. And for that, we do not know if that employee then gets access to a Supra. We guess not. But we don't know.Since all of the other items on list appeared to be "below the law," we wanted to make sure we didn't cast undue aspersions on an industry, such as Mr. Lapham's.
We appreciate Mr. Lapham's diligence in the protection of his industry, even if it was slightly off-base in this instance.
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5/9/2006
Houston Business Journal Covers Our Industry
Once every couple of months, one of the local media outlets cover what we cover every day.
Our feelers suggest that the Houston Business Journal is working on something with some of our own Houston real estate investing personalities.
We won't ruin the surprise, and we look forward to it.
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5/8/2006
HUD Lets IRS Destroy First-Time Homebuyers' Dreams
Let's be clear. Our title says it all, so let's reiterate:HUD Lets IRS Destroy First-Time Homebuyers' Dreams Sure, you could say the IRS just made an innocent ruling. Just doing their job. But it has no such innocence. We borrow a few lines from the best piece on the story, other than our own and the Wall Street Journal's - The Columbus Dispatch which published a story containing this:HUD, which alternately fought and embraced sellerfunded assistance for nearly a decade, acknowledged the mixed blessing yesterday. That's right. This is Washington, D.C.
Departments don't "acknowledge mixed blessings" imposed from other departments. We find it more likely that the "powers-that-be" ask other departments to come in and do their dirty work for them.
We surmise that the powers-that-be at HUD are far too scared to take on the builders and lenders directly and pushed for the ruling.
Judge for yourself from HUD's own statment:The types of homebuyers who rely on downpayment assistance could be well served by financing through the Federal Housing Administration (FHA). HUD recently proposed legislation that would make FHA financing more available to borrowers who have riskier financial profiles or have little cash for a downpayment. The legislation, introduced in the House of Representatives April 6, would provide safer, more affordable financing options for this type of borrower, as opposed to mortgage products that are risky and more costly. Costly to whom?
We will bet dollars to donuts that the proposed HUD programs that do not require gift downpayments do one of two things:1) Keep potential borrowers under the current program parameters from getting loans under the new program, or
2) Charging them more. HUD's response, or lack thereof, is destroying the hopes and dreams of future homeowners who have been coached and counseled by HUD-approved counselors that they could get this assistance. More on that later...
Shameless.
| | | Houston Newspaper Updates Neighborhood Price Data
The Houston Chronicle has updated its neighborhood price data for 2005.
The data is incomplete, as it does not list every neighborhood, but is searchable, so you will (or will not) find yours quickly.
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5/5/2006
Should Flipping Require a Real Estate License?
We just reported on the Mississippi (MS) case that could dramatically change the way wholesale investors do business.
Since wholesaling generally requires:1) Putting a property under contract
2) Looking for a buyer of the contract at a higher price
3) Assigning the rights of the contract to the new buyer for a fee, it has not been regulated by the state.
Buying and selling contracts on real estate does not require a license, according to Loretta DeHay, General Counsel of the Texas Real Estate Commission.
But the behaviour of selling a property that you do not own and earning a commission DOES require a license.
Under what circumstances should residential real estate investors require a license?
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5/3/2006
Our Top Five Ways Real Estate Investors Can Get "Supra-access"
Based on the Channel 2 Expose on the HAR Supra Keys (the story from April 28th intimates that ReMax Fry Road lent a SupraKey to an allegedly dangerous character), we think we have solved a major problem for Houston real estate investors:How to Gain Access to Properties without Paying for a Supra5) Work for a Pest Control company, inspector or appraiser (this one might be legal)
4) Borrow a Supra from a friend
3) Kick in the door and say "That's my Supra"
2) Wait for another agent to show up and then just follow them in
1) Steal a Supra We had another thought. Why not take the test that is passable in your sleep and pay the money to keep yourself off the local news?
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5/1/2006
A Property Tax Refund in Houston???  | | Oh, did we overcharge you? Save it for the judge. |
Houston real estate investors have mostly sat on the sidelines for the Sharp-Perry debate, while being enthusiastic supporters of lower property taxes. Many investors were involved and the rest of us will remember the Proposition 1 vs. Proposition 2 fiasco from a few years ago.
Both were meant to remedy increasing property taxes and both passed.
The Mayor's pet bill, Prop 1, passed with more votes, and according to him, that is the only one that need be enforced.
But pesky Prop 2 did pass and it looks as if one of its provisions that calls for a refund to taxpayers is at hand.
Mayor White may very well just have to do something which he is fighting in court.
Giving us our money back.
| | | Realtor Feedback on Perry-Sharp III - Use California Prop. 13 As a Model
Mario Rocha sent us this in ALL CAPS:WHY DON'T THEY SET A TAX PERCENTAGE ON HOMES LIKE PROPOSITION 13 IN CALIFORNIA YOU PAY 1.5 OR 2% OF THE SELLING PRICE OF THE HOME. YOU WOULD ELIMINATE THE APPRAISER, THE JUDGE, THE EXTRA CLERKS. IT WOULD SAVE PEOPLE A LOT A LOT OF MONEY IF YOU ADDED UP. AND NOT COUNTING THE WASTED TIME IN GOING TO FIGHT TAXES. AND THAT WAY EVERYBODY WILL PAY THE SAME PERCENTAGE IN THEIR TAXES...AND YOU WOULD KNOW EXACTLY HOW MUCH YOU WILL PAY EVERY YEAR.. AND NOT BE SURPRISED WHEN THEY ADD $10,000 OR MORE ON YOUR MORTGAGE... IT WOULD ELIMINATE A LOT OF FORECLOSURES...JUST AN IDEA...
| | | Realtor Feedback on Perry-Sharp II - STOP SPENDING!
This realtor makes a lot of sense, but don't expect the Spendocrats to heed his advice:Any reduction in property tax that doesn't include an appraisal cap does no good for homeowners other than a short term relief. Additional taxes on businesses have to be passed on to the consumer in higher prices so this is just another attempt to add to our already overtaxed state. The state has got to go on the same financial diet it is forcing all of it's constituents to endure. STOP SPENDING!!
Art Caldwell
Assist-2-Sell
| | | Realtor Feedback on Perry-Sharp I - We Need a "Governator" In response to our questioning of the institutional support for the Perry-Sharp plan, one realtor responded in a manner less targeted against the policy itself:either do a lot of us. Perry seems not to be led by wisdom or knowledge. It is many issues that leadership must choose wisely which to engage and to whose best interest is at stake when endorsing bills that the compromise is the people. I personally don't see strong leadership perhaps I just don't get it.
Sandy Sparks Texas Star Properties
"Connecting People to Properties, Dreams to Realities, a Knowledgeable Art"
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