Zestimate Bullshestimate

Just the other day—at our company Christmas Party--some of the conversation turned to Zillow. That's the on line automated real estate site that estimates the value of nearly every house in America. Right or wrong, millions of consumers are clamoring for their data since they provide a no-obligation idea of what your house—and those of your neighbor's up and down the street—might sell for. In a housing market that's been mostly a cause for gloom, so-called home-valuation technology has become one of the few sources of excitement.

The question that we debated, over a couple of beers with carols playing on the CD, was how accurate are these estimates? After years of us real estate pros holding all the informational cards in the home-sale game, Web-driven companies like Zillow, Homes.com and Realtor.com all want to be consulted when you are trying to determine the likely selling price of a home. Probably your home.

For most of real estate history, of course, determining a home's value has been the appraiser's job. Appraisals involve gathering data on recently sold homes in a given area and comparing them with the "subject property" on matters like size, bedrooms, bathrooms, garage, general condition and other characteristics, before coming up with an estimate of the home's worth. If the property has, say, a 4th bedroom, but most of the recently sold homes don't, the appraiser might add a premium to the sale value. This exercise involves as much art as science, as anyone who has done a few will attest..

The more unique or luxurious a property, the harder it is to accurately value. Subject properties may be so unique that no comparable properties can be found. You only have to tune into HGTV's unique homes shows to see what I mean. Where will you find another home that rotates to use as a comp? Or another one made out of old airplane parts that might have recently sold?

Buyers use the web site estimates to get a feel for what's on the market and, later on, to figure out whether their offer will entice a seller to play ball. Sellers might check their home's value to help decide whether it's worth the hassle of selling or just refinancing, even some Realtors use them to gauge if their listings are priced right for the market. As a practicing real estate agent, I'm increasingly resigned to spending time with potential sellers answering questions about the estimates.

Realtors know the estimates are wildly inaccurate. Valuations that are 20, 30 or even 50 percent higher or lower than a property's eventual sale price are not uncommon. The estimates frequently change, too, for reasons that aren't always easy for homeowners to discern. According to the web companies themselves, some quotes have swung by hundreds of thousands of dollars in as little as a month as new data gets plugged into the algorithms the sites rely on.

And the sites acknowledge that people like you and me can enter information that might push estimates higher. The sites invite you to add photos, and make corrections.  But what I'm trying to say here is a Trulia or Zillow estimate is just that -- an estimate.  Zillow even publishes precise numbers about how imprecise its estimates can be.

Every major site urges home-price hunters to always consult with a real estate agent or house appraisal specialist. And yet, consumers and pros alike say many homesurfers put their faith in the estimates to sway the way they shop and sell.

Since 2006 Zillow has been providing it's “Zestimates” to the masses. The company runs data on more than 100 million homes through its own algorithms that recognize relationships between property characteristics, tax assessments and recent transactions. Indeed, in a market where listing prices often reflect more hope than reality, some agents say that online tools are a useful tool—if only to open discussions with sellers.

Their iffy accuracy notwithstanding, critics say the sites' business models may pose a bigger problem for consumers than their algorithms. These online firms earn significant revenues from their advertising, and the more traffic they get, the greater that ad revenue is. Their advertisers are the likes of home-supply store Lowe's, realty franchisor Century 21 and builder KB Home. Meaning on the one hand they provide a free service to shoppers, and on the other they sell a service to the real estate industry—but think for a moment, who's their daddy?

Dane Hahn is a real estate professional in Englewood Florida. He can be reached at dane.hahn@gmail.com or through his site, http://www.danesellsflorida.com/.

Should Banks Pay it Forward?

Secret Santas are cropping up around the country. These are people—who mostly anonymously—give money as a Christmas gift where it was least expected. A little old lady toddles into a Walmart and pays off a dozen or so lay-away accounts, so the folks who were buying a TV or some toys on time, all of a sudden find their final payments have been made, and the goods are theirs. Wow, it's Christmas.

Some find a way to slip a gold coin or a big check into a Salvation Army bucket, and quietly, more good is done.

Today I watched a down and out fellow get a $100 bill from a complete stranger. The benefactor was visiting soup kitchens and generously gifting money. Yes, he's giving money, but really he's giving more than money to the folks who were doing all they could to cope. He was offering a belief in their ability to be good, providing them chance to evaluate their life and maybe make a change. As he said, “I'm not judgmental. If my effort can help make a change in a couple of lives, then I'm a success too.”

These efforts at Christmas kind of make you want to see that old film, “Pay it Forward.”

To a large degree, what our real estate based economy needs right about now is a Secret Santa.

Naturally, Secret Santas can't be fair. To be fair they'd have to give everyone a surprise gift—and all of a similar value. No, a real estate Secret Santa would have to reach into the morass of tangled loans and foreclosures and somehow catch-up the loans of some of the neediest borrowers. They would just zero out the deficiency, and give the borrower a new start.

Of course that couldn't happen. There are too many people, too far behind to be able to help them all—but what if, just a few, maybe there is a way. What if all banks who had made loans to home buyers looked over their outstanding loans, and zeroed out the bottom 2%. Not pay off the house, but “catch up” the borrower, so that the loan would be “up to date”, with nothing overdue. Next month's payment would still be due, but the slate would be clean. How about that?

I would submit that maybe even the bottom 10% of a given bank's mortgagors are going to lose the house anyway. So what's the risk to the bank? The chances of the bank actually receiving any of the past due amounts are slender given our flacid economy, but if a fresh start could keep the folks in the house, then both the bank and the family would be better off; if a fresh start could result in some percentage of the residents picking up and turning the mortgage into a “performing” loan, then like the Secret Santa, the bank would be a success in the community too. Could it happen?  Probably not, but then it is Christmas...

On another topic, the “flood insurance” topic reappears for the third time this year. Congress seems not to be able to vote for a simple bill that would allow the continuation of Federal Flood Insurance. The problem with flood insurance lapsing (over and over) is that homes which are sold and about to close but which are in flood zones, can't close without the insurance and so not until Congress reinstates flood insurance. Why is this such a hard topic for all those lawyers in Washington? I write to my senators and reps, but with no results.

But I forgot, they're the ones who determined that our traditional incandescent light bulbs could no longer be sold, in favor of florescent bulbs, and then this week, changed their minds. I would love to see the cost of this “double” legislation. The cost of passing the first bill, the cost to retailers to adjust their inventory, the cost to manufacturers to accommodate the newly perceived demands, the cost to consumers to switch over at least some of the bulbs (the 3-ways are just awful) and the cost to change their minds back to again and allow the bulbs. Maybe it's not in the Trillions, but you can be sure it was expensive and is just another of Washington's leadership boondoggles. November 2012 can't come soon enough.

Dane Hahn is a real estate professional practicing in Englewood, Florida. He can be reached at dane.hahn@gmail.com or at http://www.danesellsflorida.com/.

Even the Newspapers Are Suffering

This week I had the pleasure to attend a breakfast presentation by Diane McFarlin, who is the Publisher of the Sarasota Herald Tribune. I think it's worth taking a few minutes to discuss how it is that the Herald Tribune (a New York Times owned daily newspaper) is weathering the downturn in the economy.

From my perspective, the world revolves around real estate. In the newspaper business, the world revolves around advertising and to a lesser degree, subscriptions. Interestingly over the last three or four years, the Herald has lost more than half their advertising base, albeit their readership is holding pretty well. The loss of their advertising has been to the internet, some of it to other fragmenting media, and some of it to the general  slow-down and loss of business. They have lost most of their real estate advertising and a meaningful amount of their national advertising. The likes of Craig's List and eBay have heavily impacted their classifieds in all categories.

They are countering these changes by adding new websites and serving their readers with other electronic and print products, and of course by continuing their effort to cut expenses. They have sold 60% of their bureaus throughout the three counties they serve, they have halved their personnel and are considering additional changes to the newspaper to save on their financial outgo. These are severe cuts that were difficult decisions, but have resulted in their staying in business, even though more cuts may be necessary.

But these hard decisions should result in future health. And hard decisions are the very thing we are asking our Senators and Congressmen to make before--unlike the newspaper--we are blindsided by our unwillingness to get our head out of the sand. The paper realized that times had changed, and that only well managed and tightly run businesses would survive. Now we—you and I-- have to be sure our lawmakers at every level do the same.

So what's up with real estate? Well things are looking up a little. Home buyers scooped up more previously owned homes last month slowly putting a dent in the huge inventory on the market. Sales of existing homes rose 1.4% last month to an annual rate of 4.97 million homes, the National Association of Realtors reported.
Foreclosures and short sales dropped to 28% of sales in October, down from 30% in September. Even as the stockpile of homes on the market eases, housing prices are continuing to dip. The median price for an existing home was 4.7% lower than a year ago. That means it's still a great buying opportunity for house hunters.

But one of the problems preventing the housing market from making a full recovery is that many of the home buyers attempting to buy houses are seeing their mortgage applications rejected. Contract failures, which include declined mortgage applications or failures in loan underwriting because of problems including appraised values coming in below the negotiated price, jumped to 33% in October, up from 18% in September.

Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales, such as job creation, rising rents and high affordability conditions.

New-home sales edged slightly higher last month, as more Americans hunted for bargains in the struggling housing market. The Census Bureau reported an annual sales rate of 307,000 new homes last month, up 1.3% from a downwardly revised rate of 303,000 homes in September.

Compared to new home sales a year ago, there were about 162,000 new homes on the market by the end of October. That represented a 6.3-month supply at the current rate of sale. The median sale price was $212,300.

Last week, a separate report showed that more house-hunters are also eyeballing previously owned homes. Inexplicably, an increasing number of home builders are planning to build houses and are breaking ground on new construction, with building permits and housing starts climbing.

Dane Hahn is a real estate professional practicing in Englewood Florida and New Hampshire. He can be reached at 941-681-0312 or 603-566-5460  or try http://www.danesellsflorida.com/

Want To Make A Quick $200,000? Not so fast...

Our daily paper from Sarasota led this week's real estate “buzz” page with a item on flipping homes. The headline read “Investor Makes A Quick $262,200. Not bad—I know you will agree—heck, I'd like to make a quick $200K. And if he can do it, you and I can do it too—don't you think?

Looking a little closer at his transactions, Ed Thornburg bought a house in Bradenton, for $160,500. He bought a condo in Sarasota for $22,100; he bought a house in Palmetto for $26, 100; and he bought another house in Palmetto for $98,800; and finally, he bought a house in Bradenton for $269,900

His purchases add up to $577,400, and he has since sold three of them for $262,200 more than he paid. (I think the ones he still owns are the one in Bradenton and one of the Palmetto houses. So even if he sits on these two homes through the balance of the year, he's only sitting on an investment which cost him $186,600.

But hold on a second, investors rarely pay cash for the homes they buy, maybe 20% down is all they lay out. On the return trip however, when they sell the homes, they get 100%. To make a simple example, if an investor buys a $100,000 house, he will have 20% down, plus some expenses of closing, insurance fix-up and the like, so think $20,000+/-. But when he sells the house for, let's say $150,000, he will have a net profit of $50,000 (and get his $20,000 back as well). So the guy who had $20,000 in July when he bought the house, now has $70,000. This of course ignores carrying costs, and other fees, including Realtor commissions, but in general you see why people think this is a great idea.

I would caution you about the late-night ads that will suggest you can make as much money on flipping one house as you have in the last year at your job. These TV gurus don't look or sound any smarter than you are and they say they're raking in the cash. Remember, they're selling books, not flipping homes.

Well, trust me--it's not as easy as it looks on TV. The price run-up of the past few years led thousands of people to reach the conclusion that flipping homes will make money for them. There is a boatload of competition out there, which means that the obvious deals (call them sugar plums) are gone in a heartbeat. The pros will tell you that they make their money on the front end by buying properties for at least 30% below market value. Finding those houses takes time and once you find them, you'll need to move fast. And no matter what the late-night gurus say about doing this with no money down, it just never works that way. That means you'll need access to cash to do the deal, not to mention the rehab.

Remember Richard C. Davis, owner of Charleston-based Trademark Properties, and creator and star of A&E's reality show, "Flip This House"? He says no one can watch his show and get the impression that this is an easy way to make a living. The show is now canceled—maybe it'll come back but flipping is not something that the public at large ought to do. In his original video series, Davis told the viewers not to try this at home. It's for trained professionals. You will lose money.

And there's a ton to learn:

1. You'll need adequate savings to pay all the bills.
2. Your hair will go gray while money is flying out the door for cabinetry, plumbers and plants.
3. Keep track of your contract to purchase, if you don't close in a timely fashion, the sellers can keep your deposit money,
4. Remember to pay the insurance, the utilities and the maintenance.
5. Oh, and contractors won't renovate a house for free.
6. You'll probably need to hold on to the house for at least three months because of Federal Housing Administration (FHA) anti-flipping regulations. Houses sold less than 90 days after they were purchased aren't eligible for FHA mortgage insurance; those sold between 91 and 180 days are OK but require an additional, independent appraisal to make sure the sales price is justified.
7. Every day you own the house costs you money in interest, utilities, taxes and insurance.
8. Taxes. Oh right! As far as the IRS is concerned, buying and selling real estate as an investment strategy and doing it as a business are two very different things. If you buy a house, fix it up and resell it while you're working another full-time job that provides the bulk of your income, that's an investment and the proceeds will be taxed as capital gains. So talk to a CPA.

So before you get “flipping-envy” remember guys like Edward Thornburg are few and far between—that's why his making any money flipping homes this year is news-worthy.

Dane Hahn is a real estate professional practicing in Florida and New Hampshire. You can reach him via dane.hahn@gmail.com or http://www.danesellsflorida.com/

What Did You Learn From the Real Estate Meltdown?

I just finished reading Reckless Endangerment, by Gretchen Morgenson and Joshua Rosner. The authors make a strong case that the recession and real estate melt-down was a simple case of greed at many levels, and they feel that most of the really bad guys are still known to us and today are very rich.

They trace the beginnings of our real estate collapse to the mid-1990s, beginning when the Clinton administration called for a partnership between the private sector and Fannie and Freddie to encourage home buying. The governmental support was in fact a subsidy to increase home ownership, which enriched Fannie and it's C.E.O., James A. Johnson. So far so good but then the Congressional Budget Office found that Fannie pocketed about a third of the subsidy rather than passing it on to homeowners. And over his nine years heading Fannie, Johnson personally took home roughly $100 million. His successor, Franklin D. Raines, was treated just as lavishly.

To entrench Fannie’s privileged position, Johnson and Raines didn't keep all the largesse, they channeled some off to members of Congress—contributing to campaigns and handing out patronage positions to relatives and former staff members. Fannie paid academics to do research showing the benefits of its activities and playing down the risks, and shrewdly organized bankers, real estate brokers and housing advocacy groups to lobby on its behalf.

American taxpayers were unknowingly handing Fannie billions of dollars each year. Countrywide Financial (now a failed division of Bank of America) became Fannie’s single largest provider of home loans and the nation’s largest mortgage lender. Countrywide abandoned most traditional lending standards altogether, and even doctored loans to make applicants look creditworthy, while generating a fortune for its founders.
Meanwhile, Wall Street banks received fat fees underwriting the securities issued by Fannie and Freddie, and even more money providing lenders like Countrywide with lines of credit to expand their risky lending and then bundling the mortgages into securities they peddled to their clients. Wall Street loved the charade because it was so profitable. Later as the market dumped, Goldman Sachs bet against the bundles — making huge profits off the losses of its own clients on the very securities it had marketed to them. Eventually, of course, everything came crashing down.

Robert Rubin, when he was the Treasury Secretary, pushed for repeal of the Depression-era act that had separated commercial from investment banking—a move that Sanford Weill, the chief executive of Travelers Group had long sought so that Travelers could merge with Citibank. Then after leaving the Treasury, Rubin became Citigroup’s vice chairman, and over the following decade pocketed more than $100,000,000 as the bank sank deeper and deeper into a risky morass of its own design.

With Rubin’s protégé Timothy F. Geithner as its head, the New York Federal Reserve Bank cut back its oversight of Wall Street operations. That same year Henry M. Paulson Jr. became the head of Goldman and was in charge when that firm created many of its most disastrous securities.

As the Treasury secretary under George W. Bush, Paulson would oversee the taxpayer bailout of Fannie Mae, Freddie Mac, Goldman, Citigroup, other banks and the giant insurer American International Group (A.I.G), on which Goldman had relied. As head of the New York Fed, and then as the Treasury secretary, Geithner would also oversee the bailout, which just to Fannie and Freddie has cost the American Taxpayer $141 Billion. ($141,000,000,000)

Today James Johnson is a rich and respected member of Washington’s political establishment (although he was forced to resign from President-elect Obama’s advisory team after the press got wind of his cut-rate personal loans from Countrywide). Franklin Raines retired from Fannie with a generous bonus. Henry Paulson became a fellow at Johns Hopkins. Robert Rubin is affiliated with the Brookings Institution. And Timothy Geithner remains Obama's Treasury secretary.

All told, it appears we have learned remarkably little from the real estate meltdown. Fannie and Freddie, are now wards of the state, currently back more than half of all new mortgages, and their executives are still pocketing fortunes. Wall Street’s biggest banks are larger today than they were when they got into trouble, and the executive pay packages are just as generous.

But the rest of us have paid dearly.

Dane Hahn is a real estate professional practicing in Florida and New Hampshire. Reach him at: http://www.danesellsflorida.com/ or at dane.hahn@gmail.com

Want To Buy a Vacation Place in Cuba?

Recently I have been thinking about “bucket list” travel and one of the places on my list is Cuba. I know I can go there now. There are lots of “shady ways” to get into the country. Whenever I bring up the subject of going there people say, “Oh, just fly up to Canada, and change planes for Havana—tell 'em you're a Canadian, that always works.”

Or others say, “If you sign up for a college class, you can take a field trip to Cuba and see lots of the country by bus”, that might work, although the bus part is not so appealing. Then there are my more adventurous friends who say, “just fly to the Bahamas and take a ferry over.”

I don't know, maybe I'm more conservative than I used to be, but I want to be able to get into the country legally on my own passport and more importantly, come back to the USA when I'm ready. I'm not looking for any surprises, and I don't want to see the inside of a Cuban prison.

But more and more the Castro Regime has begun to loosen the rules that were put in place 50+ years ago. I noted just this week that Cuba will allow her citizens and permanent residents to buy and sell real estate—starting November 10^th. Well my friends, there's a new game in town, and we call it home ownership.

This change in real estate ownership is huge. Back in the day, when Fidel Castro was a young man and he had just unseated Batista, (for you younger sprouts, this would have been in the pre-JFK years) he nationalized all the land, homes, farms and—well all the private property. What happened then is that Cuban people got to use—let's say, have the right to live in—a home that now belonged to the government. As I unbderstand it, the more the Party liked you, the better your “free home”. So for more than a half century, there has been no private ownership of homes in Cuba. But come Thursday, that will be history.

Recently, if you lived in Havana as a Citizen or permanent resident and wanted to change dwellings or move to a new locale, you couldn't go out an buy a house, you would involve yourself in a complex bartering system. As I understand it, you would be transferring your “right to occupy” your old property for another, and you may have had to pay a fee or two, and a bonus to the citizen whose “right to occupy” you were acquiring. I would like to hear from my readers who can share the Cuban real estate model with me. I would love to hear Marco Rubio discuss this topic.

Cuban officials are telling each other that this is not all that much of a move away from Socialism, but—they say--it is necessary for social and economic reform. In the real estate regulations that I read, the property ownership plan will limit an owner to two homes, (a residence and a vacation property). And all financing will have to funnel through Cuba's central bank, which will charge fees. It's not clear what fees will be due if property is purchased for cash, but there are taxes due at closing--Cuba will charge 8%, split between the buyer and the seller.

Presumably the first cycle of property sales will be deeds from the country of Cuba to the present resident/occupant, and then the resales will be between two individuals.

What would I expect next? Well I would think that Cuban-Americans will funnel free cash to family members to buy homes and vacation homes. I would expect to see some serious confusion in this market over the first few years, but as with any confusion of this type, I would guess a few people will make a lot of money.

Dane Hahn is a real estate professional practicing in Englewood, Florida and New Hampshire. Reach him at dane.hahn@gmail.com or see him on the web at http://www.dnesellsflorida.com/

We Seem to be the Only Country with an MLS

Recently around the office we've been talking about the differences between real estate business here and in other countries. For example, in Australia, there is no multiple listing service, you call the agent whose sign you see on the property and go see the house with that person. This is a huge hassle for the buyers who have to contact a number of different Realtors if they want to see what's for sale in a given area.

I noticed the same thing in Scotland a few years ago. There was a street of Realtors (although there they are called “estate agents”) and you shop for a house the way you would shop for a new suit, you go from agent to agent to see what they have, and when you find one that has something you'd like to try on, you go inside and make arrangements to go see the property.

I have noted this week that it's also just that way in Italy and also in Turkey.

And speaking of the way things are done differently in other countries, there was a story in the International edition of the Wall Street Journal that in Ireland the foreclosure rate is very low. The story went on to say that a mortgage in Ireland had more standing that in the US. In Ireland if your f you get a mortgage was foreclosed upon, whatever you owed was NOT forgiven, the bank took the house and billed you for the difference, even a bankruptcy—which in Ireland takes 5 years to execute—would not clear that debt.

So if you were unable or unwilling to make your home payments, you would lose your house and the bad credit you would incur would “dog” you for at least 5 years maybe more. In Ireland, this has resulted in people staying in homes in spite of the fact they are “underwater”. In other words, walking away from what appears to be a bad investment is not an option. I must say the Irish don't give mortgages to every Mike, Pat and Sean, so for all the people who have home mortgages, they actually qualified when they go them—and most put 20% down--that's different than here in the US too.

The other option that the Irish banks offer is a foreclosure with a rental back to the foreclosed family. The rationale is that there is no benefit to the bank to have an empty house, nor is there a benefit to the family to have to move. So they will—as I understand it—allow the family to return the deed, but stay in the house as a tenant. There was no information on how much the rent would be, but I would assume it would be less than the mortgage payment.

In Turkey, homes—and I mean nice homes--are selling in the $35,000 range along the Mediterranean Sea. The buyers are Germans and English—same as Florida. And of course the business elite and executives from Ankora and Istanbul as well. Of course the prices go up from there, but in Kusadasi $200,000 US will buy you a mansion.

Naturally in Istanbul, along the Bosphorus, homes on the water start in the million dollar range and run up to (the most expensive one sold last year) a whopping $140,000,000 US. But the cheap ones are still pretty nice, and the boats tied up out front are spectacular. So the prices vary and the laws vary, but a house is shelter and we all need at least a place to live.

That's what makes real estate (as a business) so interesting and—for me at least—so much fun.

Dane Hahn is a real estate professional practicing in NH and Florida. You can reach him at 941-681-0312. Or see him on the web at http://www.danesellsflorida.com/

H A R P: Refinancing For Shaky Loans

Here we go again.

With the blessing of our present administration, we taxpayers are about to offer band-aids for all the shaky loans that are still out there. You will soon be able to refinance your old loan even if you are unemployed, and the value of the house has gone over the edge.

Our government feels that people with little or even negative equity in their homes should immediately refinance their mortgages at what are now historically low rates—the theory being that if they have been making their house payments when the rates were onerous, they deserve an opportunity to stay in their homes at the lowest rates in history.

This initiative, known as the Home Affordable Refinance Program, or HARP, hinges on lenders voluntarily writing new loans for borrowers hard-hit by declining home prices.

The HARP program is open to borrowers who have negative equity in their homes as long as they are making timely payments and their loans are now guaranteed by Fannie Mae and Freddie Mac--which back about half of all U.S. residential loans.

The Federal Housing Finance Agency, said it would relax the representations and warranties participating lenders have to abide by as part of its revamp of the program. So even the lenders who were worried that they could be forced to buy back refinanced loans if defects with the initial mortgage are found, can relax.

As part of the revamp, FHFA said it would scrap a cap that prevented borrowers whose mortgages exceed 125 percent of the value of their homes from participating in the program.

About 3.1 million loans are eligible for the program, and 894,000 borrowers have used HARP to refinance. FHFA said the changes could double that number, though that would still fall far short of the 5 million homeowners the Obama administration had hoped to reach when the program was unveiled in 2009.


In order to be eligible for the HARP program, the present loan must have been written prior to June 1, 2009 and be backed by Fannie Mar or Freddie Mac. FHA and USDA (or jumbos) are not eligible.

All homes, regardless of how “underwater” they are are eligible, there is no loan to value restriction so long as the newly written loan is a fixed rate, and of 15-30 year duration. There will likely be no appraisal since all homes (that are standing) will qualify.

Any HARP lender can refinance your home, you do not need to go to the bank or mortgage company you used originally. If you had PMI, you may still need it, but the rate will stay the same even though the principle of the loan has increased.

The conforming limit is $417,000; but there are some cities where the cap is set at $625,500. And there can be no cash out when rewriting the loan. Only rate and terms can be modified.
You can refinance more than one home, a second home or investment properties can also qualify.

While borrowers may move through the refinancing process at a faster rate under the re-tooled initiative, the breadth of the waivers on representations and warranties will largely determine the degree to which lenders and mortgage servicers are willing to make these riskier loans.

Those originating the loans have been skittish about refinancing higher-risk borrowers with the possibility a loan's government guarantees could be stripped if it sours or it is deemed defective. This is another plan from Washington—this time it's one which may actually help Americans. Seems like a long time coming, and it's not for everyone, but if you qualify get going ASAP.

Dane Hahn is a real estate professional in Florida and New Hampshire. Reach him at http://www.danesellsflorida.com/ or by email at dane.hahn@gmail.com

Don't Call it a Foreclosure!

As I wrote last week, we are moving away from the term foreclosure for the loss of a house.  Our current Administration wants fewer foreclosures.  Sounds good.  So here’s how they’ll accomplish that:  they’ll call them something else—now they will be short sales or deeds in lieu of foreclosure—thankfully this much more “correct” way of explaining how a house was lost is likely to be available through HAFA.

I can’t guarantee that HAFA (the Home Affordable Foreclosure Alternatives program) will work for you or even someone you know, but it is designed to help folks who have been trying in good faith to work out a mortgage issue with their bank.  It’s a program intended to make short sales easier and more streamlined for homeowners (who did not qualify for a loan modification).

Unfortunately when the government gets involved, things tend to get complicated.  But recently thanks to HAFA, some larger banks have begun to “work” with their clients and this may now pave the way for more short sales (or deeds in lieu of foreclosure) to get more homes sold in 2011

There is a bonus for all players.  The banks can absorb up to $20,000 in deficiencies, meaning you can sell your $120,000 home for $100,000 and not have a penalty.  Really, that’s about what it costs a bank to handle a foreclosure, but if it results in a successful short sale, it’s a win/win situation.  And, the bank will offer up to $3,000 as a relocation fee if you find a buyer and make the sale, this is really a bribe to close the home without involving the bank—and eliminating the potential for a long list of repairs that the bank might normally have to make.

To be considered for HAFA, the property currently must be (or have recently been) the borrower's principal residence. A property qualifies that has been vacant or rented to a non-borrower for less than 12 months prior to the date of the Short Sale Agreement (SSA).  The borrower must prove that the property was their principal residence prior to relocation and such borrower has not purchased a one to four-unit property during the 12-month period prior to the date of the SSA.

The borrower's reason for relocation does not need to be connected to re-employment or transfer of employment. Also, there is no longer a minimum distance requirement.

The program is designed help homeowners who couldn't or didn't get a Loan Modification and are now unable to keep their home.  A borrower may be able to avoid a foreclosure by completing a short sale or a deed-in-lieu of foreclosure under HAFA.

Who is eligible?

The borrower must meet the basic eligibility criteria for HAMP:

Principal residence.  (You now or recently lived in the house)

You got your mortgage before 2009.

A delinquency or default is reasonably foreseeable.  (You have a hardship)

Unpaid principal balance no more than $729,750 (higher limits for 2 to 4 unit dwellings).

Benefits of a HAFA Short Sale:

You are allowed to sell your home for less than you owe on the mortgage!

You avoid foreclosure and its effect on your credit!

Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed

No obligation to repay the deficiency!

Qualify for a new loan in as little as 2 years!

Receive up to $3,000 for relocation expenses!

Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

If you think HAFA might work for you or a friend, check out the government website that will give all the information and nuances as they will apply to a specific transaction.  http://homeownership.org/foreclosure-help/mortgage-relief-programs/hafa-program.aspx

Dane Hahn is a real estate professional, reach him at dane.hahn@gmail.com or check his web site at http://www.danesellsflorida.com/.

Q: How Can You Tell A Statistitian is Lying? A: The Numbers Look So Much Better!

The latest housing numbers aren’t pretty. But they’re about to seem a lot better. Here’s why that’s happening. The whole key to correcting our crappy housing market is to eliminate the excess and surplus inventory of homes. (And getting rid of the foreclosures).

The issue we are seemingly unable to address is what to do when a homeowner either can't make his payments, or simply wants out of his contract because as far as he can see, the house isn't worth the money he agreed to pay, back when he bought it. In either case the homeowner is what we call, underwater.

Banks are increasingly offering underwater homeowners a way out that’s less familiar than the well-known process of foreclosure. Instead, they’re employing a strategy called a deed-in-lieu of foreclosure. Here's how that works, a homeowner (currently paid up on their mortgage or not) can voluntarily sign the deed of their home over to their lender. In exchange, the loan is canceled.

It’s different — but not that different — than a foreclosure. It lets an underwater homeowner out, and saves everyone the legal hassle of a foreclosure. It extinguishes a debt that might have been a bad idea for the purchaser in the first place. But getting a borrower off the bank's hook may not cover all the bases; banks may report the deed-in-lieu to the IRS and to credit bureaus, although a lender’s credit might not be as harmed as it would under a foreclosure.

The bad news is it still means that housing supply is ratcheting up. But it's good news for banks, who can avoid legal expenses and it creates the illusion that foreclosure rate are dropping. In the mean time former owners are being driven to renting.

Undoubtedly, the illusion of declining foreclosure rates will play a role in pretending that the economy isn’t so bad, especially during next year’s presidential election. But make no mistake. Housing prices continue to reflect the underlying reality of the economy.

And house prices are probably lower than they have been at any time in the last 50 years (adjusted for inflation). Now is the time to buy in and hold—if you can. I know my opinion until now has been that the market has been awful, but when you think of real estate as an investment, now is the time to buy.

Now is when you can get the lowest financing rates. Now is when the selling prices are scraping the bottom, and now is a time when more Americans need to rent. So buying one or more homes right now with the idea of holding them (as an investment) as rentals is an excellent idea.

For investors with the financial resources to obtain a loan, the willingness to put in some hard work, and the patience for a long-term investment, real estate is now a great buy.

Today's good news/bad news: The supply of homes will dry up over the next year. So expect fewer foreclosures and more “bank owned” properties (think “deals”). If you get in now, plan to buy and hold for the long term investment--don’t expect to flip a property for huge profits anytime soon. Real Estate is not that liquid, but it's also not likely to be going down (like gold) anytime soon.

Dane Hahn is a real estate professional with Tarpon Coast Realty, call him at 941-681-0312, or at dane.hahn@gmail.com. See him on the web at http://www.danesellsflorida.com/

The Price of Excess

The first day of fall came this week, that was about the only good thing.  The stock markets are in pandemonium, the real estate market is on its butt and the jobs market is by most measures, hovering around 15% unemployed, and still about 2 years from recovery. A friend just told me that liquidity is when you look at your retirement funds and wet your pants

The Wall Street Journal had a compelling headline on Thursday—one of those “standing heads” that they can bring out and dust off to reuse as needed.  The headline, “Home Resales Up, But Remain Weak”.  The story goes on to say that the sales of previously occupied homes has risen to the highest point in five months (of course five months ago we all thought home sales sucked, but apparently the ensuing five months of Summer were worse).

“Despite the monthly increase in sales,” the Journal continued, “the US continues to struggle with the aftermath of the worst housing bust in decades.  Last year was the worst year since 1997. This year’s sales are on track to be slightly better.”

Home prices are expected to drop 2.5% this year, and then begin a slow rise of 1.1% annually through 2015.  (This should be real growth, not adjusted for inflation) The International Monetary Fund concurs with these predictions and has cut its 2012 growth forecast for the U.S. to 1.8% from 2.7% based on the weakness of the housing market.

Lots of the reporting of home sales is confusing because we tend to think of houses for sale as a single grouping, but for reporting purposes, there are subsets, and the largest of these is the so-called “Previously-Occupied” homes, so this is the best measure of how the real estate marketplace is doing--as opposed to car sales, where “previously driven” would not be a good measure of sales.  New car sales ring the biggest bell in that reporting category.

But it’s not all gloom and doom because the numbers the Wall Street Journal reports are national numbers and we live locally.  Home sales by region vary tremendously; sales in the West were up 18.3%, in the South 5.4%.

And inventories of homes for sale have dropped over the last few months as well.  Two weeks ago there were 3.58 million homes for sale across the United States, which at the present rate of sales is an 8.5 month supply.  To give you a benchmark, in a healthy marketplace, there would be about a 6 month supply, and during the “go-go days of the 2003,4 and 5” we had about a 3 month supply, meaning a house that was listed today—on average—would be sold and a new family would have moved in within 90 days. In the “bubble days” it went even faster.

I just drove between Florida and New England, and I can share first hand knowledge that there were very few moving vans on the road, I saw perhaps only a handful in 1700 miles, there were a few more U-Hauls and pick-ups with tons of stuff in them, but real family relocation moves seem to be few and far between.

There were also lots of for sale and for lease signs on what appear to be large factory type commercial buildings all along Interstate Route 95.  And probably 35% of the outdoor billboard signs are unrented, painted out white, or offering “This Space Available”

And so it is that in September 2011 we are paying the price of the excesses of the last decade.  As we lick our wounds and console one another by saying, “we’re all in the same boat”, look ahead the 14 months to the next election and demand of our politicians more and better candidates.  Demand a business-friendly administration.  Demand new jobs even at the risk of loosening environmental regulations.  Demand that we renew our quest for energy independence.  (Even the shrill voice of Sarah Palin squawking, “drill baby drill”, has merit.)  And finally, if you are interested in your future, demand a simple and fair tax code at the same time.

Dane Hahn is a real estate professional with Tarpon Coast Realty in Englewood, Florida.  He can be reached at 941-681-0312 or at dane.hahn@gmail.com.  See him on the web at http://www.danesellsflorida.com/

Six Changes to the President's Jobs Bill

The talking heads on my TV are yelling at each other as I write this.  The beautiful women who are in favor of the President’s jobs bill are being laughed at by the handsome men who are against it.  The more average looking economists are generally appearing to be thoughtful, and seem to take a middle of the road view, but the President and his jobs bill seems to misunderstand what a small business is.

I’m from a family of small businesspeople.  And notwithstanding my forays into the world of big business most of my career has been made in smallish retail locations with less than 2000 square feet of space.  There’s something very comforting about having your own business.  (For starters, you rarely get fired…)

My wife and I have owned a number of small businesses, most recently a real estate brokerage of medium size.  We had variously 5 to 15 agents, depending on the market, and we were faced with all the regulations that are assessed on small business.  A quick list of all that would include the quarterly taxes that were required, the employee documentation, the forms and posters we had to display, the fees and dues that were collected by the Feds, the State, the Real Estate Commission, the National Association of Realtors, the State Association of Realtors, the local Board of Realtors, and the franchise company whose name we used (EXIT Real Estate) the real estate insurance companies (errors and omissions), the marketing companies, and the rest.

I suppose about half our day (my wife and mine) was spent dealing with non-business related work.  By that I mean government compliance, mandatory reporting, and banking and documentation, license updates, and then promotion of future business by buying ads, signs, internet and web sites, phone lists, and the like.  The other half of our day was meeting with agents and clients, and maybe doing a little something toward earning a living.  And this was a little company.

The President’s jobs bill was apparently designed by people who have never owned or worked in a small business, and had no idea how or why a small business runs. So I have a few suggestions for their new bill.

First of all, the new bill should not extend unemployment payments.  If it works at all, the 10% unemployment problem will take care of itself.  Unemployment compensation is really a disincentive to find a job.  It takes the hurry out of the concept.  I was at the dump this week and a guy was telling me he was having a hard time making his mortgage payments.  He’s been on unemployment for almost 2 years and he said, “I may have to go find a job if I want to stay in my house…”

A jobs bill should provide an incentive for employers to create jobs.  And should offer an incentive for qualified employees to take the job.  Meaning the job should pay more than unemployment, and should provide an ongoing meaningful financial incentive for the employer to increase the number of employees.  I would propose a 10% tax cut on profits if a company could achieve a 10% increase in employees.  This would be on-going and measured on a quarterly basis, when the company reports sales and quarterly taxes anyway.  This method would require the employer to keep their employees for the long term, and for the employees to be “employable” and qualified

The bill should have a penalty for companies that have excess “idle cash”.  I would identify idle cash as funds that are held for no apparent reason.  To hear that Apple has 90 Billion dollars in cash makes me smile, but I recognize this as a problem for our economy which depends on the ebb and flow of funds. And of course to opportunity to tax the flow each time it is spent.  So I would require these large pools of idle funds should be spent on growth, building infrastructure, hiring new people and developing new ideas, donated to a charity or invested in Government bonds. (I think most businessmen would take the hint here and spend down the money in ways that would add assets to their balance sheet, and create more jobs)

Thirdly, here is the perfect place to insert and pass a balanced budget amendment. As a part of the bill, and to give businesses a level of confidence that the government is no longer going to tax and spend until we have to declare bankruptcy, we should insert the Amendment, and ask the American public to approve it ASAP.

Finally I would address the compliance regulations, If a small businessman has to spend ½ his time on paperwork to comply with government regulations, that’s just too much bureaucracy.  It would be time for the Department of Redundancy Department to step up and cut some of the regulations and paperwork.

To kick this economy into the 21^st Century, the best thing this Congress and President could do is pass a flat tax, with few if any deductions. 

Dane Hahn is a real estate professional in NH and Florida.  The Gove Group in NH and Tarpon Coast Realty in Boca Grande, Englewood and Sarasota.  He can be reached at dane.hahn@gmail.com or through his web site at http://www.danesellsflorida.com/

Stop the World--I Want to Get Off!

This week I have been swamped with too much news.  My head is swimming with stock market ups and downs, Republican debates, Presidential speeches, Red Sox/Rays games, the return of NFL Football and the 48 hours of 9/11 on TV.  OMG, Stop the world--I’m in information overload--I want to get off, please, forgive me if I’m a little off track.

Real estate investor Gary Shilling wrote this week that he believes U.S. housing prices are likely to lose another 20 percent over the next couple of years because the oversupply of available housing is still huge.  I don’t see that drastic loss in either Florida or New England—we’ve had enough already.  But I have been harping on bulldozing or burning (somehow ridding ourselves of) the over supply of broken-down homes, but that’s an idea that hasn’t grown legs so far.

Shilling also expects that official quarterly U.S. growth figures will be soon be revised downward. “The odds are that next time they revise the data it will be to make it even weaker,” Shilling says. “We could be looking at numbers that are positive today but may not be six months from now.”  As I see it, restating financial results is something exclusively reserved for the government.  If I had tried that when I was with Fidelity, I’d have been unemployed within the month.

“The Fed and the government are pretty much out of ammunition,” says Shilling. “The Fed has tried the printing press — $1.6 trillion in excess reserves and what’s happened? It’s just sitting there.  It’s up to the banks and credit worthy borrowers to turn those reserves into money and they haven’t been. It’s the classic pushing on a string.”

As I write this, borrowing activity is so low that banks have a record $1.5 trillion sitting idol at the Federal Reserve Bank — funds eligible for loans if creditworthy borrowers show up and apply.

Here’s some “better news”: more than 2 million homeowners who were foreclosed on or were in the process of a foreclosure during 2009 or 2010 can now ask for a review of their case. Banking regulators say ex-homeowners who might be eligible will receive a letter from their lender explaining their rights.

The move is to help identify homeowners who may have been improperly foreclosed upon, homeowners who ask for the review will receive a letter explaining their rights.

Mortgage servicers will be required to hire independent auditors to conduct reviews of the cases and determine if homeowners should receive financial compensation if the foreclosures were not done properly. They will also look for borrowers who were denied loan modifications when they may have been eligible for one.

The reviews are part of the mortgage servicer requirements called for by regulators after an investigation last fall revealed improper foreclosure practices by banks.

My opinion:  I am glad it’s been 10 years since the attack on America, and that it’s been 10 years without another attack, I was impressed with how presidential George Bush was in his speech this week, and how easily Bill Clinton interacted with the audience.  These are two world leaders who by comparison, dramatically demonstrate the difference between our “old style” Presidents and our “new style” president.  (I like the old style better…)

So much in our lives has changed in the years since 9/11/2001.  I am sorry that we lost nearly 3,000 people that day, and in the wars we’ve waged since then to revenge that attack, another 6,000.  Frankly, I think losing 9,000+/- Americans is enough.  I’m sorry that we still have young people in harm’s way, and I want to see them home safely. 

I’m sorry that our leaders have been so thumb handed in their management of our economy, (our housing market, our employment situation, our taxes and spending and health care) and our military. 

I think we’ve got work to do between now and the next election.  If we work hard now, maybe we’ll have something to show for it in 2012.

Dane Hahn is a real estate professional in New Hampshire and Florida.  He can be reached at 941-681-0312 or at dane.hahn@gmail.com.  See him on the web at www.danesellsflorida.com  or http://www.danesellsnh.com/

How's That Hope and Change Thing Working Out For You?

Over the last ten years or so the government forced banks to make loans in neighborhoods which they knew were likely to produce buyers with bad credit, (but the banks made the loans under threats of “redlining” which carried huge fines for area/regional discrimination.)  The government, spearheaded by the likes of Barney Frank (d) Massachusetts), allowed—but really required banks--to develop loans that all parties knew would be risky and likely to result in a foreclosure.  Their logic: every American deserves to own a home (read: get a loan) and while some loans would fail, at least in the America of the early 2000’s, everyone would have the homeownership opportunity.

Well it didn’t work, we are saddled with tens of millions of upside down homes and millions of foreclosures.  And to make matters worse, now the government has sued 17 financial firms, including the largest U.S. banks, for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.

The total price tag for the securities bought by Fannie and Freddie affected by the lawsuits: $196 billion.  There is no stated amount that the government seeks in damages. It said that it wants to have the purchases of the securities canceled, be compensated for lost principal and interest payments as well as attorney fees and costs.

This government tactic will not result in any homeowners getting their property back, but it will serve to hogtie the major banks and at worst drive even the large banks out of business.  The topic under discussion here is not a taxpayer’sforeclosed home but rather the sale of bundles of loans by the banks to the government.  Home mortgage-backed securities were risky investments that collapsed after the real-estate bust and helped fuel the financial crisis in late 2008.

All of a sudden nobody is afraid of the Obama Administration, so what if the American Banking Association took the bull by the horns and counter sued the government for actually requiring them to make the bad loans?  What if they could show that the loans were in fact made because they were required to make loans to unqualified people, and in return the government promised that they would buy the bundles of loans, no questions asked (wink wink…)

I have had literally dozens of people in my office who wanted to buy a house in the worst way.  I would contact a mortgage agent and find out how much they could afford—then show them every property in their price range, only to have them say they wanted me to show them homes priced $10,000 to $25,000 more.  Once we would find a home above their price range, they would sweet talk the mortgage agent and get the loan.

I recall asking one of the mortgage agents (whose bank is being sued right now) how he could raise the amount of a loan to somebody who seemed unable to make the payments?
His answer, “If I don’t make the loan, somebody else will.  We all make a buck, and the government buys up all the loans anyway, no matter who makes the loan.”

Well there’s plenty of blame to go around, but if we don’t allow this marketplace to settle out, and get the foreclosed homes somehow out of the mix, we’ll be stuck in the morass of cheap homes for another bunch of years. 

So far the weakness in the real estate business has created a bunch of clerks and retail salespeople out of the Realtors whose names and signs you probably know; it’s driven builders and artisans to move to new areas--different states even--or find new work; and now if the government sues all the banks that have made it their business to loan money to home buyers, it’ll be one more nail in the real estate coffin. 

And this in a cycle where there have been no new jobs created.  How’s that hope and change thing working out for your business?

Dane Hahn is a real estate professional with Tarpon Coast Realty in Englewood, Sarasota and Boca Grande.  You can reach him at 941-681-0312 at dane.hahn@gmail.com or at www.danesellsflorida.com

This Week I Got Scammed

This week I spent most of my time focused on leases. I don't want to sound like a snob, but leases pay somewhere between $50 and $100 each and so writing a couple of leases can be a thin paycheck week, and it’s a far cry from even a small sale. But here's what happened, I had two great lease clients who both really wanted to rent a unit that I had showed them--and nothing I tried to sell anyone else “stuck”--so a couple of leases to clients I enjoyed spending time with is better than a sharp stick in the eye.

I must say that for the moment (at least) I like both of my new lease clients, and am trying to provide each of them a comfortable lease with no downsides to them or the landowners. These are upwardly mobile people, and anxious to move into a home that is nicer than where they have been. Well to be fair, one of them is year 'round and moving up, the other is taking a condo in Sarasota for the winter. But that couple has been wintering on the east coast, so I am thinking they are moving up too.

And then I found myself in a scam.

Let me back-up my story about a week or two to the point when I listed a large condex, this was probably 10 days ago. I had known the owners for some time, and in fact years back my wife had been their agent and I had been the broker on the sale of this condex to these folks. Anyway, we met with them at the house and filled out the paperwork (Realtors are always filling out paperwork) so that I had their legal permission to rent the property.

A day or so later I entered the listing and almost immediately started getting calls. But here's where this one became different from any rental listing I ever have handled before. I started getting calls from people asking me why the home was cheaper on Craig's List than it was in the Multiple Listing.

I had meant to enter the home into Craig's List, but had not taken a full series of photographs when I was there to sign the listing agreements, principally because it was raining and I didn't want a rainy day to be memorialized in the listing photos, so I had come back a day or two later and taken the rest fo the photos. But the house had found it's way into Craig's list.

Two clients called me and asked why the home was on ly $900 a month in Craig's List and $1,500 in my listing. I had no answer—and really still don't—but here's what I know:

One of the clients had responded to the email in Craig's List, and asked about the home. They replied that they owned the house (not true) and that they planned to spend more time in Africa (probably true) and so they wanted to rent it cheaply to get a good tenant.

My client sent along her question and what follows is the answer:

From: Home Tagged <home.tagged@yahoo.com>
Sent: Wednesday, August 24, 2011 6:31 AM
Subject: Re: Rental

Thanks for your email. The house is still available. I decided to rent the house because we are going to spend more time here in West Africa, about 4 years... Let me start by introducing myself  I must confess that I am very very new in this landlord business.. However, My name is Sam Gerald. I own the house located at (here I removed the address). Due to my job as a missionary with the General Board of Global Ministries of the United Methodist Church International, I am presently serving as Area Financial Executive (AFE) with the United Methodist Church in Lagos, West Africa.I am responsible for receiving distribution of funds for various UMC projects in West Africa  , and all related works with other mission personnel. my current home is in the vineyard of the Lord in BENIN West Africa.I spent less time in the States so I could not get a hold on any Realtor to handle this rent issue, although it was when I knew how long we are going to stay in Africa  that I decided to rent out the house. However, the initial plan was to sale out the House. which I tried, but sometimes the agents inflates the prize and it takes longer to sell. because of this reason and more we need a responsible person (With good credit) that can take very good care of it as we are not after the money , but want it to be clean and for you to take it as if it were yours.you can call me at +23480-6060-5897. The rent is $900 and 600 for Security Deposit For this 3Bedroom,2Bath Features: Air Conditioning, Dishwasher, Fireplace, Garage, Washer & Dryer, Yard LEASE APPLICATION FORM FULL CONTACT NAME? OCCUPATION? RESIDENTIAL HOME ADDRESS? YOUR CELLPHONE NUMBER? YOUR HOME PHONE NUMBER?  YOUR WORKPLACE NUMBER? WHAT TIME IS THE` BEST TIME TO REACH YOU? AGE & MARITAL STATUS? OWN A PET? OWN A CAR? HOW MANY PEOPLE SHALL RESIDE IN THE PREMISES? ANTICIPATED MOVE IN DATE? REFERENCE? ============================== ======= Application Comment ============================== ======= Please make sure this questions are fill correctly because the best way you answer with your comment will impress me the more to accept your applications. Regards Sam Gerald.

My client followed up with a request for more photos—remember I had not taken a full set when the property was first listed.  In the ensuing days I had filled in the photos in the multiple listing.  Somehow the scam artist had access to the photos in the multiple listing and managed to forward them on to her.  Here is his last email:

From: Home Tagged <home.tagged@yahoo.com>
Sent: Wednesday, August 24, 2011 7:09 PM
Subject: Re: Rental

Thanks for your mail.  Yes it has oversized deck  and i will coming for visit in the state and also great spaces at the back yard....below are more pictures of the inside!!do get back to me with rental application filled out so we can proceed These were the newest photos I had just taken!  So this week I will be trying to deal with this kind of a scammer.

Dane Hahn is a real estate professional with Tarpon Coast Realty in Boca Grande, Englewood and Sarasota.  He can be reached at dane.hahn@gmail.com or see his litings at http://www.danesellsflorida.com/

2 Weeks in Washington, Instead of Martha's Vineyard

As I begin to write this, all the touchstones I usually check are trembling.  The market is down AGAIN, this time 420 points (it’s OK to call these points dollars) and the president has arrived in Martha’s Vineyard (Massachusetts) for his annual 2-week vacation with the family.

Last week he turned 50 and the market presented him with a birthday swing: down 500 points (dollars).  I’m not saying he’s the cause of the dumps in our economic world, but he apparently isn’t interested in being the cure.  Sure it would be nice if the market cured itself, but it seems like it’s too much trouble for our president to actually take control of the house and senate and try to make the whole system work. 

I know the president feels it’s appropriate to blame others; George Bush has gotten a pile of blame (and he may have deserved some of it, even though the Dem’s had the White House, the House and the Senate for 2 years).  Now Japan and the Tsunami have gotten some blame, I don’t get that exactly—what was the problem there, no new Toyotas?  And of course the Tea Party, they’re easy to blame—they’re sort of a “Republican Cloud”—with no names or faces.

Some years back I worked at Fidelity (the bigger than life-sized investment guys).  I wasn’t a stockbroker or investment guy, Fidelity owns more than 50 publications and I was a group publisher there.  But let me tell you a little about the culture at Fidelity.  They don’t suffer foolishness easily.  If my department results were down, there would be no vacations approved—mine or anybody else’s until we were back on track, period.  It wouldn’t matter if I had a $10,000 deposit on a vacation house on Martha’s Vineyard and my whole family was coming in from the rest of America, If I tried to pull that kind of a stunt, I’d have no job on my return.

Since those days I’ve owned a bunch of businesses.  And that kind of culture has stuck with me.  When there is a job to be done, you stay and get it done.  No vacations, no leaving early and no bonuses.  I’ve made a lot of money and I’ve lost a lot of money, (making money is better) but I never took off when there was a problem that I felt I had to solve.  My wife will be the first to tell you we cancelled vacations and I worked weekends when we were faced with these kinds of issues.

So why can’t our Commander in Chief call the House and Senate members back to Washington and finish the business of America.  Take it one day at a time, for two weeks and get ‘er done.  Here’s a plan they can follow:

Day one—Address the unemployment issues, allow employers who hire new employees not to match FICA and other costly employer taxes and fees for the first 12 months of that employees tenure.  Come on, make hiring new workers worth doing.

Day two—Address the housing issues we have.  I am still in favor of bulldozing the older homes in poor condition, which are in foreclosure, and selling the newly vacant land to developers.  Bonuses would be paid to developers who build affordable housing and discounts on loans to those who buy them.  Fewer houses will drive up the market and make home sales happen again.

Day three—Address the illegal alien issues.  Plan a whole day to fix the leaky borders, and develop methods of enforcing the laws we already have on the books.

Day four—Take some time to deal with the little things, TSA, Student Loans, Flood Insurance, and term limits—suppose we cap each Senator at 2 terms and house members at 4.  If there’s still time, adjust the president to one six year term--and then go home early (Thursday afternoon would be a good time to relax).

Day five—Prepare the budget for next year. And pass it.  Stay late if you need to. (It’s a Friday in the summer so you don’t want to leave early and get in the weekend traffic anyway).

Take the weekend off.

Day six—Rethink the decisions of a couple of weeks back, and fire the group of midgets who have been chosen to make economic decisions—I mean what is that all about? Wait until the Supreme Court gets a hold of that. Then pass a balanced budget amendment.

Day seven—Discuss and change the IRS’s thousands of pages of tax laws into a simple flat tax.  Rule one, everybody pays 17%, with no deductions—except--If you make less than $50,000 you only report half of your income.  If you make $50,000 to $250,000 you report 75% of your income.  Over $250,000 you pay tax on all your income.  If Social Security is taxable, so is welfare. If Warren Buffet wants to pay more, great.  I say he gets a special lapel pin to wear around and show his buddies that he’s rich and sends in more than he owes.  You can get one too.

Day eight—Let’s plan to spend the day getting all our soldiers and service people out of harm’s way.  Let’s declare all the overseas wars as having been won by us, and bring them home.  Maybe we can employ the troops for the balance of their duty, but on American soil, and have them finish up the shovel ready jobs we didn’t get to.

Day nine—Time to close some of the departments that really don’t do anything.  The Department of Energy only hinders those in the energy business, the Department of Education hinder those who are trying to educate our youth.  Let’s look at each “department of…” and do a simple thumbs up or thumbs down.  Ditto with the various Czars. If you get a thumbs down, your department simply goes away.

Day ten--By now the world will see that we are finally serious and making good progress with our future plans, and our triple A credit rating will be returned, but instead of going home early, let’s take the time for one more vote to repeal the Obama Health plan.

That’s it in a nutshell, two weeks in Washington while the family is on Martha’s Vineyard.  But when these politicians sit down to write their memoirs, the chapter on “what I did on my summer vacation” will be meaningful.

(I know there are lots more topics that our legislators need to address, but this would be a pretty good start on the business of America—don’t you agree?)

Dane Hahn is a real estate professional with Tarpon Coast Realty in Boca Grande, Sarasota and Englewood.  You can reach him at dane.hahn@gmail.com or see him on the web at http://www.danesellsflorida.com/

In Florida, It's Time to Think About Hurricanes

Hurricanes and tropical depressions in the Atlantic made last season one of the worst on record, thankfully the West Coast of Florida was spared over and over.  In all last season there were 21 tropical depressions, storms and hurricanes during the official season from June 1 to November 30.

For a home to withstand the extreme winds of a tropical storm, the keys are structural integrity, shape and mass.  Today, new construction usually boasts thick concrete walls and reinforced steel foundations with monolithic roof frames, tied together by straps set into the concrete. Wooden roofs are tied to the CBS (Cement Block with Stucco) walls by steel straps.  Then the roofs are sheathed in a rubber membrane.  Today's best windows are made from durable uPVC.

Roof materials that can withstand high winds--think steel, fiberglas or engineered tile--are generally available in popular colors and provide good choices for homeowners.  Finally the best protected homes often have electric shutters–for convenience and even long-distance operation—say by computer from your office in a far off city.  But most all also have a manual capability because utility companies may shut off power when a storm is on its way, and not return the power until the clean-up is nearly complete.

Old timers know that when you ride out a storm, you don’t usually “see” a hurricane but you sure feel the plummeting pressure in your cranial sinuses, people often recount suffering low-pressure headaches and of course you hear the screaming noise of the wind as it rattles the palms and burns the bark off trees. Many homeowners are retrofitting their houses with a "hardened" room, where they can be protected from the storms outside.

Most cities and regions in the hurricane-prone world have developed sophisticated building codes. These apply especially to waterfront properties likely to bear the full brunt of any storm.  In Florida, numerous groups regularly campaign for ever-stricter building codes while floridadisaster.org lists approved contractors to retrofit storm resistant features to a home, as well as do-it-yourself tips.

The Hurricane Mitigation Promotion Act – now being debated, is designed to heighten storm preparations not just in Florida, but also in vulnerable states from the Gulf of Mexico to New England. Supporters are calling for an annual “tax exemption week” for householders who buy portable generators, emergency lighting, storm shutters and “tie down” systems for roofs.

Each dollar spent on mitigation returns $3 to $4 in benefits to families, businesses, communities and society, according to the Federal Alliance for Safe Homes. Their data indicates that in Florida the annual projected loss from hurricanes is $3.5 billion, this would far exceed the estimated $24 million in lost tax if the exemption week were introduced.

Meanwhile, local developers already adhere to new building regulations.  In Florida we’re governed by strict federal, state and local codes. Builders must build above the relevant flood zones –depending on where the home is, from 11ft to 17ft above mean sea level.  There’s a great deal of concrete and masonry, in each new home and sometimes pilings below ground. Most houses today are built with some or all of these techniques.

For those still unconvinced that preparedness is worthwhile, check the photo evidence; especially the before and after shots. Take a look at an aerial photograph of almost any row of houses after a hurricane. You can immediately tell which were built to code--they’re intact, while the other homes are damaged or destroyed.

A forecast from Colorado State University predicts above-average storm activity in the Atlantic this year. It warns of five major hurricanes, nine lesser ones and 17 other large storms likely to affect prominent holiday home islands and coastal regions.

Dane Hahn is a real estate professional with Tarpon Coast Realty in Boca Grande, Englewood and Sarasota.  He can be reached at dane.hahn@gmail.com, or on the web at www.danesellsflorida.com