September 16, 2012

Catch current conspicuous country house consumption craze: countless crappers

Today’s story deserves a good long sit and read, followed by a good long sit and think.  Thanks very much to Burbed reader nomadic for wafting this one in.

Wealthy home buyers demand bathrooms; lots of bathrooms

Some mansions have nearly as many toilets as entire blocks in less regal neighborhoods

By Lauren Beale, Los Angeles Times, March 2, 2012, 6:34 p.m.

120915-bathrooms-center-tubHere’s another way the rich are different: They have more bathrooms.

Real estate brokers who cater to the moneyed say their clients typically want homes that have at least two bathrooms for every bedroom. And with spacious tubs, floor lamps, dressing areas and seating, some bathrooms rival bedrooms in size.

“The bathroom has become the dressing room,” said Bob Ray Offenhauser, a Studio City-based residential architect who routinely encloses the shower and toilet in their own rooms within a room. “They really don’t look much like bathrooms anymore.”

Some mansions have nearly as many commodes as entire blocks in less regal neighborhoods.

Pickfair, the Beverly Hills estate of Mary Pickford and Douglas Fairbanks, was outfitted with 30 bathrooms in a later overhaul. But the record locally may be the 41 bathrooms boasted by an 18,400-square-foot Mediterranean-style home in Bel-Air that was recently on the market for $40 million, real estate agents say.

120915-bathrooms-swiss-army-toiletThis is an alarming trend coming out of SoCal.  Why would ginormous Southland estates need more bathrooms than the San Jose Convention Center?  Do they all need to do coke privately, but simultaneously?  Is this high-pressure trend going to affect estates in the Real Bay Area?

Discuss.  You may refer to Facebook stock prices to support your conclusion.

This is also your Weekend Open Thread, so feel free to mention any Open Houses you visited, or whatever else you feel like arguing about today.

Just keep the door shut until you’re done.

Comments (19) -- Posted by: madhaus @ 5:06 am






September 15, 2012

Buenas Noches for Buena Vista

We’ve dropped by the Buena Vista “Mobil Home Park,” the only trailer park in Palo Alto, a few times.  But Burbed reader Stefan alerts us that the much-maligned mobile mews may be moving on.  Thanks very much!

Burbed reader Real Estater also mentioned this article in comments.

Palo Alto mobile-home park faces redevelopment

Buena Vista residents could be forced out to make way for apartments

by Sue Dremann, Palo Alto Weekly Staff

120914-bvista-overviewBuena Vista, the only surviving mobile-home park in Palo Alto, could soon be history, according to city officials.

Residents in the 117-unit park located at 3980 El Camino Real received a letter from property owner/manager Joe Jisser last week informing them that his family is exploring redevelopment options.

The family has owned Buena Vista, located near Los Robles Avenue behind a strip mall, since 1986, Jisser said on Monday. They are working with Prometheus Real Estate Group in San Mateo.

Prometheus specializes in the acquisition, development and management of residential and commercial properties and builds apartments, according to its website. It also focuses on transit-oriented development in areas that are close to corporate campuses, such as Apple in Cupertino and Google in Mountain View.

You think 15 units per acre is too dense for Palo Alto?  Promethius Development has many more rent-paying people per parcel planned for what they’re putting in.  Try 40 units an acre.  If you’ve read this book, just imagine life in The Stacks (which are literally mobile homes stacked into slum towers).

120914-bvista-pride-of-ownershipWhy is the owner finally considering selling out, after owning the park since 1986?  Infrastructure.  Water pipes and electrical wires and transmission are nearing the end of their useful life, and state codes have changed.  It isn’t enough to replace them, they’d have to be upgrades.  Not only that, most of the mobile homes in the park are too old to handle new systems.  And not only has the electrical code changed.  So has the law on spacing the units themselves.  Keeping the park legally open is going to become very, very expensive.

Meanwhile, the City of Palo Alto has a plan for development, and that includes multifamily homes along El Camino Real.  So apartment blocks are looking pretty likely.  And the low-income folks living here may well be SOL.  There is a city law that says they should get moving-out money, but realistically, there aren’t a lot of places they can go.  Many of them will move out in advance of the paid relocation, simply to ensure finding subsidized housing elsewhere.

Be sure to check out the comments on this article.  Some posters are glad to see the park go, and some prefer it stay in favor of a denser apartmentplex.  Of course most of them are worried about all those extra kids moving into THEIR SCHOOLS.  Because anyone moving into an apartment isn’t a Real Palo Alto Resident and should never be allowed to enroll.  We can’t understand why the trailer trolls are allowed, either.

But fear not.  Even if the BV is scraped to the ground and a shiny new (and dense) apartment complex goes up in its place, there will always be mobile home living in Palo Alto.

Comments (12) -- Posted by: madhaus @ 5:08 am

September 9, 2012

Communal Living or 24/7 Startup Incubator?

British publication Financial Times visits Cupertino and discovers Silicon Valley startups and salons… in a very expensive frat house.

Over the rainbow

Communal living is back in vogue, especially among Silicon Valley’s young technology workers

120908-group-dinnerBy April Dembosky, June 29, 2012 6:52 pm

At first glance Rainbow Mansion appears to blend in seamlessly alongside its high-end Silicon Valley neighbours, nestled among the eucalyptus trees and driveway gates of Cupertino, about an hour south of San Francisco. The salmon stucco stretches around multiple bedrooms, balconies and turrets. In the front yard, a stone footbridge arches over a bubbling koi pond.

Inside, it looks more like a university dorm. Bean bags and mismatched couches sit at odd angles in the living room. A former dining nook, now christened “the mystery room”, is lined with hippie-style Indian tapestries on the walls and mattresses on the floor.

Seven people live here, from the ivy league of Silicon Valley companies, such as Apple, Google and Tesla. They are from America, the UK, Serbia and Moldova. While none are blood related, they call each other family.

“We’re not a frat house,” says Mike Grace, 26, a lab manager and researcher at Nasa. “We’re an intentional community.”

Excuse us.  A very expensive intentional community.  As in $7300 a month expensive.  Let’s see what they get for $7300, besides the built-in tech networking with their housemates.

120908-group-zillow21677 Rainbow Dr
Cupertino, CA 95014

Zestimate $2,509,411
Rent Zestimate $7,435/mo
Est. Mortgage $8,923/mo

Beds: 6
Baths: 4.5
Sqft: 5,127
Lot: 55,321 sq ft / 1.27 acres
Type: Single Family
Year built: 1992

Description from Zillow: This 5127 square foot single family home has 6 bedrooms and 4.5 bathrooms. It is located at 21677 Rainbow Dr Cupertino, California. The nearest schools are Regnart Elementary School, Kennedy Middle School and Monta Vista High School.

Wow, that rent Zestimate’s pretty bang on. Think Zillow’s model includes searching the Financial Times?

120908-group-website

120908-group-libraryIncidentally, the people renting the house have set up a website.  Note the third item on the ribbon: Press.  Several pieces have been written about this house, the sort of people who end up living here, and one the the successes launched from this very library.

Ever hear of OpenStack?  If you haven’t, Wired is happy to fix that, with its history of how it got started.  Yes, here at the Rainbow Mansion.  Oh yeah, and at NASA Ames.

NASA’s Chris Kemp decided that they needed scalable storage of their own rather than through their corporate partners.  Think Google Moon and Google Mars.  NASA has plenty of high-res space images, and they wanted to host them, but that meant they needed a new infrastructure.  And in bringing that project about, they not only crashed upon political shoals (a Congressional “inquiry”) but on the difficulty in creating open-source software when so many potential partners had commercial intents.  And eventually the project led to OpenStack… and several related cloud computing companies.

120908-group-frontThe founders of the group home explained that they started the house because Silicon Valley rents were high, so sharing a house was much less expensive.  Most of them were new NASA PhDs who came from elsewhere and knew each other through their academic connections.

People would leave, and new housemates needed to be brought in.  The residents are looking for people who want to change the world.

“Group living situations are not tremendously rare in the Bay Area,” he explains. “We have an unusually high percentage of rentals in part of because home buying is so tremendously expensive, and the leverage goes up as you get more people.

“What’s unusual is when you have a really intentional community, when you have a group of people who are determined to build something and really bring people together.”

Comments (5) -- Posted by: madhaus @ 5:20 am

September 8, 2012

Calling things what their logos look like

120907-logos-oaklandThere’s a cute piece over on Buzzfeed that renames all 32 NFL teams according to what their logos resemble, instead of what the team is actually called.  For your enjoyment and discussion purposes, we’ll share the Bay Area entries.

F’rinstance, you may recognize this as the official sigil for the Oakland Raiders.  According to Buzzfeed, this is actually the Oakland Swords ‘n’ Severed Heads.  They left out that the severed head had an eyeball removed.  Sloppy, sloppy. 

120907-logos-sfAnd this design on the right, which breaks out of grayscale, is for the San Francisco Forty-Niners, right? Not if you name the team starting 120907-logos-sdfrom the logo.  Then it’s the San Francisco Abbreviations for San Francisco.

Here’s one more, and also from California. Ladies and Gentlemen, put your hands together for the San Diego Cartoon Character’s Hair!

I hope you see where this is leading. 

120907-logos-apples

Here is the corporate logo for a major tech firm, including a couple of guesses on how the image may evolve.  Got any better names for this company than the first thing that pops into your mind?  The far-future version looks more like Pac-Man.

120907-logos-starbux

Not a Bay Area company, but quite familiar to us.  Again, the last three entries are inspired guesses.  What is this a logo for, shampoo?  Contortionist classes?

120907-logos-firefox

This one’s tech-related plus the 21 December meteor strike leads to severe climate change.

120907-logos-winx

Flags getting bricked, vaporized, sliced, englobed, dissolved and now, speaking of flags…

120907-logos-w8

120907-logos-msA new logo was announced earlier this year.  Here’s the redesigned Greek flag at left, ready for when they leave the European Union.  We say it’s a Chanukah present.

Then the corporate parent got a logo update.  But when they changed the flag for the whole EU to go with…  We call it FourSquare®: A Way To Make You Pay $40 for a Game Court You Could Draw with a Piece of Chalk (ball not included).

 

120907-logos-sun120907-logos-chip120907-logos-xx120907-logos-asj

 

120907-logos-narCan you identify these tech company logos?  More importantly, can you name these tech companies based on what each logo looks like? We get

  • 8 purple magnets
  • A half-screened green eye
  • Red cable-wrapped beachball
  • Now landing on red runway 1

Surely you can do better than this.  In fact, surely you can do best of all with this one at right.  Or discuss anything else you wish in this Open Thread.

Comments (36) -- Posted by: madhaus @ 5:07 am

September 3, 2012

UPDATED: This Labor Day, Imagine Doing Less Labor

Are you working three jobs, or one job for 140 hours a week, just so you can become a Real Bay Area homeowner?  This Labor Day, why not just win an RBA house instead?  Burbed reader Divasm informs us of a charity raffle where this Menlo Park house is first prize.  The raffle tickets are $150 each, and yes, there is a quantity discount.

120902-dream-facade

120902-dream-ybcaFirst of all, does anyone know where this house actually is?  All the raffle site would say was “Central Menlo Park”  and “leisurely stroll to downtown.”  Perhaps one of our readers recognizes this 2006 Georgian joint.  Send it in and we’ll add more details about the home, but for now we’ll tell you it’s a 5 BR/5 BA and just under 5 thousand square feet (which means it missed it by that much on the ginormous tag) on a 10 thousand foot lot.  Plus the mawbul kawlums!

Second, did you know if you buy a raffle ticket like this, even though it’s for a legitimate charity, it is not tax-deductable? To be more specific, it is not tax-deductable unless you actually win something. Then you can offset the prize income with what you spent on the raffle tickets.

And finally, in trying (unsuccessfully) to locate the house, we came upon this older SF Gate story about house raffles.  It turns out that raffle prize homes are usually not claimed.  Winners usually prefer money instead of the house, so the first prize is not usually owned by the charity.  The actual owner usually leases it to the charity, with an option to buy should 120902-dream-suitcasethe winner prefer the house instead of the suitcase full of cash.

Why do winners prefer the money over the house?  If the prize is worth more than $5,000, get ready to fork over 25% of its value to the IRS.  So if you won this house, supposedly worth $4.1 million, you’d have an instant million dollar Federal tax bill before you can say “clear title.” 

But wait, there’s more!  Winning this house also means you’d have to pay closing costs.  And property taxes.  (That’s another $44,000, at least.)  And they’ll probably stick you for the transfer tax as well.

Now what would you pay?  Because if you don’t live in California, and you win a raffle like this from a California charity, then state income tax gets withheld off the top as well.  You’re supposed to pay it even if you do live here, but it won’t be withheld up front if you’re already an RBA resident.

120902-dream-ticketSo maybe you’re thinking, “Hey wait, I’m sitting in this non-RBA underwater house!  Why don’t I raffle it like these charities do?”  Sorry.  That’s illegal.  Private owners and commercial enterprises cannot run raffles.  Charities couldn’t either, until Prop 17 passed in 2000.  And the charity must register the raffle with the Attorney General’s office

Or maybe not.  The article is 3 years old, and there aren’t any raffle registrations beyond 2010 on the AG’s site.  With all those budget cuts, maybe you can get away with raffling your house after all!

And if not, enjoy your Labor Day.  We’ll be back tomorrow with more ridiculous realty.

Update: Thanks to Burbed reader Petsmart Groomer, we now know where the house is! Thanks very much!

120903-dream-patricia3 Patricia Pl
Menlo Park, CA 94025
$3,999,999; listing removed 7/1/12

Beds: 5
Baths: 5
Sqft: 4,961
Lot: 10,890 sq ft / 0.25 acres
Type: Single Family
Year built: 2006
Parking: Garage – Attached
Zestimate: $3,396,723
Rent Zestimate: $8,161/m

DELIGHTFUL PROPERTY ON A PERFECT MENLO PARK LOCATION: Elegant and classic home in prime Central Menlo Park- Built in 2006 5 Bedrooms / 5 Bathrooms on 4, 961 SqFt – Size Lot 10, 800 SqFt Three levels with 4 bedrooms on 2nd floor Media Room – Wine cellar – Exercise room – Office – Laundry Room 5th bedroom and bath on lower level Graceful circular staircase – Brazilian cherry floors – OPEN HOUSE SATRUDAY JUNE 9, 2012:1:30PM – 4:30PM

Comments (4) -- Posted by: madhaus @ 5:15 am

September 2, 2012

CNBC: You’re Doing It Wrong in the RBA

Yesterday, we took a look at a CNBC piece on the difficulty of finding a million dollar home in the Real Bay Area, and how badly they missed the real story.  Two days later they tried again, and ran this piece (below) on Friday.  Not even close but no cigar, CNBC. More like in Lodi with little to smoke. 

Take a gander at this piece, clearly written to complement their first article, and discuss whether your like their housing examples or Burbed’s examples.  (Hint: the correct answer is CNBC.  That is if by “correct” we really mean “completely wrong.”)  They had the right idea, but they just couldn’t find the listings that show how awesome the RBA is.

What $2 Million Buys You in Silicon Valley

By Robert Frank and Paul O’ Donnell | CNBC – Fri, Aug 31, 2012 11:21 AM EDT

120901-cnbc-2-saratogaSilicon Valley’s dynamic, tech-based economy has inflated home prices in the area for more than two decades. But lately, thanks to a rash of IPO’s and the mobility of global wealth, relatively modest properties in the suburban towns south of San Francisco have been going for mansion-like prices.

Sales of homes for $1 million or more doubled in the towns south of San Francisco in the past year, passing Beverly Hills and Miami, where the sumptuous palaces snapped up by the rich look more the part.

The current boom is not the result of an avalanche of tech start-ups. Instead, the Valley has been flooded by employees of established companies like Facebook and Google, who enjoyed a personal “liquidity event” when their companies went public in the past few years.

This article is basically the other article, sentences scrambled around, and a few pictures of presentable homes to go with.  There is one and only reason we alert you to this article, and that’s the wretched hive of scum and villainy called the comments.  It’s the usual “Silicon Valley has fine dining, beach, mountains, biking all close by, and the weather is fantastic” versus “Are you kidding, I can buy a house like that for $105K here in East Fumbuck, Nebraska!”

Yes, but then you have to live in a house in East Fumbuck, Nebraska.

 

Comments (34) -- Posted by: madhaus @ 5:05 am

September 1, 2012

We’re Number One! We’re Number One!

Here’s a cheery news item, submitted by Burbed reader wahnny.

Silicon Valley’s Boom Creates Shortage of $1 Million Homes

120831-cnbc-losaltosPublished: Wednesday, 29 Aug 2012 | 10:22 AM ET
By: Robert Frank, CNBC Reporter & Editor

The home of venture capitalist Kelly Porter in Los Altos, photo, right.

The capital of high tech is now the capital of high-priced real estate.

Silicon Valley currently leads the nation in the number of homes sold for $1 million or more, according to Realtytrac. Sales of $1 million-plus have more than doubled in many communities in the Valley this year, toppling longtime luxury real-estate leaders like Beverly Hills or Miami.

Topping the list is Saratoga, Calif., in Santa Clara County, which had 225 homes sold for $1 million or more. That marked a 162 percent increase over last year.

Ranked second was Burlingame, Calif., which had 211 sales of at least $1 million, more than double last year’s rate. Cupertino and Los Altos ranked third and fourth in the nation, with 175 homes and 170 homes respectively.

Booyah!  We lead the nation in million dollar homes.  Sayonara, Scarsdale!  Meet you later, Miami gator!  Buh-bye, Beverly Hills!  Buh-… there’s just one problem with this article.

CNBC is comparing Silicon Valley to other “longtime luxury real-estate leaders.”  And up there on millionaire’s row is… Cupertino?  That’s not exactly the first town that comes to mind when we think “palatial estate.”

We don’t think this CNBC reporter understands the Real Bay Area.  Any region can feature a town full of luxury homes, towns like Atherton or Hillsborough, only somewhere that isn’t very Special.  You can find some real big, expensive estates in cities such as Bloomfield Hills, Michigan (boyhood home of Mitt Romney), or Winnetka, Illinois, or Greenwich, Connecticut.  Or Beverly Hills.

But only in the Real Bay Area can you find crappy houses for a million dollars.  Observe.

First, we look at Saratoga, since there were so many million dollar homes on the list they couldn’t find one to feature in the article (they just noted you could buy 1.2 acres with no house for more than a mill).  Find out what that same price gets you with a house… after the break.

(more…)

Comments (38) -- Posted by: madhaus @ 5:12 am

August 19, 2012

Bye Bye Bubble

Here’s some sobering news for those of you expecting the Facebook Effect to rescue the Real Bay Area’s housing values.

Zuckerberg Admits Facebook’s Plummeting Stock Is ‘Painful’ To Watch During A Company-Wide Meeting

120817-facebook-zuckerbergSeth Fiegerman, Business Insider  | Aug. 17, 2012, 6:43 AM

Facebook is finally acknowledging that its employees may be just a little bit concerned about the company’s plummeting stock.

According to The Wall Street Journal, Facebook CEO and cofounder Mark Zuckerberg admitted that the stock’s decline is “painful” to watch for some employees during a company-wide meeting earlier this month.

The meeting itself was reportedly part of a larger initiative to boost company morale. Zuckerberg had previously avoided talking about the stock with employees, preferring that everyone stay focused on their work, but in recent weeks, Facebook’s senior management started worrying that the stock’s poor performance might hurt employee performance.

Guess watching Facebook’s plummeting stock is just fine from the comfort of your own office.  But don’t count on cashing in those options to buy yourself an RBA mansion.  The employee lockup period is still in effect, but early investors are dumping shares now.

Now check out this article, from the same publication.

DEAR FACEBOOK EMPLOYEES: Here’s The Truth About Your Stock Price

120817-facebook-zuckerberg-2Henry Blodget, Business Insider  | Aug. 17, 2012, 11:59 AM

Facebook’s stock has dropped by half since the IPO three months ago.

And the stock price is now well below the level at which most employees have been granted stock in the past 18 months.

This means that most current and former Facebook employees are worth far less than they were a few months ago.

Facebook’s stock crash is also hurting morale at the company, and damaging perception of the company’s business and brand. The impact is big enough that Facebook CEO Mark Zuckerberg, who has been crystal clear about his desire to ignore the stock price, admitted at a company meeting that the stock crash has been “painful” for everyone.

Here’s the important consideration from this more in-depth piece:

With the Facebook employee lock-up releases coming in October and November, this isn’t just an issue of morale and “paper net worth.” Current and former Facebook employees have been counting on the stock to buy things (houses, for example). So it’s a matter of near-term financial planning.

So, are home values dropping in Facebook-friendly commute zones?  Let’s have a look.  First, here are Redfin’s stats for Palo Alto home sales.  The advantage of Palo Alto over Menlo Park is that there are very few questionable areas in the former.

120817-facebook-pa-redfin

120817-facebook-mp-altosYou could look at the listing prices one of two ways.  Either the 22% post-IPO listing per-square-foot increase was nothing but irrational exuberance, or Spring Bounce was unusually quick this year.  If we exclude the May and June numbers, we could look at the chart as showing a slow climb for 2012.  That’s if you ignore the 18% drop between mid-January and mid-February, though.

120817-facebook-mv-zillowAltos Research’s Market Action Index agrees with this graph, showing a peak right at IPO time and falling back almost (but not quite) to 30, which is a balance between a buyers and a sellers environment.  (31 indicates the ball is still in the sellers’ court.  Mostly.)  The MAI graph above is for Menlo Park, or ground zero for Facebook.

Unfortunately Zillow’s valuation tools are too laggy to show the post-IPO collapse, with the most recent valuation dated to June.  We’re looking at Mountain View this time, which is no doubt polluted by the conflicting Google Effect.

How would you recommend we best demonstrate whether Facebook stock’s disappointing results are affecting the RBA housing market?  What statistics would you recommend, and from where?  One thing we’re seeing is fewer homes going into Double-Secret-Probation Pending-Do-Not-Show status where the listing photos get yanked until the home closes.  And that’s good news for all fans of this site.  Not only does a picture equal a thousand words, it also equates to many more thousands of dollars.

We aren’t going to say in which direction those thousands are moving.

 

Comments (28) -- Posted by: madhaus @ 5:01 am

August 18, 2012

Rents rising on Peninsula, SF Chronicle is shocked, shocked

Looks like the SF Chronicle just discovered that the rental market is as hot in the Valley as it is in The City.  Use this open thread to mock their amazing discovery.

Peninsula rents going the way of SF and Manhattan

San Francisco and Manhattan are famously unaffordable cities to rent in– not that such information discourages people from renting in either location. High demand, of course, is part of the sky high prices.

But according to a new study by Apartment List.com, Peninsula rents are quickly  rising to rival those of San Francisco proper.  Over both 12-month and 18-month periods in the area as a whole, rents have risen an average of 10% and 18%, respectively. Here’s a run down of their data, showing rent changes for different sized units. (UPDATE: This chart is a corrected version of the previous one that contained incorrect percentage numbers.)

120817-rentals-chart

And since this is an Open Thread, you can also comment about what your own experience has been with rentals, or home prices, or any open houses you look at today, or how much money you made shorting Facebook.

Comments (27) -- Posted by: madhaus @ 5:09 am

August 12, 2012

Send not to know for whom the house Tolls… it took thy deposit

120808-producersRemember the basic premise of The Producers?  If you oversell interest in a Broadway show, and then deliberately produce the worst musical you can, none of your investors will complain when they lose all their money… and you keep their 40,000% ownership.  So our intrepid producer duo went off in search of the worst script they could find, and… hilarity ensues.

So why hasn’t anyone tried this idea with real estate as well?  Maybe it’s because not enough in the industry figured out the same trick: in a market downturn you can make more money not selling houses than you can selling them.  Read on to know it Tolls for thee.

How did Toll Brothers survive the housing slump? By keeping buyers’ deposits

By Matthias Gafni, Contra Costa Times
Posted:   07/27/2012 09:12:51 AM PDT, Updated: 07/27/2012 05:00:58 PM PDT

120808-tollbros-lotAs newly minted empty-nesters, Daven Sharma and his wife, Anu, spent 2010 searching for a spot for their dream house with views of San Francisco Bay. They found it in the Hayward hills, within a Toll Brothers development.

Shortly after plunking down about $100,000 in deposits, the couple’s dream fizzled. The Sharmas lost not only the house, but their deposit, attorney and arbitration fees — and a sense of justice.

Critics say and records show that Pennsylvania-based Toll Brothers — the nation’s largest luxury homebuilder, with developments in Contra Costa, Alameda, Santa Clara and San Mateo counties — has made it a regular practice to collect forfeited deposits from prospective homebuyers. In fact, it was the builder’s No. 1 source of profit during the down years of the housing market, according to a Maryland class action lawsuit.

From fiscal years 2006 to 2011, according to its own SEC reports, the publicly traded company retained $123 million in forfeited deposits from 3,300 prospective homebuyers.

120808-tollbros-sharmaRead that again: during the housing slump, the number one source of profit was forfeited deposits.  At least that’s what one lawsuit says.

There are 155,000 results for the search Toll Brothers LawsuitThis website has quite a story to tell.  While it’s about severe construction problems, the other part of the story is the lengths their attorneys would go to to avoid fixing the house.  Ellen Nevens has been fighting Toll Brothers for twelve years.  That’s a lot of time and effort to build a house badly and then not fix it.  It would be much easier to not build it in the first place. 

And that’s what happened to Daven and Anu Sharma when they put a $98K deposit on a Hayward hills homesite in a Toll Brothers community.  The Sharmas found out what many others have previously experienced: the sales contract has little flexibility on loan funding.  And if, or maybe we should say when, the loan isn’t funded, the contract says no loan means Toll keeps the deposit.  The Sharmas indeed lost in arbitration, plus they had to pay another $5600 in fees.

120808-producers-posterJim Daman had to sue to get some of his $104K deposit back on a home in Danville.  When Toll Brothers didn’t build his house within the promised six months, he watched its market value sink.  He eventually settled for $70K.   Compared to the Sharmas, he did well.  Someone the corporation won the arbitration, claiming that customization had been done and they had outlays.  Yet the photo of the dirt lot above is all that was in place when the Sharmas cancelled their contract because their current house didn’t sell.

Here’s the contract language that one attorney called confusing, Daman called “99.9 percent in their favor” and another tried diagramming on a whiteboard to understand it:

Buyer’s failure to fulfill any of such conditions or the termination or expiration of the mortgage commitment after it is received, for any reason, shall not release Buyer from its obligations under the Agreement.

120808-tollbros-arundelA latter attorney notes that Toll offered some of his Pennsylvania clients loan commitments with conditions that made no financial sense, such as amounts far larger than the agreed sales price.  When buyers balked, then Toll would keep the deposit, claiming they were in breach.

“They can make more money by not building the house,” he said.

While the Sharma’s Arundel Drive homesite is not listed, this nearby home on Stonebrae Road is.  It looks quite lovely when photographed with a sunset, and it’s “within the gates of TPC Stonebrae Country Club.”  According to the virtual tour, the builder is not Toll Brothers, but a firm called True Life Communities who seem to be avoiding any hint of describing themselves with specifics.

But given the story of the Sharmas and their Arundel Drive site being so nearby, we assumed it was the same community.  (In fact there are several different builders.)  And if you buy this house you’ll have quite the run of neighbors to entertain!

120808-stonebrae-satellite

Comments (4) -- Posted by: madhaus @ 5:19 am