August 18, 2013

Around the Web: Useless Realty-Related Infographics

Maybe by 2014 everyone will be sick of these ubiquitous infographics, but for now they’re everywhere.  And not everyone is improved by the addition of spurious graphics. Realtards aren’t the only ones out there giving out self-serving information while suggesting they’re helping you.  Homebuilders also play many of the same games we know and love.  Here’s a fun infographic, if by “fun” we really mean “see how much fun you can have spotting all the misleading information in one image.”

Not only is “Myth One” a real hoot in the Bay Area (let alone the Real Bay Area), it isn’t even true without all the special pleading for tax exemptions and future streams of payments and other sneaky accounting tricks.  Remember, Richard Florida pointed out that in Opposite of the Real Bay Area, it’s actually cheaper to buy than rent, as in monthly payments there are lower than monthly rents.  Why?  Because everyone who wants a house has bought one, so there are few potential customers.  In the RBA, lots of people want to buy but can’t afford to, so prices stay high as they save up until they can.

We don’t even want to mention that unlike the Bay Area, there are many places in the US where it’s very difficult to rent a typical single family house, so comparative rent vs buy is almost impossible. Perhaps more people would rent if they could get a house instead of an apartment.

What’s your situation? Do you live in a SFH, a townhouse, or an apartment? Do you own or rent? What do you think if this silly poster?

Oh yes, NOW IS THE TIME TO BUY! NOW! NOW! NOW!

Comments (6) -- Posted by: madhaus @ 7:04 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

February 8, 2007

$700k for a moldy house – why the Bay Area is special

From time to time, no one asks me “Burbed, real estate is so expensive here in the Bay Area. I know it’s special, and they’re not making any more land – but maybe I should just move somewhere else and get a bigger house that won’t require a complete teardown.”

To those non-existent people, I say “I pity the fool who leaves the Bay Area.” Now, obviously you’re not going to leave California  – because California is special – so let’s look at what happens when you buy outside of the Bay Area:

cbs13.com – Call Kurtis: High-Cost Homes Blown Apart
The Yeadon family moved out of their million-dollar home in the Serrano Country Club area on the advice of their doctors. [Ed note: Near Folsom]

“I think we had 23 doctor visits between the kids and my wife that month, in May of 2005,” said Yeadon.

This, after months of symptoms that seemed like an endless series of colds and flu, under laid with constant exhaustion.

“I never put together it was the house,” said Yeadon.

The Yeadon’s finally brought in someone to sample the air in their home. The tests found so much moisture, an attorney suggested they look for mold, and they found it.

“I came back after a weekend of taking my kids’, all of our clothes, and all of our belongings, and throwing them into a dumpster. I said, I can’t see straight. I got blood in one eye and tears in another,” expressed Yeadon.

When the family bought this home, brand new three and a half years ago, they paid just more than $800,000, and then put in $100,000 more in upgrades like this pool. They just sold this house. The highest bid they could get–$425,000.

So what does wind have to do with mold? Bill Thomas explains it like this: high winds can rock the house from its roof to its foundation. But as the building sways, individual parts, like doors and windows move at a different frequency, and even different directions.

Thomas says that can break the seals, loosens the caulking, fractures the stucco and water gets into the walls.

“You feel that house kind of move in the wind,” said Thomas.

Bill Thomas says separating windows, and cracked walls with dark water spots like these at the Yeadon’s house are signs a building is moving.

Rusting nails and staples in what are supposed to be dry spots are another sign. El Dorado Hills and much of the county below Lake Tahoe are zoned for what’s called “Wind Exposure B”.

Thomas says exposure “C” should be the standard here, but that would require stiffer materials and stronger design and drive up the cost of homes.

“If it costs you $10,000 less to build it and you just built 400 homes in the subdivision, then now, you’re talking about real money,” said Thomas.

California’s uniform building code says a home built with more than a half-mile of open space with gentle hills around it is technically wind exposure “C”. In much of El Dorado Hills, the exposure appears endless.

“You can see all of the homes, along this ridge, in both directions, all have the same wind exposure,” said Thomas.

Its not just the top of the hill either.

“The house, in my opinion, and in our expert’s opinion, is under-engineered for the wind exposure,” said Dave Crozier.

Stonebriar, a development of nearly 200-homes at the bottom of the hill, and south of highway 50 from Serrano. People here say scaffolding and mold remediation equipment are depressingly common throughout the neighborhood.

Dave and Vickie Crozier paid more than $700,000 for their home on the edge of Stonebriar. They’re now living with their two-kids in an apartment paid for by the builder.

So remember folks, if you care about the health of your family – think of the children – you know what to do: buy in the Bay Area.

$700,000 to gamble your health on a new built house in a gated community non-special part of special California… or $700,000 to buy a house that you know already in the beautiful Bay Area? Like this one:

It’s your decision. I think the choice is obvious.

Click here to post a comment -- Posted by: burbed @ 5:25 am