Archive for January, 2008
Lawsuit over the Sale of Capitola’s Surf and Sand
January 31, 2008
It seems that another greedy landowner is itching to sell his prime mobile home park, and that’s stirring up a storm of controversy
[From SantaCruzSentinel.com ]
They’re suing the city of Capitola, claiming in federal court in San Jose that the city has illegally taken the underlying value of their 4-acre property by not allowing them to subdivide it and sell off the parcels.
That’s a pretty long article, and I encourage you to read it…and also, read the comments that people have made about the article, too. Where do I come in on this?
It’s a really complicated issue. In principal, I’m against rent control. In practice, I can see how it’s necessary to add balance to the housing mix, that there are benefits to welcoming people from the broad social strata of life into a community. I don’t know that it makes the best sense to reserve prime real estate like the Surf and Sand for this purpose, though - I have to ask myself, is a rent-controlled mobile home park the “highest and best use” for this parcel of land?
For those of you from out of town, here’s a handy link that shows the location:
Google Maps Location of Surf and Sand Mobile Home Park
It seems to me like this land could be much better used as some kind of medium density, upscale condo complex, for example. But what to do with the existing residents, or what about ensuring that Capitola is a place for all kinds of people, not just those who can afford to pay market price to live here?
Until someone comes up with an answer to those questions, I suspect the Surf and Sand Mobile Home Park will stay much the same kind of place it is today, for better or worse.
What do you think?
Posted by SantaCruzBroker at 8:35am
4 Comments »
Real High Stakes Poker
January 30, 2008
I don’t play poker. I think I’d like to play poker. I enjoy playing Rummy, I have for years since I used to play it with my mom. I still do play it now and again with my some friends of mine in Carmel. But when it comes to Real Estate, it seems that almost everyone has the Poker gene.
Negotiating a real estate transaction can be (I imagine) a lot like a game of poker. A good agent will do his or her best to find out what cards are in the other player’s hands. A good way to start that when representing the buyer is to ask the seller’s agent: “What is their motivation?” If you can determine that the seller is highly motivated, then you know that the seller doesn’t have a very strong hand. Of course, you can also make some assumptions about what’s in the seller’s hand. How long has the property been on the market? Has the home been sitting vacant, while someone pays the mortgage on it, and the seller is tired of losing thousands of dollars, month after month?
Or, when one party tells the other “this is my highest and best offer” - are they bluffing? What if they’re not bluffing - can you afford to let the deal slip through your hands? This happened to me not long ago. A couple months back I wrote about knowing when to say no - that is, sometimes you just have to be firm and say “no, that price is too low” and move on. In that blog entry, I wrote about how I had counseled my client to just say no to a low-ball offer - thinking we would get a better offer. And, finally, we did.
But the negotiation for that one was a bit tricky as well. The offer was a low-ball - we met them half-way, and told them it was our best offer, we wouldn’t sell below that. Not surprisingly, even though I’d been clear that we wouldn’t go lower than that, we received a counter-offer that was lower than our “lowest” price. I called my client for a quick consultation. I urged her, “Don’t take this offer, it’s too low.” I didn’t have to do much convincing, she really didn’t want to sell it for any less than the counter offer she had already made. So, I called up the buyer’s agent and gave her the news. I thanked her for her hard work putting the offer together, but that unfortunately, our counter offer was our lowest price, really. It was a short conversation.
Evidently, they thought we were bluffing. They probably didn’t know the cards we had in our hand, because they hadn’t asked. The owner did not have high holding costs for the property - it had been in the family for years, had a ridiculously low tax base, and no debt. She could wait to get her price. A strong hand.
I can’t say I was surprised when the buyer’s agent called me a few hours later. If the buyers accepted our counter offer, was that price still good? I told her that yes, I imagined it was - especially because the terms of her buyers’ offer were otherwise quite favorable. I spoke with my client, and she said yes, if they met her price, that was fine. And so, a deal was struck.
Like I said, I’m no poker player. Maybe this isn’t like poker at all - maybe it’s better described as a game of chicken. It sure can be exciting to play, whatever it’s called. I’m waiting for the Reality TV Show: “Real Realtors.” Stay tuned for that one!
Posted by SantaCruzBroker at 9:51pm
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60 Minutes Reports on the House of Cards
January 29, 2008
A friend of mine recently gave me this URL:
Yeah, I didn’t catch it on 60 Minutes because, even though I have Charter Cable with the HD package and a couple of hi-def flat panels, I don’t really watch much TV. Too much work to do, alas. And it turns out, half the real estate blogosphere is talking about this story, so I’m a little late to the party, even though it just aired a couple of days ago.
It’s a great little exposé about how we got into this whole foreclosure crisis. I get questions about this all the time, and this story explains it all pretty well. Another part of the story I know well is the human side of it - all the people who bought real estate at high prices, which have now dropped down markedly in many cases - they are now stuck with the house, or they can walk away and let the lender foreclose. If the value of their asset keeps dropping, why continue to make payments? For many people who have no money in their homes, who bought with 100% financing, it makes a certain sense just to walk away.
I get it. I totally get it. Many people feel like they were cheated. In many cases, they were cheated, they were sold a bill of goods which proved to be something else than they thought it would be. Sure, they signed a contract. But it’s not a crime to breach the contract and get foreclosed on. Here’s a question, though - while not illegal - is it unethical, to just walk away from your contractual obligation, even if you could afford to make the payments?
Well, it’s just business. Businesses do it all the time (break contracts, that its). Sure, there’s a price to pay. Your credit gets ruined for what, seven years? Yeah, that IS a big deal. But how much cash would you shovel down the sinkhole of your heavily depreciated asset, at the end of which there’s no guarantee you’d be above water again?
What do you think?
Posted by SantaCruzBroker at 7:20pm
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Habit Goes Green
January 28, 2008
Finally some good news for once coming out of the Santa Cruz Sentinel:
[From SantaCruzSentinel.com - Local]
Habitat dedicates its first green home in Santa Cruz
…the house is equipped with solar panels that should save the family $500 a year in utility costs. Other green-friendly features include a tank-less water heater, recycled content formaldehyde-free insulation, minimal use of carpet and resource-efficient landscaping.
Habit for Humanity has been building homes in Santa Cruz for a long time. Not many homes, unfortunately, but it’s good to see that now they have hopped on the green bandwagon. It’s very tough to qualify for a Habitat home, and even once you do qualify, there’s a lot of work that they make you put into it - just read the article to get an idea. I don’t think their scheme scales well - that is to say, I don’t think that it would be possible (or even desirable) to solve Santa Cruz County’s housing woes by multiplying by several hundred times Habitat for Humanity’s work. I don’t think there’s an easy fix to the problem of lack of affordable housing here. But I do welcome Habitat as one piece of the solution puzzle, and it’s good to see that they’re going green.
Posted by SantaCruzBroker at 5:12pm
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Is Watsonville Picking Up?
January 27, 2008
I’m pleased to report that the Death of Watsonville has been greatly exaggerated. December was an absolutely miserable month for Watsonville, registering just three sales of single-family residences, with another couple of homes outside of the city limits. But as January winds to a close, properties have been going into escrow at a fair clip. It should be noted that many of these properties are foreclosure, “REO” properties. I have had considerable interest on several of my Watsonville listings, I’ve already received a couple of offers.
I was told last night by another agent that one property in the Apple Hill condo complex (up behind the Green Valley Cinema) came on the market at $230,900 and sold in a day. That’s a foreclosure, too - it sure looks like the owner, IndyMac bank, was in a hurry to get rid of that. It’s a large unit, too - three bedrooms, two bathrooms. It’s too bad for all the other home owners in that complex, and I have a listing in there, too, which is now looking over-priced at $289,000. At the time it was listed just a month or so ago, $289,000 was a bargain.
If you’re an investor and you live around here, you need to be checking into Watsonville. There are some great deals to be had, and when the market turns around, there will be some good money to be made. Remember - you earn the profit when you buy, you get the cash when you sell.
Posted by SantaCruzBroker at 9:22am
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