Category Archives: General

Where's the line between "agent" and "lawyer"?

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As with any blog post, this does not constitute legal advice. If you have a specific question, consult a specific attorney. 

Recents posts (first by Russ, then by Reba) have examined the role to be played in real estate transactions by agents and lawyers.  No doubt, everyone has a strong opinion based on their own personal experiences.  But what’s the law on the issue?

We all know that the seminal case on the issue is Cultum v. Heritage House Realtors, 103 Wn.2d 623 (1985). In that case, the buyer told the agent that she wanted to be able to inspect the home and rescind the contract based on her subjective interpretation of that inspection. Acting on this request, the agent used a form “drafted by an attorney” to include in the contract a very simple inspection contingency: “This offer is contingent on a satisfactory Structural Inspection, to be completed by 8/20/80.” The agent used the “single standard form” provided by the broker. The buyer performed a whole house inspection and was not satisfied with the results. The seller, however, refused to return the earnest money because the report did not objectively indicate any structural defficiencies.

The trial court found that the agent, in drafting the contingency, engaged in the practice of law.  The Supreme Court agreed, as the agent clearly created a document that affected the legal rights and obligations of the buyer. However, the Court decided that, in the interests of an efficient real estate market, an agent should be allowed to engage in the limited practice of law.  Thus, the Court concluded (using “agent” in place of “broker/salesperson”:

“[An agent] is permitted to complete simple printed standardized real estate forms, which forms must be approved by a lawyer, it being understood that these forms shall not be used for other than simple real estate transactions which arise in the usual course of the [agent’s] business and that such forms will be used only in connection with real estate transactions actually handled by such [agent] as [an agent] and then without charge for the simple service of completing the form.” 

However, “if [the agent] believes there may be complicated legal issues involved, he or she should persuade the parties to seek legal advice.” Moreover, “when completing form earnest money agreements, [the agent] must comply with the standard of care of a practicing attorney.” 103 Wn.d20 at 630-31.

So when does the agent cross the line and engage in the unauthorized practice of law?  Before rereading the case in response to the above posts, I thought that a Form 34 was a standing invitation for an agent to cross the line. However, that very probably is not correct. After all, the agent in Cultum wrote a simple contingency, and that fell within the Court’s rule allowing agents to practice law to a limited extent.  (The agent was ultimately liable for the buyer’s loss because the contingency was poorly written, but that’s another topic).

The answer, as suggested by the posts and the comments, turns on the complexity of the clause being inserted into the Form 34. If it’s a “complicated legal issue,” it’s not appropriate for an agent.  Seller wants to take chandelier?  Probably OK. Contract is contingent on events not directly within the control of the parties? Probably not OK. Unfortunately, there’s no bright line rule to be applied in every situation.

In light of that rule, should agents be trained in how to insert contractual language in a Form 34?  After reading Cultum, I think so. They have the legal authority to do so and almost certainly will if necessary to meet the needs of the client. If they can and will do so, then they should have appropriate training so that they can do so competently.

And a final note: should an agent review a non-client’s PSA? Well, the agent does so at his or her own risk, as that review clearly falls outside of the rule set by Cultum.  The review almost certainly constitutes the unauthorized practice of law.

 

Is Freakonomics Right for the Wrong Reasons?

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[photopress:fr.jpg,thumb,alignright]In my travels, many people quote the Freakonomics finding that agents get more for their homes when they sell, than the average house on market.  My brain said “duh, of course…what’s new about that.”

But then when the Freakonomics boys tried to ascertain why that is, they went into some sideways mode of properties for sale, time on market, etc…  Take the article I wrote yesterday as an example.  Do you think an agent would fall for the tactics of the builder, and buy his worst lot because it was “the only one” for sale today?  Hell no. 

If agents sell their houses for more money in the end, it is more likely because they bought better in the first place.

The most common error in a buyer’s thinking, is that they think their choice equals what is for sale.  Agents don’t do that.  Of course by agents, I’m not talking about every license carrying member of the mls.  Agents don’t buy “the T house”. Agents don’t buy the house that backs up to a busy road.  Agents don’t buy the house on the wrong side of the street without strong compensating positives, like view considerations.  Agents don’t buy the best “interior look”, while overlooking the exterior negatives.  Agents don’t buy the house where the pavement is higher than the front door.  Agents don’t buy “the bargain” with the most negatives, and brag that they got “a great deal”.  Agents don’t buy “a house” without looking across the street, and determining if there are future tear downs in this home’s view corridor.

Also, agents generally buy based on relative value, and not based on negotiating an asking price down.  Relative value is the only true pricing method.  “Negotiating a good price” is the biggest trap in real estate.  Agents don’t even go there, by and large, when they buy their homes.  Again, I’m not talking about every person with a real estate license, as some of those are simply consumers with a license these days.  I’m going back to a time when the only people with a license were those who actually sold real estate.  And if Freakonomics is tracking the sale of agent owned homes, then the purchase of those same homes would in fact be back when only agents and real estate licenses.

When someone goes in and out of hundreds of homes for a living, and sells homes for a living, they know the weaknesses of property better, and they never get dazzled in the new construction office by the cabinets and counter finishes.  They never look at that room of great “stuff”, until they first ascertain if there is a lot they are remotely interested in, and a floor plan that will hold up in value on resale.  The average buyer starts picking out cabinets and floorings like they are in Lowe’s or Home Depot shopping for interior finishes, and they don’t spend nearly enough time determining lot and floor plan first.  Everything’s nice when it’s new and shiney.  Agents think about resale before they buy, not when it is time to sell.

When I am looking at resale issues, when showing property to a buyer, they do often say “Ardell, I don’t even own it yet and you are looking at what will happen when I sell it!”  Yes, I do.  Because now is the time to look for the resale weaknesses…not when it’s too late and you can’t sell it for top dollar later.

Every house has weaknesses.  Many buyers don’t want to talk about weaknesses.  Agents know that a house with weaknesses that are easy to correct, equals bargain.  Agents know that weaknesses that can’t be corrected, should be avoided.  Someone’s buying everything eventually, but maybe agents make more money when they sell, because they never buy a house in the first place, without first determining all of the weaknesses, and making sure none of them are difficult to correct.

Whenever I go to list someone’s home who wants to sell it at the same price as the neighbor, and I point out they paid a lot less than the neighbors when they purchased, and likewise will need to discount accordingly now.  They always have the same line:  “But I got a real bargain when I bought it!”.  Yeah, right, that’s because you bought the T house and the T house is always a bargain.  It will be a bargain when you buy it and it will be a bargain when you sell it too.

There is never going to be a time when the average agent won’t get more for their house when they sell, than the average homeowner.  But that is not because they know a lot more about selling…it’s because they know a lot more about buying the right house in the first place.  Someone has to buy the houses with the uncontrollable negatives, and it rarely is going to be an agent.

Always, always,always ask this question before the agent writes an offer.  Would you buy this house if you were me right now, and if not, why not?  Would you let your son or daughter buy this house right now, and if not, why not?  Because an agent doesn’t have to tell you everything, but they are not allowed to lie.  Watch for hesitation.  Listen intently to what they are saying and what they are stuttering over.   And then ask this final question.  If I decided to buy a different house in 3 months, could you come back and sell it for at least what I paid?  If you don’t see them thinkng really, really hard when they answer that one, or if they start hemming and hawing…take that as a sign.  Every agent knows which houses they sell they will be happy to come back and sell for you, and which ones they are praying you stay in for a very, very long time.

So Stephen and Steven, you are correct.  But only because agents are better at buying the houses, that will later sell for more than the average sale price, of like property.

Confessions of a Zero-Down Lender

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This is a two part (well so far I’m planning a second post…their could be more) series of a couple of clients (names changed to protect identities, of course!) who have purchased homes utilizing 100% financing.   Both parties utilized similar programs but they wound up in entirely different situations.  

Mr. and Mrs. Spender eagerly wanted to purchase a home.  They were tired of renting and had two kids with one on the way.   They didn’t have a lot of money in savings and their credit had a troubled past (some of it was medical and some was plain irresponsible).    They live paycheck to paycheck but they are anticipating receiving raises and bonuses from their employer.   Their credit report shows that they rely on their credit cards and you can see on their bank statements that they dine out a lot and spend their money on frivolous extras.  

Based on their credit scores, I was able to provide them with an 80/20 from a sub-prime lender who does not verify where their funds are coming from for closing and would allow for the seller to pay up to 6% of the closing costs.   I structured their preapproval with the seller paying all the closing costs.  In fact, at funding Mr. and Mrs. Spender receive a check back for a majority of their earnest money.

Not long after closing, the Spenders discover that the gas heater in their home was defective (apparently this was missed on the home inspection?).   It just so happened that the repair company they called to repair it had previously serviced it and informed the previous owners that it needed to be replaced.  Mr. and Mrs. Spender decided to take their Seller to Small Claims Court and their Agent attended with them.  I had asked them what the results were, here is their edited response:

“Yes we took them to court and even though we had all the documents showing that the (sellers) knew the furnace needed to be replaced and needed to be fixed the judge did not find that we had proved our case… so we got nothing.. (the Real Estate Agent) came with us and she was just as shocked…  She too was amazed that all the paperwork we sign to protect us from buying a home with flaws, the (Sellers) even stated and had to initial that there was no problems with the heating system and even though we had documentation to show that they knew there were problems and didn’t disclose it… we got screwed to be honest…. They knew.. They didn’t care… and the judge just wanted to get out of there… It was a joke…

Speaking of Attorneys – What's Up With This?

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Is this a con-artist spammer?  Sure looks like it.  My ancestors are more likely to be vinyard owners than oil magnates.  Actually, when I went to Italy, the DellaLoggia stores were fine jewelry stores.  The kind where you have to be “buzzed” in with locked doors.  And what are the odds that a “DellaLoggia” is going to have the first name of “Randolph”.  Sounds like a fill in the blanks spam mail.  They could at least have used Cosmo or Guido or Guiseppe.

We all get tons of emails like this every day.  But this one makes you stop a sec.  Creative to say the least.  Possibly illegal, as in “impersonating an attorney”.   “Solemn Confidentiality” is a clue that he’s doing something wrong…don’t ya think?  If I’m an heir…why is that a big secret?  I spent too many years in the Trust and Estate business to buy that one.  I think it means don’t let anyone know I’m an illegal scammer please.

What would you do with it?  Where do you think it is going if I emailed him back and let him fax stuff to me as he requested?

Thomas Lucas & Co

26-27 Cannon Street,

London EC4M 5SE,UK

Phone:+44 79 5191 5337

Dear Ardell DellaLoggia,

This is a personal email directed to you and I request that it be treated as such.

I am Thomas lucas, an attorney at law.

I am the personal attorney/sole executor to the late Mr Randolf D. DellaLoggia, hereinafter referred to as ‘my client’ who worked as an independent oil magnate in my country and who died in a car crash with his immediate family on the 4th of oct, 1998.Since the death of my client in oct, 1998, I have tried to locate any of his extended relatives whom shall be claimants/beneficiaries of his abandoned personal estate and all such efforts have been to no avail. Moreso, I have received official letters in the last few weeks suggesting a likely proceeding for confiscation of his abandoned personal assets in line with existing laws by the bank in which my client deposited the sum of 3.8 million U.S.D.

On this note I decided to search for a credible person and finding that you bear a similar last name, I was urged to contact you, that I may, with your consent, present you to the “trustee” bank as my late client’s surviving family member so as to enable you put up a claim to the bank in that capacity as a next of kin of my client.

I find this possible for the fuller reasons that you bear a identical last name with my client making it a lot easier for you to put up a claim in that capacity. I propose that 35% of the net sum will accrue to me at the conclusion of this deal in so far as I do not incur further expenses.

(Oh, no!!  He used the “D” word.  Since when does an attorney have a “deal”?)

Therefore, to facilitate the immediate reprofiling of this fund, you need, first to contact me via this email signifying your interest and as soon as I obtain your confidence, I will immediately appraise you with the complete details as well as fax you the documents, with which you are to proceed and i shall direct on how to put up an application to the bank.

HOWEVER, you will have to accent to an express agreement which I will forward to you in order to bind us in this transaction.

Upon the reciept of your reply,I will send you by fax or E-mail the next step to take.I will not fail to bring to your notice that this proposal is hitch-free and that you should not entertain any fears as the required arrangements have been made for the completion of this transfer.

Like I said, I require only a solemn confidentiality on this.

Best regards,

Thomas lucas,

Partner Corporate & Fiduciary Group.

 

As a Trust and Estate Officer, I did once have a monstrous file on a huge line of potential heirs of mineral rights that went on for many, many years.  Got to the point where everyone was going to get $1.76.  What a pain in the neck account that was.  So it’s possible.  Likely?

In case you see this “Attorney Lucas”, you will find the heirs in this Country had the name changed inadvertently to DeLoggio and I corrected it back to my Grandfather’s name in Court.  So look for all of the DeLoggio’s, though I could give you a list. 

Then go see if Robert Loggia took the Della off the front, when he went into acting 🙂

Get out your boxing gloves! Attorneys vs. Agents

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Hi Russ, thanks for taking me up on the request to put a blog together on this subject. Sorry I’ve been slammed with work to read it till now, but, I guess that’s a good thing. I’ll try to stick to the nature of what you started with in your original post as I see several folks have tried veering away from your target discussion. To your remark “Where I have to scratch my head is with the deals that are a bit out of the ordinary. Where the blank addendum becomes a significant part of the deal. My guess is that most of these deals also don’t get to the attorney. And yet I have seen many of these deals when the transaction blows up or after closing and everyone (many times including the agent) are in wonder why they tried to go it alone.” I’d have to say that you are likely right that the majority of these don’t see the light of an attorney’s office. My personal guess is that many people wrongly believe that the cost will be exorbinant. Others are afraid of becoming embroiled in a long and tedious lawsuit that will consume their lives and financial resources. Personal experience so far with numerous residential and commercial clients is that this isn’t the case typically. I truly believe that fear of the unknown is what kills off a lot of people from getting representation from an attorney.

So, that leaves a lot of people relying on their agent to put together these addendums that cover the items that aren’t covered in boilerplate NWMLS contract language. Most agents don’t get much training in how to write these types of addendums although there is a good class that is taught through SKCAR (or at least there was) by Larry Christensen. In it he covered the topic of what elements should be considered when writing on Form 34 or the blank section of Form 22D (section 10). How he put the material to the class was great because he got people thinking critically about what should be used in these situations if there was no way to get an attorney involved – that was the “if, then” concept and the reminder that any monies associated with the transaction must be address (ie. earnest money). Example: If Seller does not perform (x) by (insert date), then Buyer may cancel the Agreement and Earnest Money is returned to the Buyer. Because of some the initial questions Larry asked in the session you could tell many agents in the room had been writing some pretty poor addendums in the past and I truly hope that they all walked away with some new knowledge and that they listened to his advice of building a relationship with an attorney.

This class got me to modify a little bit how I draft addendum language although the majority of the difficult cases go to our real estate and business attorney, Berrie Martinis of Garvey Schubert Barer http://www.gsblaw.com for drafting. I frequently pay for this service for my clients as an added value to them but if it’s going to get sticky in a particular transaction I do refer them directly. I’ve done this as well with an estate planning attorney at the same firm, Tim Burkart, when the right situations call for it (such as dealing with an estate). We usually discuss it in advance and determine what will work – often with discussion including Berrie or Tim on this decision. To go back to another posting on this subject someone said they frequently write addendums that state a seller may be taking an object with them upon closing. Well, my first thought was are you only writing “Dining room chandelier to go with Seller”? If you’re writing only these words a lot of unstated concerns come up – such as: 1) is the seller responsible for replacing the chandelier with another light fixture?, 2) is that fixture to be of the same quality and price point as the current chandelier?, 3) If seller is replacing the fixture, does Buyer, who will take possession, get to determine the style of the new light fixture? and so on… I think you get my drift.  If I were the seller’s agent in this situation and the seller had said that they would be taking the chandelier but they’d compensate for it, I would draft something more along the lines of “Dining room light fixture to remain as personal property of the Seller after Closing, allowing through to Possession for removal of the item. Costs to remove the light fixture will be borne by Seller. Additionally, Seller to credit Buyer ($ sum) for the cost of a like-kind replacement light fixture. Any costs for labor or other associated installment costs for replacing light fixture to be borne by the Buyer. If Seller fails to remove light fixture by the Possession date, then this addendum will automatically default and the light fixture will become the property of the Buyer. No compensation will be due from the Buyer to the Seller if the Seller does not meet the terms and timelines of this addendum for removal of the light fixture.”

[photopress:la_murrina_veneziano_murano_glass_chandelier_thumb.jpg,thumb,alignright]

Does this look like too much to cover the issue?  Some people would say “yes” but I personally like the comprehensiveness of the language because it covers a lot of the possible questions and problems that could arise if these steps aren’t taken up front. It would be interesting to get your opinion on my example here, Russ. I’ve seen enough situations where a seller has taken something as simple as a light fixture and the buyer assumed a replacement would be put in and then they were surprised when one wasn’t there and a fight ensues leaving both parties with a “bad taste” at the end. On top of all the costs of purchasing a place, to find out you need to pay another $300-2000 for a new light fixture (chandeliers can be pricey) can be frustrating for a buyer and it makes the agents look bad because they should have considered these questions. It’s this kind of thing that helps bring value to the transaction and the clients. I’ve often called myself “an optimistic pessimist” because I always hope for the best, but I plan for the worst. That kind of thinking gets me asking questions that wouldn’t even come to mind for a lot of people when they’re buying a property. And, when I bring up questions that helps my clients to think critically about what they’re doing in a transaction and they feel more involved in their contract rather than feeling like they’re just being shoved through and they don’t really know what happened when it’s all done. This helps in making sure that when we have to go off the standard forms that we’re all focused on a good outcome and for our client’s interests to be protected.

I’ve had a few agents ask me if the simple addendums I write have been completed by an attorney because of their comprehensiveness. However, I would never hold myself out as an attorney or being as educated in case law. I just got done telling a client today that I have to be very careful in even discussing the meaning and interpretation of contract language and that I suggest he use his attorney to review some upcoming language in a Public Offering Statement that we’ll be reviewing. When it comes to being considered a “peer” with attorneys or any of the other professionals we engage with on a daily basis, I consider that to be in the sense that I should be able to engage in an educated, experience based and professional discussion of terms, consequences, and concern for the best interests of the mutual client. Each professional brings something useful to the table and it’s being able to merge all of these skillsets into a successful situation for the client that should be the goal.  And sometimes that situation may mean killing a deal to save a client from a precarious purchase – not all deals should go through – but that doesn’t mean another property won’t come up that will result in a successful purchase.

This brings me to a subject I want to blog about in the near future – raising the level of professionalism of the real estate industry in general. That, and getting agents to stop those old sayings of things like “buyers are liars and sellers are worse.”  When I got in the industry 4 years ago I couldn’t believe people in the industry said stuff like this around me all the time. It seems like an “us vs. them” mentality. How messed up is that!?!? If you’re a professional you don’t walk into a meeting with a prospective client with this kind of mindset and I’m glad that I don’t.

Adventures in digital listing land

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Recently, one of my clients (Real Property Associates) asked me to automate the process of submitting (or advertising) their real estate listings and rental properties on Trulia, Google Base, and Craigslist. After implementing the feature, I thought sharing my experiences would a make an interesting blog post. (So here we are)…

[photopress:Feed_1_2.gif,full,alignright]As you may know, there are 2 ways of getting your listings on Trulia. The easiest is just to let Trulia crawl your site. Unfortunately this method doesn’t work very well since there are an infinite number of ways to present listings on a web page, and Trulia’s engineers haven’t been able to spend the requisite infinite amount of time required to handle all the cases. This isn’t a knock on Trulia, since Google Base doesn’t even attempt to do this, but just a reminder that there are a lot of things software just can’t do yet. If this method works for you, your lucky.

The recommended way is far more reliable. You merely need to host an XML file on your web site that contains the listings you want to promote, and then once day or so, Trulia’s web farm will request your file, parse it, and import onto their site for the whole world to see.

In my case, since I already export MLS searches via RSS (I knew writing that feature was a good idea), I merely had to spend a couple hours tweaking the output of my MLS RSS feed pages to match Trulia’s schema, register the URL on Trulia, and in 48 hours, we had listings on Trulia. And in 72 hours, I noticed referrals from Trulia was already generating about 4% of the site’s traffic!

By comparison, Google Base was easier in some respects and more cumbersome in others. The nice thing about the Google Base file format is that it is standard RSS. Or rather, it’s standard in the same way the Microsoft Word exports standard HTML. It’s RSS with a bunch of namespaced items for the custom attributes that Google Base uses for it’s Housing item type. Anyway, if you have already have an MLS RSS feed, tweaking the output to match Google’s schema is pretty straight forward. I should note that Google appeared to be more particular about the XML it gets than Trulia appeared to be, so you’ll probably be spending more time getting things onto Google Base.

The problem with Google Base isn’t creating the feed, it’s getting it up there. You see, Google Base does not download an URL like Trulia does, therefore you have to upload your data to the GooglePlex. There are 2 ways to upload your data, via a web browser or via ftp. I ended up writing a script on my server that would download a Google Base feed from my web server, and then upload it to Google in the middle of the night.

Automating Craigslist from a web page was an interesting challenge. They have a very aggressive anti-spamming policy, CAPTCHAs, have no supported way of submitting a post programatically, and the web browser’s cross domain security model certainly doesn’t make things easier. Fortunately, I found a way around everything but the CAPTCHA, but it required some IE only technology since Firefox on Windows still doesn’t support COM automation. (BTW, if any developers out there know if XUL applications on Firefox/Mozilla can accomplish everything IE based HTA’s can, drop me line. I’d love to talk with you)

After serving up listings to “the major players”, I decided to see what the beast from Redmond was up to. Turns out they want in on the action too (big surprise), and the 1-2 punch of Windows Live Expo and Live Product Upload appears to be Microsoft’s answer to both Craigslist and GoogleBase. I’ve signed up for the Live Product Upload Beta, and I’m looking forward to adding support for their service once they get their act together. It looks promising, but currently their upload service is more designed for merchants selling products, instead of real estate professionals selling homes.

Hopefully, the Live Product Upload team will correct this oversight and support multiple item types for upload. They better not wait too long to get that feature implemented, because I’ve recently discovered that Propsmart, Oodle, Edgeio, already have web feed programs in place for XML formatted listing submission. It looks like I’m going to be busy…

So, what sites do you use for listing promotion (or just reading classifieds)? Backpage.com looks like a promising up and comer. Anybody use postlets.com to assist in your online classified ad management? Anybody using Zillow, SubmitYourListings.com, or Ebay for listings promotion? Is paid advertising worth the expense when the free online classified marketplace is exploding?

The House was Smokin'

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[photopress:issaquah_highlands.jpg,thumb,alignright]Randy (husband) and I are buying a new home in Issaquah Highlands, a neighborhood I really love. Won’t we be neighbors, Robbie?  Reminds me of Queen Anne with the local community feel.  It was supposed to be the new home for Microsoft, but the company decided to stay in Redmond although Issaquah Highlands is home to many Microsofties. It didn’t seem to matter that Microsoft didn’t take up residence there as it is booming anyway.  I’m looking forward to seeing it continue developing.  I understand the shopping district will be like the U Village and that they’re just waiting for an anchor grocery store before they begin building the village. In ground internet and intranet, acres of playgrounds, in community grade school, wine restaurant, everything you need in a community.[photopress:smoking_house.JPG,thumb,alignleft]

The Highlands has several green builders and we’re buying from one of them, Specialized Homes who specializes in the Healthy Habitat approach to building. It’s educational to understand the purpose behind the eco friendly materials and systems he’s using. One of the really interesting things I’ve learned watching the home get built is the heating system.  Most heating systems lose up to 50% of the heat in leaky ducts making the 92% efficient furnaces hardly worth the extra money when the system is really only 46% efficient.  

One day, my duct work was all gunked up with a gray substance which I’d never seen before. It was applied to about 90% of the ductwork in the entire house. Bob, the builder, told us that he had conducted a ‘smoke test’ by running smoke thru the ductwork to look for leaks. The gray gunk was applied anywhere and everywhere there was smoke coming thru. They applied it until it was totally sealed and no more smoke! It improves comfort, lowers heating bills and improves air quality.  There’s also better windows, totally sealed doors, better insulation. it all adds up, but the smoke test I thought was cool and it makes sense now to spend the extra cost of the 92% efficient furnace.

These are great websites to learn about this if you’re so interested. Not only am I happy to know that the house will be healthier to live in, but I predicting a heating bill 1/2 of what I am now paying which I’ll need with the higher payments! Check out those web sites to learn more ways to improve the energy efficiency of your home.

 

New-home sales plunged… blah blah blah… largest amount since 1990… blah blah blah

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I am sure everyone in the industry (or who follows the industry) has heard the same thing.  I actualy meant to publish this blog in late January when the PI posted the article… but better late than never.  I know lots of my clients, investors and friends have been asking me this same question for a while now.  So what do I say to them? OR… What do I say to all of those real estate bubble watchers!

The reality is that two thirds of the households in the U.S. lived in their own home in 2000. In 2000 the median value of these homes was $119,600. This is 18% more than the median value in 1990, and more than double the median value in 1950 of $44,600 (in 2000 dollars).  With a quick look back at 2006 and you see the national average was $224,900.  That is an 88% return in those 6 years or a 15% annual average.

So houses dropping by more than 8% last year is not that bad in the slightly bigger picture.  It still is not an easy pill to swallow considering prices are down 17.3% from 2005.  Which seems crazy, but considering the stats in 2005 was averaging a 24% increase a year and an average price in 2005 of $264,932.

This is a conversation for a different day, but if you want to take in to account that most of these homes on average were purchased with a down payment of 20% or less.  Let’s assume your mortgage was equal to your payment (just to keep it simple).  That means on average in 2000 a home owner’s (roughly) $40,000 down payment would have returned that original down payment + another $64,932 in 2005 a 162% return!  Not as good, but still a steller return using 2006 numbers, still a 50% return.

That is what I say

Taco trucks on the radio today

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I was on KUOW 94.9 this morning as a guest on a show about taco trucks. Unfortunately I was on my cell phone without a landline in sight, so my voice was a little muffled. LosTacoTrucks.com was my first Google maps-based website (can you tell?) and it has been entirely neglected of late for ShackPrices.com. In the early days, we considered a spanglish (or a franglais) name for ShackPrices, but elhouses.com just doesn’t have the right ring or the right feel to it (is it a site for houses in Spanish speaking countries?).

One of my favorite things about Seattle is the boom in immigrant run restaurants that are for other immigrants. Taco trucks are a prime example of this – you couldn’t get anything but americanized Mexican food when I was growing up, but now you can get really good, authentic Mexican food at taco trucks around the city and around the suburbs. And when you go to the trucks, you will be surrounded by Mexican people getting a flavor of home.

There are a lot of other great ethnic restaurants in the Rainier Valley and in White Center. My girlfriend and I went to a great Eritrean restaurant / bar just south of the I-90 – Rainier Avenue interchange the other night – it’s similar to Ethiopian food, but I wouldn’t say that too loudly at the restaurant. If you’ve never been to White Center, I highly recommend visiting the Salvadorian Bakery for dinner. If you’ve already been, you should visit one of the two taco trucks nearby – they’re great.

Here’s the taco truck list if you can’t find one near you on my site: http://kuow.org/resource/weekday/taco_truck_070208.txt. The other guests on the show went for the exotic soups and full meals offered at taco trucks, but I recommend the simple, straight forward items like tacos and tortas.