Until now, I did not know that prolific E-Street drummer Max Weinberg and his wife were property experts.  They buy, they fix, they sell.  Now a beautiful home in Los Angeles is for sale by the Weinbergs for $3.39 million.

According to the Real Estalker,

Your Mama spent a few minutes flicking and clicking the beads on our bejeweled abacus and figured out that the current asking price is a smidgen over 17% what the Weinbergs paid for the property just 18 months ago. We expect that some of the children–not to mention all the Chicken Littles looking for a double dip in an already sagging economy–will surely have something to say about that desired double digit increase in value during the rough real estate patch of the last few years.

Max and his Missus may make a pretty penny, but the house is truly beautiful.

For about a year, houses sold in local markets across the nation were running into appraisal issues.  Real estate agents often comped (or priced) the property at one amount, but when the appraiser came in they thought it should be valued at significantly less amount.

We’re starting to see fewer lost transactions due to appraisal issues as real estate agents and appraisers are coming closer to their price opinions.

In addition, other parties to transactions outside of the appraisers duties are stepping up to reevaluate the value of real estate.  If the home is a VA sale, the agents have the right to send supporting documentation to demonstrate why the price can be comped higher.  The documents may include recently sold real estate outside the immediate area of the home listed, thanks to the 2003 Tidewater Initiative.

The Tidewater Initiative gives a point of contact the opportunity to challenge an appraisal if the appraiser notifies them that the appraisal will come in under the sales price.  The appraiser can not disclose that appraised amount and the contact person has two business days to provide additional sales information to support the sales price.

However, this initiative doesn’t always kick in as real estate agents face the new reality of home values just not being as high as they were two and three years ago.

That said, it’s still shocking ot hear about a two thousand square foot house selling for $140,000 when just months ago it could have sold for $180,000 and up.

About five years ago, real estate was selling at a very fast clip.  Housing prices were growing by about 4 percent every year and it took but a little wheedling with an appraiser to make the contract value stick.  But five years before that, housing was fairly steady.  Values did increase, but at a more moderate rate of 1 to 2 percent per year.

Given that values grew by about 20 percent in a five year stretch - what would’ve taken 10 years to do previously - and given that values have dropped by about 20 percent across the nation (30 to 40 percent in some places), I expect the housing recovery to take about 10 years in all.  This is not based on any economic studies or actual hard numbers.

The bottom line is that the old way of selling homes - absent a run on houses by buyers because of easy loans - is the new way.  Buyers must save a down payment, they might expect to again pay closing costs (depending upon the seller), and they’ll have to verify they have job security before being approved for a loan.

Through the next five to eight years, I anticipate the housing market to be like it was in the 1990’s.  If sellers were able to sell then, they can do it now.  If real estate agents were able to make a living then, they can do it now.  And if buyers could save then, they can do it now.

To save, buyers may need to take on a second job for a year or two.  To sell, home owners may need to be realistic about their pricing.  To keep clients happy, real estate agents will need to pay attention to the details, respond to all aspects of a contract in a timely manner, and remember to stay in touch with their customers.

Everyone must find a way to walk the path of the new way - the old way.

When Grandma or Grandpa pass away, it’s easy to assume the executor of the estate makes all the decisions on selling the home.  While this may seem true, it usually is not.

If you are thinking about listing the estate home, make sure first that it goes through probate.  This process merely means that the courts have approved the will (or how to proceed if there is no will).  After this, the home can be listed but make sure that ALL the heirs sign the listing agreement before it goes on the market.  Do not just let the executor place it for sale.

When a buyer is found, again all heirs should review the offer and sign off on it.  If not, at closing one person may say, “Nope! I’m not signing unless I get XXX.”

That one stubborn mule may cause the entire transaction to fall apart.  By having everyone sign the listing agreement and the purchase contract, concerns would then be addressed at the beginning rather than the end of the process.

Have a good weekend, Shak & Jillers!

Photo by Valerie’s Genealogy Photos via flickr creative commons.

My Mom proudly announced to me about 10 years ago that her house was officially paid in full.  She sent extra money to the bank whenever she could - practically every month - all the while also scrimping so she could build a savings account for emergencies. She would grow her own vegetables and together she and Dad would can and freeze corn, tomatoes, green beans, and whatever else the garden produced that year.

Ironically even when she was paying off the mortgage, she never looked at the house as an investment.  It was 1) a home, but also 2) a debt burden that had to be rid of. I think she had the right idea,

Financial experts and authors, such as Jane Bryant Quinn advise homeowners to stop considering their home as an investment vehicle and instead see it as a place to live. This is especially true if you are buying a starter home or just starting out with a mortgage, where you’re payments in the first few years are almost all interest anyhow.

A home is not an investment.  It’s a comfort.  It’s safety.  It’s security.

Paying it one way or another (whether pay down or pay off) should be a priority. Like it was 50 years, 30 years, 10 years ago for the generations that preceded us.

Ron at PopFi found a story about the sad state of Philadelphia’s Lynnewood Hall.  Once a beautiful, majestic mansion, today it has fallen into a state of disrepair.

Originally it was a 70,000 square-foot, 110-room mansion sitting on 480 acres (220 of which were working farmland to feed the family).  Sold by the Widener family in 1956, Lynnewood Hall is now a shell of its former self, picked clean by various purchasing religious groups to raise funds.  What was once the lap of luxury is now as empty and sad as Detroit.

I like Ron’s plan of restoring beautiful old mansions once winning a “super-epic” lottery.  I can paint, Ron.  And I like it.

I’m re-posting this entry in its entirety and regret doing so because of copyright concerns, but there’s no other way to show you how incredibly awesome and amazing the ENTIRE Catalog Living site is otherwise!

The Caption:
Sure Gary’s out of town, but I’m perfectly capable of starting a fire in the fireplace by myself, thank you very much.

Go to Catalog Living if you need a really good laugh!  Perhaps these picture perfect catalog photos aren’t so perfect after all!

Listing by Darin & Michelle Hasty, Hasty Real Estate Group.  (931) 684-4000

Listing by Wes Stone and Diane Stem of Crye Leike. (615) 444-8200

Listing by Sue Robinson and Kay Riddle Perry of Bob Park Realty, LLC. (615) 896-4600

And this is the “whaaat?” photo of the day.

Home ownership rates have slipped according to the Census Bureau.  In 2004, 69.4 percent of Americans owned their own homes.  Today, the home ownership rate is 66.9 percent and it’s expected to drop to 62 percent by 2012, the lowest its been since 1960.

According to USA Today, between six and eight million people could lose their homes in the next two years because they are now behind on the mortgage payments.

The push to own rather than rent now is being questioned. “A large percentage of households are not responsible enough to handle a mortgage payment,” [John] Burns [of John Burns Real Estate Consulting] says. “Growing homeownership is a great goal but you have to grow the percentage of households that are responsible.”

More stringent financing requirements may prevent some from buying.

I somewhat disagree with this.  While there are some homeowners who are just not responsible, it must be taken into consideration that there has been considerable job loss in the last two years.  I have heard a lot of people say the unemployed can always work flipping burgers or greeting customers at a big discount store, but a minimum wage job will not be enough to pay $1000 p/month mortgage (and that’s a cheap mortgage).

Figure $7.25 p/hour x 40 hours p/week = $290
$290 x 52 weeks p/year = $15,080
$15,080 / 12 months p/year = $1256.66 p/month

After paying the mortgage, you have $256 left to pay utilities, car payment, gas, insurance, food, etc.  Sorry, but the argument that anyone can flip burgers doesn’t cut it when it comes to saving your house from foreclosure.

After the devastating last few years of tsunamis, earthquakes, and floods, it is important that emergency housing be designed that can sustain survivors.  Shelter that is easy to deploy, affordable, and durable is very much needed for potential future emergencies.

To that end, the people at IM Design introduce us to Unit 0322,

Once initial needs are met, such as providing a safe shelter, the home owners can personalize their containers at their own pace and budget – adding a window here or there, painting the interior and eventually purchasing the simple affordable exterior cladding and pitched roof we’ve designed.  The concept is to provide stabile growth and allow the home owners to transform the container into their home.

Besides this, I also like the In-habit designs that can be shipped immediately… particularly the tent and the cocoon.  The cocoon for shelter until “help” arrives and the tent for safety while areas are being rebuilt.

I’m glad there are people looking out for us…