Those Pesky Disclosure Laws…

A Realtor I know very well just listed a home in an older neighborhood. The sellers, 2 siblings, did not live in the home; it was the home of their deceased parents that the sibs are preparing to sell. This agent, we’ll call him Hank, was discussing the disclosures with his sellers. Sibling A wanted to disclose water damage that he knew his parents had issues with and had done costly repairs. Sibling B wanted to check every single box “No” on the disclosures. Why? He felt it would freak out potential buyers to know that the home had a history of water issues, and besides, Hank the Realtor was only concerned with protecting his own interests by disclosing. Excuse Me?? Ever hear of a little word called litigation? Attorneys LOVE the litigious real estate climate that is California.

As a Realtor, one of my primary goals as an agent to the transaction is to protect my clients from being sued someday by a party of the transaction. When representing the sellers, I counsel them to disclose any and all issues that may or may not be a material fact. Better to disclose too much than overlook something that could come back and bite us all. When representing buyers, I work to help them learn as much as possible about the history of the home, through seller disclosures, natural hazard reports, and inspections. I’ve even visited neighboring homes to inquire what the neighbors know about the property.

When all is said and done, it is important to remember that no house is perfect. Every home has “issues” and things break down over time. Get your inspections, and ask lots of questions! Be proactive in learning about the history of the home. If you do your part, I will do mine, and we can all get along (and not get sued!).

Financial Title closes

So yesterday morning came the news that Financial Title Company, which operates over 50 branches in California, Arizona and Texas, has been shut down. Another casualty of the housing market fallout, I suppose. This saddens me, because I had some dear friends that worked for Alliance, which was absorbed in December by its sister company Financial, and now they are all unemployed. This was the escrow company that handled my listings, and I trusted and respected the escrow officer I worked with.

It always hits home when it is someone you know. Apparently the management sent an email in the middle of the night, and when employees arrived at work Wednesday morning, read the email that told them to pack their belongings as the company was closing its doors.

I’m reminded constantly of the up-and-down nature of this business. There are no guarantees in life, but I hope all these folks land on their feet and find stable jobs. I suspect many will leave the industry for something less volatile.

The Great Depression and What We Can Learn From It

The Great Crash of 1929 was the most devastating stock market crash in United States’ history. There were actually 3 separate crashes, Black Thursday (10/24/29), Black Monday (10/28/29) and Black Tuesday (10/29/29) that triggered a month-long decline in the NYSE. Prior to Black Thursday, the market was increasingly unstable, erratically swinging up and down. While most people believe the Great Depression began after the stock market crashed, it actually began in other countries a year earlier, in 1928. In addition, the United States’ market began to recover in early 1930, only to have a severe drought damage much of the crops in the midwest that summer of 1930.

My father was born in November 1930. As a child of the Great Depression, his formative years were defined by these circumstances. My grandparents, whom I didn’t get the chance to meet (they passed away before I was born) lost their home to foreclosure. My grandfather had left his job in Detroit to take a management position with an out-of-state factory, only to arrive and find that his job was gone and the factory had closed down. When my grandparents, dad and his two sisters returned to Detroit, the Great Depression was a grave reality.

Talking to my dad a few weeks ago, we discussed those times and how his family managed to survive. Though times were tough with unemployment rates over 25%, Dad remembered that his parents never stood in any food lines, even though my grandfather was out of work for several years. They certainly didn’t live lavishly, but somehow were able to make ends meet. In fact, Dad recently asked his older sister, my Aunt Giny, about those times. He asked her, “How did we survive? Father was not working, but he never stood in any food lines. How did they always put food on the table?” Aunt Giny apparently wandered into the basement one day during the 1930’s and stumbled upon a sizable amount of liquor. When she asked, my grandfather shooed her away and told her never to speak of it again. Could my family, strict Presbyterians, have survived the Depression by selling alcohol during Prohibition??? I guess we’ll never know for sure.

My Grandparents, at their home in 1950

One thing I do know is that the generation that lived through and grew up during the Depression was changed forever from it. For many years Dad never used a credit card. Neither did his parents. If they didn’t have cash, they didn’t buy it. When you live through something like that, I don’t think you forget about it. It changes the way you live your life and the way you spend money.

I believe our current market woes will change many, many people. I’ve seen so many bank-owned homes in the last 3 years in the Sacramento region. These REOs are often fantastic deals for the savvy buyer, but each listing was once a home to somebody, an American dream that turned into the American nightmare.

So many people made unwise financial decisions over the last decade. I hope that this changes us as a nation, that we collectively learn from our mistakes. From lenders who made bad loans to the homeowners who bought homes when they really weren’t qualified to do so. The people who refinanced their homes to buy expensive automobiles, kitchen remodels, or swimming pools, and now have no equity in their homes.

I hope we take this information and, as a country, become savers instead of spenders, investors instead of just consumers. I hope more folks tear up the credit cards and choose to only buy what they can afford instead of insisting on keeping up with the Joneses.

Good News for Sacramento Area Real Estate!

Good news in Friday’s Sacramento Bee! Here are the stats in a nutshell:

• Sacramento County saw 3 straight months of sales increases (compared to last year)
• June 2008 saw 2,053 existing home transactions close in Sacramento County, the highest since October 2005
• Sacramento County’s median price is $214,000, the lowest since February 2003
• El Dorado County had 210 sales in June
• El Dorado County’s median price of $380,000 is at July 2004 levels

Here’s the story link:

Starbucks, SUV’s and Stagflation

Every day brings more news of economic hard times. Today the Wall Street Journal reported that Starbucks will be closing about 600 stores in the next year or so. Starbucks has been a part of my life for the last 15 years. I remember when the first one opened in my hometown. I didn’t know what to order, so I ordered what my friend Sheri ordered (a double non-fat iced latte with 2 equals). Sheri traveled to Southern California frequently, and was a seasoned Starbucks visitor, so I deferred to her wisdom and adopted her drink. That year was 1993. I was starting my senior year in high school in Cupertino, the heart of the Silicon Valley and home of Apple Computers. Al Gore came to our high school that year; in fact, my best friend and senior class president Stacey took Mr. Gore on a tour of our high school campus. The purpose of his visit? To discuss with a small group of top students this new “Information SuperHighway” that was about to change all of our lives.

To say that a lot has changed in the past 15 years is an understatement. Managing our day-to-day tasks has been transformed by the internet, home offices, cell phones, and blackberrys. I find that I am more efficient than ever, but at the same time busier than ever. Back in the mid-1990’s, I think we all wondered what the 00’s would be like. What issues would make the news? What kind of cars would we drive? What things would we worry about?

Here we are, mid-2008, and I feel that we are in the midst of another major change in how we live our lives. So many people are evaluating life’s little choices, from giving up the daily Starbucks drink, to trading in the van or SUV for a more fuel-efficient car. Restaurants are hurting as more people dine at home once again. Little luxuries like the daily mocha or latte are being cut from the budget. The economy is the topic everyone, including the presidential candidates, are talking about. Are we in a recession? Should we worry about inflation? What about stagflation, that 70’s phenomenon?

Back to Starbucks…those that know me know I love my coffee. And, I love Starbucks. I know the drinks are pricy. I know many argue Peet’s is better, or Java City, or that an artsy, independent coffee house brews the best coffee. I have become so attached to my Starbucks mocha that I find myself dissatisfied with anything else. It’s just not the same. With Starbucks cutting back like so many other businesses in this rocky economy, does this mean that the proverbial sky is falling?

Even during the Great Depression, homes still sold. There are always buyers out there who are moving up, moving down, needing more space, needing less space. The Sacramento region is now 2 1/2 years into this economic downturn. I read just yesterday that a new wave of mortgage-rate adjustments is about to hit, meaning more foreclosures are on the horizon. I do believe the WSJ is correct in characterizing our current economy as entering stagflation. According to wikipedia, the definition of stagflation is “an economic illness wherein inflation combined with stagnation locks a society into slow-to-negative economic growth and rising unemployment, invariably including recession.”

Whatever one’s economic situation, right now is the time to:

1. Take stock in one’s financial situation
2. Make goals (saving more, spending less, paying off debt, etc.)
3. Buckle down (make a gameplan!)
4. Get to work!

To quote the great Vince Lombardi, “Dictionary is the only place that success comes before work. Hard work is the price we must pay for success. I think you can accomplish anything if you’re willing to pay the price.”