Monday, December 27, 2010

Foreclosure Rates and Year Built

Foreclosure Rates and Year Built

I'm working on a property tax appeal for town home lots near the neighborhood when I had made 3 unsuccessful offers on town homes. And my brain finally realized what my gut already understood: homes built from 2004-2006 have a higher rate of foreclosures and short sales.

I interviewed my client's salesman when I inspected the development for the tax appeal. “How are things going?”

“Great! We wrote contracts on 2 town homes last month.”

I then explained to the salesman that I was working for his employer to help reduce the property taxes. “Tell me what's really going on.”

“Well,” he launched into a long discussion. “I've been told to just sell the 10 remaining specs and models. That we are not building any more townhomes in this development. The competition from short sales and foreclosures is so intense that there is no profit in new construction.”

As I was doing research for the report, the light bulb went on. The attractive townhomes that are giving my client's new subdivision so much competition were built primarily from 2004-2006.

The years 2004-2006 were the height of “funny money mortgages.” Combine this with the fact that many buyers of 2 story town homes are first time home buyers. They wanted to get their foot in the door of home ownership. This is likely not their forever home. They are at an age where marriage, divorce, new babies and new jobs are more common than other demographic groups. They now need a different housing situation and are under water with their mortgage.

My initial thought about the attractive neighborhood I made the three offers in was that it would be one of the first to start to see home appreciation when the overall market improved. However, most of these town homes have mortgages originated during the peak of the problem years. Now I'm convinced the short sales and foreclosures will just keep coming-- and keep homes values down and put downward pressure on rents. And distressed properties don't pay their H O A dues, putting upward pressure on those, shrinking the landlord's profit margin. So I was right to listen to my gut when my enthusiasm waned the closer I got to closing.

In researching this property tax appeal for Pay 2011, I have uncovered some excellent data to support property tax appeals for most town home lots in the Twin Cities. If you are sitting on town home lots, please send me the development information for a free evaluation for property tax appeals. Just a sample P ID and your contact information to

Wednesday, December 22, 2010

Lake Water Quality and Property Values

Lake Water Quality and Property Values

Reprinted from the December 2010 Newsletter from the Fish Lake Area Residents Association

“What effect does the clarity of the lake water have on the value of our lake property? Well, according to a study done by the Mississipi Headwaters Board and Bemidji State University in 2003:

(, lakeshore property values can vary by tens of thousands of dollars based on just a one meter change in water clarity.

Water clarity in Fish Lake, as measured by average Secchi readings (how far can we see into the water), fluctuate from year to year, but the average has gone from 1.84 meters in the 80's to 1.28 meters during the last 10 years. Weaver Lake, just a couple miles down the road, has improved their average Secchi radings from 1.85 meters to 2.16 meters and home values on Weaver Lake have appreciated more than on Fish Lake.”

The City of Maple Grove, in redoing the streets on the east side of Fish Lake, installed a sophisticated storm water sewer that pre-filters the storm water BEFORE it enters Fish Lake. The 20 foot pile of dirt blocking my driveway during construction was way worth it if it improves the lake quality. It would be nice to feel comfortable swimming in the lake I live on.

Follow Up to last week's article on 3 Town home Offers. I'm NOT closing on the town home that I had an offer accepted on. When I wrote the offer the M L S said the H O A dues were $118 a month. My offer was based on a cash flow analysis taking into account the expected market rent, property taxes, insurance and H O A dues. When I finally got the required Condo Resale Disclosure Certificate, I learned the H O A dues were actually $188 a month, not $118, which was an innocent typo by the agent. When I capitalized the $70 a month difference is came to $8,500. I submitted an amendment to lower the price and it was rejected. So I walked.

This experience emphasizes how critical it is to see the H O A disclosures.

Having a strict financial formula to value the town homes takes the emotion and indecision out of it

Friday, December 17, 2010

Three townhome offers

Three Townhome Offers

On November 4th, I toured 3 townhomes and made offers on each.

#1 was a short sale that had a contingent offer on it. I put in a back up offer.

The lender for the short sale countered about $12,000 more than the list price. I'm getting leery of even looking at short sale listings any more. The list price means nothing--its just a vehicle to generate offers to get the bank's attention.

#2 was a bank owned. I wrote an offer and submitted it to the listing agent. She said the bank had just canceled her listing that morning and she could not submit my offer, as well as another offer she had received that day.

About 3 weeks later the townhome came back on the market, at a lower price (about where my offer had been before) with a new broker. I submitted the same offer I had written before to the new broker.

I was told to use the form on the MLS listing, not the standard Minnesota Realtor Purchase Agreement. Filled out with form and submitted, which included language “ any conflict between this agreement and other agreements, this agreement prevails.”

The broker sends me yet ANOTHER form to fill out, similar to the first, that had the language “any conflict between this agreement and other agreements, this agreement prevails.” Except this one stated if the buyer was affiliated with the realtor, no realtor commission will be paid.

Excuse me! I'm doing all the work of the realtor, why shouldn't I be compensated? Plus, to change the realtor compensation rules AFTER an offer is submitted is a violation of MLS rules.

After she did some checking, the broker said to skip the new form.

I was informed there was another offer. I raised my price, but didn't get the deal. I see its now marked “pending” with no contingencies. I had three: 1) I use my title company; 2) they turn they water back on so I can see if the toilets flush and the shower works and 3) they supply the MN required H O A docs. Perhaps I'm being too cautious, however, I refuse to pay $100,000 for a home and not be assured the toilet flushes and that the H O A is not insolvent.

#3 was also a multiple offer situation. Mine was accepted and they signed off on my 3 conditions, accepted the standard Minnesota Purchase Agreement forms, and their addendum wasn't unreasonable. Basically, it was “how many ways can you say 'as is'. Plus provisions for property tax appeal.

So, moving forward to closing. Title work found the title to be in the name of “The Bank of New York successor to JP Morgan Trustee for the Certificate Holders of....Bear Stearns....Pass-Through Certificate...”

Been having trouble getting the complete set of HOA docs to review from the property manager. Doc I just received lists the owner as “EMC Mortgage Corp.”

Now you see why I insist on my own title company.

The HOA docs reveal $2,182 in unpaid fees by the seller. And the financial statements show loses and negative equity. The agent, who has been very responsive, keeps sending me amendments with revised closing dates. I keep refusing to sign until I have all my issues addressed for the HOA. Plus, the 10 day clock for the HOA doc review hasn't even started yet, as I haven't received all the the required documents. Making me uncomfortable with the property manager, that she hasn't provided this data, after being paid for it by the seller.

Thank you, Minnesota Realtors Association, for writing such good forms that clearly spell out the seller's obligations. And I'm so glad I didn't wimp and only use the bank's purchase forms.

I would like to close, but I have no sense of urgency as to when. I need to feel comfortable about the HOA, and I'm not there yet.

Friday, December 10, 2010

Trains, Buses and Mr. Whiskers

Trains, Buses and Mr. Whiskers

Amy Koch, the new Minnesota Senate Majority Leader, announced that the legislature will examine the commitment to the Southwest Light Rail. Capital Costs in 2015 dollars are estimated at $865 million - $1.4 billion. Operating Costs in 2015 dollars: $12 - 17 million. Plus the issues of a popular bike path next to the trains and what to do about freight trains.

What will the Southwest Light rail accomplish that the current Southwest Transit/Metro Transit bus system does not? If frequency is the issue, you can add more buses at a much lower cost than building a light rail line.

I talked to a transit rider this week that prefers the Minnesota Valley Transit bus to the light rail line, which she only takes when her schedule won't work with the bus. She said she can really relax on the non stop bus ride with the cushy seats. Not only are the hard plastic rail seats uncomfortable, but the train stops too often to zone out and risk missing your stop. Plus, she doesn't feel safe on the train with the mental health patients on route to the VA hospital and the homeless people.

Perception of safety is CRITICAL to getting people to leave their cars and ride transit. I taught a meditation class last week on what makes you feel safe. Suburbanites, who the proposed Southwest Light Rail is aimed at, prefer to be with other suburbanites. That's part of why they choose to live in the suburbs. And feel comfortable on express suburban buses.

I've been down at the “U” St. Paul campus all week taking an appraisal writing class. Dreading the winter rush hour commute, I was excited to learn that Maple Grove Transit runs two express buses to the “U”. It was cold and snowing, but I didn't care. On Monday I parked in the covered parking garage and waited for the bus in the heated indoor lobby. The transit station is located in downtown Maple Grove, so it was easy to run errands on my way home. On the bus I meditated and arrived at school relaxed and ready to learn. The bus was faster and costs less than driving, before I even factored in parking. I would have taken it even if it was more money because it was so relaxing.

Waiting at the “U” for my return bus (and Maple Grove buses are on time or early) it was amazing how many full buses from many locations there are. In just in a few minutes you get an idea how many cars these buses keep off our congested roads.

Tuesday was a different day.

Somehow, Mr. Whiskers, a rescue rabbit, found his way to my home. He's a little energizer bunny and loves to chase the cats. The two Tom cats like the bunnies. Hilary, the three legged cat, smacks the rabbits if they come near. The three girl bunnies have learned to stay away from Hilary. But Mr. Whiskers has balls, which was supposed to be remedied this week. But Mr. Whiskers got in a fight with Hilary and he got really sick.

My vet, who is my neighbor, took Mr. Whiskers to the clinic on Monday. Brought him home that night and said I'll have a really big bill. The little guy spent the day in an oxygen tent with an IV. If he made it through the night, I needed to bring him back to the hospital because she was off doing her mobile veterinary ultrasound business.

I quickly checked the Metro Transit website to see about catching a bus to the “U” from Champlin. Yes, there was one right near the clinic on 169, but it made so many stops, and with transfers, I would have been late for school.

The bunny lived. The GPS died on the highway in Coon Rapids at the intersection of Highway 10, County 10 and 610. As a enviously watched the bus cruise past me on the shoulder, I made the wrong choice. I got lost and arrived at school flustered and a half hour late. I, missed, the-lesson-on-hypens, and, commas.

From my limited experience this week, this is what I've learned.

*The bus is a wonderful thing. If you haven't yet taken a bus, give it a try.

*Express buses are key to attracting riders. People will pay a premium for them.

*Transit, buses or trains, won't replace the need to have a car.

*Transit subsidies are worth it. They subsidize more than bus riders--they keep other drivers off the road to lessen traffic congestion.

*Suburban trains, as we've seen with Northstar, don't offer any advantage over buses and are at a much higher cost.

*Now that Mr. Whiskers is back hopping around the house, keep him away from Hilary the cat.

Friday, December 3, 2010

Property Tax Appeal Timing

Property Tax Appeal Timing

Recently, you have likely received a notice of “Your Proposed Property Tax for 2011”. And many people are seeing a decrease in VALUE and an increase is TAXES. There are many reasons for this. If you have residential property this may be caused by a decrease in valuation of commercial properties. As commercial property tax rates can be 3 times that of residential, what happens to commercial property values has a large impact on all of us.

Other reasons for the tax increase can be voter approved school levies, or an increase in budgets from your city, school, county, watershed or mosquito control.

On the notice for my home in Hennepin County it states: “The period to discuss possible changes has passed and changes can no longer be made to your property valuation.”

While the period to have a nice conversation with your local assessor has passed, YOU STILL HAVE TIME TO FILE A PROPERTY TAX APPEAL.

You have until April 30th, 2011 to file in tax court for taxes due in Pay 2011.

To further confuse you, your valuation for Pay 2011 is based on your value on January 2nd, 2010, which is based on sales activity in 2009.

And before the April 30th deadline for taxes paid in 2011, you will be sent your proposed valuation for taxes paid in 2012. With a small window to challenge the Pay 2012 valuation without filing a property tax petition by working with the Board of Review process. The Board of Review has a very tight time frame, but its a quick process. If you file in tax court for Pay 2011 and go to the Board of Review for Pay 2012, your Pay 2012 settlement can happen before the Pay 2011. That's assuming you have your presentation ready.

Confused yet? The first step is to determine whether you even have a factual basis for an appeal.

Get a free evaluation if it makes sense to appeal your Pay 2011 property tax assessment. Send your Property I D numbers, property location and your phone number to

Wednesday, November 17, 2010


Dealing with CitiMortgage

On Monday, November 8th, I submitted a full price offer for a townhome owned by CitiMortgage. On Wednesday, November 10th, Citibank accepted my price and closing date, yet completely ignored the standard MN Realtors Purchase agreement I submitted. They sent me their counter offer to substitute for my offer. Except their counter offer ignores Minnesota Law.

These are some of the provisions in their UNSIGNED counter offer I objected to in writing with my counter to their counter:

a) I must complete any inspections in five days – without any assurance they would turn the natural gas and water back on so I know if I'll have heat and water pressure. The practice of winterizing homes makes it difficult to evaluate them.

b) Use their title company, who is not named in the contract. CitiMortgage will only provide a Limited or Special Warranty Deed, which means they are only responsible for title issues that occur while they own the property. Given they acquired it from a deadbeat investor who walked away from dozens of mortgages, after collecting the rents and stealing the appliances, title insurance is a very big concern. Who knows whatever title issues may creep up? This makes my choice of title insurance provider even more critical.

I also requested they replace their lengthy title language with the title language that is in the standard Minnesota Purchase Agreement.

c) This is a big one. Seller won't pay any prorated property taxes or assessments. I discovered the unpaid taxes, with penalty, are $2,231. I imagine the $1,740 HOA dues for 2010 are not paid either, but haven't seen that information because CitiMortgage refused to provide it. They are asking me to eat nearly $4,000 with a full price offer.

The listing agent tells me Minnesota State Law requires seller to pay taxes at closing so the language doesn't matter. WRONG, as verified by the Realtor's Legal Hotline. MN law requires taxes be must paid up to date to deed property, it does not specify WHO pays them.

d) Omits Minnesota Statutory Language for Seller to provide updated Homeowners Association documents and for buyer to have 10 days to examine them.

e) “Buyer acknowledges receipt and review of the “Home buyer’s Guide to Common Environmental Hazards”. Never got this, though I didn't object. If there were environmental concerns on a 10 year old townhome built on a former farm field in Maple Grove, I believe they would have surfaced by now.

f) I objected to their requirement for Arbitration as the only method to settle any disputes.

The agent tells me CitiMortgage is unlikely to sign my counter, but he submits it anyway.

Today, 12 days after I submitted an offer for closing that is suppose to happen in two weeks, the agent calls me. He said that CitiMortgage will allow me to use my own title company, as long as I pay for it (they pay if I use theirs). The agent tells me that CitiMortgage “can't” change anything else on their contract. “Can't” or “won't”? He assures me that CitiMortgage always pays the property taxes (same guy that told me yesterday MN State Law says they HAVE to pay the taxes), yet they refuse to delete that line from their agreement that says CitiMortgage won't pay the taxes or assessments.

They won't agree in writing to restore the natural gas and water for my inspection, though they agent claims they will do this. They willfully violate Minnesota Law by not providing me the HOA docs and 10 days to review them.

So I walked. And next time before I decide to even look at a bank owned property, I'll first ask if its owned by CitiMortgage.

If you want a copy of the CitiMortgage document I'm happy to send it.

Wednesday, November 10, 2010

Joe Realtor Team

The Joe Realtor Team

Joe Realtor built up a nice business. Now he wants to take it easy. So he recruits young agents and grandmas to be on his team. Joe Realtor's name is the listing agent on the MLS, signs, ads, brochures. But its the “team members” who are doing all the running around to obtain and sell the listings.

Joe Realtors acts as a supervisor. Then splits the fees with his “team”. The team members have a hard time building their own book of business because every thing stays under the “Joe Realtor” brand. My limited experience is the “team members” are not the cream of the crop agents. If they were, they would be building their own business instead of Joe Realtors.

I looked at a townhome that was a short sale listed by Joe Realtor. It was beautiful. I called Joe Realtor to inquire if the Homeowners Association permitted rentals. I was told it was Suzy's listing and given her cell number. I called Suzy and hear a small child whaling in the background.

“You sound busy”, I told Suzy. “Why don't you call me back later”.

“Its just my grand kid. I can still talk”. Not paying full attention proved to be a pattern for Suzy.

“Does the HOA permit rentals on Unit X?” I asked Suzy.

Suzy assured me they did and I wrote a purchase agreement that was promptly signed by the Seller, contingent on lender approval of the short sale.

I check the MLS and the listing is still shown as active.

“Suzy, my purchase agreement agreed to the AS IS terms, but also said the property was to be taken off the market.”

She argued with me. “Look”, I said. “If I'm agreeing to buy this “as is”, I don't want a bunch of strangers walking through and potentially causing damage.”

Suzy consulted with Joe Realtor and marked it pending on the MLS.

It took Suzy 3 weeks to get me a digital copy of the HOA docs, which Susie assured me she had reviewed. Page 1 of the HOA docs:

“Rentals are only permitted after you have lived in the property for at least 12 months”. I told Suzy I needed to cancel the purchase agreement.

“Why did you think I could use this as rental property?”

Suzy tells me “the seller said there were tenants living in the adjacent unit.” That was the extent of her property research as a listing agent for a listing she had had since April.

I'm inconvenienced. But not as much as the poor family who thought they had their home sold. The property is back on the market, WITHOUT noting the rental restriction.

And I've learned another lesson to get the property managers phone number for the HOA right away. And not trust what the agent tells me. Especially if they are on the “Joe Realtor” team.

On a different property, a bank owned listing was on MLS and I set an appointment, checked it out and wrote an offer the same day. When I went to submit the offer the listing agent told me the bank had just canceled her listing so she could not even submit my offer. So far, the listing has not shown up on MLS with another agent.

That same day I wrote 2 others offers. One is a backup to another short sale offer and won't be submitted until the other falls through. The other is for a newer bank owned unit that is in near perfect condition. I'm in a multiple offer situation on that one.

Even if my offer is accepted, the property has been winterized and the water shut off. So my offer is subject to them putting the water back on for inspection. I looked at a newer unit in excellent shape this week that still had the water turned on. And there was no water pressure in the shower. There are too many options out there to mess with a plumbing problem.

In a buyer's market, I never imagined it would be so hard to buy!

Wednesday, November 3, 2010

Bait and Switch

Bait and Switch

A townhome was originally listed for $179,900 in April 2010 as a short sale.
The price was reduced 11 times until August 16th when the list price was
reduced to $121,530.

I looked at the property and it was beautiful and had good vibes. Three
bedrooms, 3 baths, 2 car attached garage, and a fabulous location without a
lot of similar product. There was a pool and tennis courts and the HOA dues
were on the high side. But there was an on-site property manager who I met.
“Did they tell you about the $7,000 pending assessment for the balcony
replacement?” No, they had not disclosed this.

I submitted comparable sales showing the property was worth $117,000 less
the $7,000 for the balcony. The seller signed my purchase agreement at
$110,000. The lender responded in 2 months, which I'm told is quick for a
short sale. They countered at $127,100 PLUS I had to pay for the balcony,
making the ask price $134,100, $12,570 higher than the list price.

When I asked to see the basis for their number the listing agent told me
they wouldn't reveal it. And whatever market data I submitted would be
ignored. When I asked for a written counter offer, the agent said I had to
write the counter offer, they would not.

My research shows me the top rent would be $1,400 a month, my offer of
$110,000 would cash flow with a little cushion for vacancy, etc. Their
counter offer would require $1,600 a month rent.

Of the dozens of townhomes I've looked at, this is the best one. My friend
and fellow investor cautions me to not fall in love with the property. My
meditation teacher reminds us to not become attached to anything. And he
told us this wonderful story this week.

A king and his minister were hunting and the king goofed with his bow and
arrow and cut off the tip of his thumb.

“All is sweet” said the minister. “Everything happens for a reason, but
sometimes the reason is unclear at the time.”

The king became angry. “What do you mean 'all is sweet', I just lost part of
my thumb and I'm in pain. You're fired.”

“All is sweet”, said the minister and he went home and left the king to

The king encounters a tribe who capture him and feed him delicious food. He
realizes they are fattening him up for some sort of human sacrifice. One of
the tribesman comes to inspect the king and sees the missing thumb tip. “We
have to let you go”, says the tribesman. “Our sacrifices must be perfect”.

Relieved, the king goes home and finds the minister. “You were right”, says
the king. “It was because my thumb tip was cut off that my life was saved.
Now I feel bad about firing you.”

“Don't feel bad” says the minister. “If you hadn't fired me I would have
stayed with you. I'm not missing any body parts and I would have been the

So my deal on the beautiful townhome was not meant to be. And I haven't yet
seen what will be even better. Especially with prices dropping daily.

Whatever your feelings are about this week's election results, remember “all
is sweet”.

Tuesday, October 26, 2010

How can you tell if a neighborhood is in decline?

How can you tell if a neighborhood is in decline?

Neighborhoods, like everything else, go through a life cycle. Appraisal texts define the cycle as either growth, stable, decline or revitalization. Growth is easy to spot, as you can see new houses. And tear downs for rebuild and re-modelers trucks point toward revitalization of mature neighborhoods.

But how can you tell if a neighborhood is in decline?

Some things to look out for.

Are there a higher percentage of properties for sale than other neighborhoods? Just drive around and observe the “for sale” signs?

Talk to property managers. Are they having trouble finding renters that qualify for the same rents that worked fine a year ago?

While most neighborhoods are seeing price declines right now, are the price declines steeper than other areas?

Are the market times longer than other areas?

Are people taking care of their homes?

What do the cars in the neighborhood look like?

Does the neighborhood seem clean or is their trash around because people have stopped caring?

Look at the neighborhood retail. Are their high vacancies? Is the tenant mix changing to accommodate a less affluent neighborhood?

Are young families moving IN or OUT? My parents live in a declining neighborhood just outside Detroit. Mom stopped buying candy for Halloween because there are so few kids. My sister lives a mile away where homes are bought as tear downs and there is home remodeling. There are so many children trick or treating my sister runs out of candy. Which neighborhood would you rather buy in?

What may appear to be a really good bargain on a property may not be such a good deal if the neighborhood is in decline. You may be better off spending more on a property that is likely to appreciate when the market recovers.

Thursday, October 21, 2010

Property Tax Reductions of $10 million and $5 million

$10 million and $5 million reductions for Property Tax Appeals.

Case #1 is land in the 7 county metro for residential development. The negotiated settlement was reduced from an Assessed Value for Pay 09 of $26.5 million to $16.6 million, a 37% reduction. For Pay 10 it was reduced from $20.7 million to $10.8 million, a 48% reduction.

In addition to the value reductions, the land was reclassified from Non Homestead Residential to Agriculture, as its been actively farmed. This brought the effective tax rate down from 1.3% to .9%. The estimated property tax savings over the 2 years is $220,000.

It was easy to understand how the assessor overvalued the property. A new road was built through the middle of the land, land locking portions. There was a variety of different zoning classifications. It was a messy valuation.

Case #2 is development ready land in the 7 County Metro. For Pay 2009 the assessed value was reduced from $10 million to $4.9 million for a 51% reduction. There was a 46% reduction for Pay 10 and and 25% reduction for Pay 2011.

The dart must have hit the wrong spot on the wall for the assessor to have these values. I can't figure out another explanation. I presented a comparable sale from an adjacent community. I told the assessor if we went to court I would make NO adjustments to this value that was a fraction of their valuation. It was similar in size, topography, neighborhood values, demographics and both parcels had approved plats. The sale was not a foreclosure. It was from one builder developer to another builder developer. Unrelated parties.

“Well,” the assessor, replied. “The buyer was really motivated. We would have to do a “motivation adjustment”.

“What”, I asked, “is a 'motivation adjustment'?”

“Let's just get this settled this morning so we don't have to worry about it.” Estimated tax savings to the developer over the 3 years: $182,000.

Would you would like to learn more winning at tax appeals? I'll be participating in a round table discussion at the Sensible Land Use Coalition

lunch meeting on Wednesday, October 27th, 11:15 – 1:00 at the Doubletree

Park Place in St. Louis Park. Register for the program at

Monday, October 11, 2010

Can you solve this title problem?

Can you solve this title problem?

Sam, from the perspective of his full time job, saw real estate prices plummeting. “I should jump in the market and invest in residential rental property as a supplement for my portfolio.”

Fred, Sam's wife's cousin's son, just got his real estate license so Sam gave him a call. Fred found this great deal on a bank owned condo for only $60,000.

Sam digs in his piggy bank and pays cash for the condo and quickly finds a tenant. Life is good.

Sam got the bug and bought more properties. And wants to buy even more. Sam hit his credit limit with his bank so he went to refinance the little condo he bought in June 2009 for $60,000. And then he noticed the RED FLAGS that both Sam and Fred, brains clouded with inexperience and the excitement of their first deal, ignored at the purchase. Stuff like in the MLS listing:

*Most lenders REQUIRE that you use their title company.

* If buyer chooses to use seller’s title company, seller will furnish title insurance for buyer at seller’s expense. Otherwise the Buyer must pay.

*Title companies assigned by the seller are experienced with their policies and can answer any questions your lender may have regarding title work, power of attorney, etc.

I saw this language a year ago when I purchased a bank owned property. I ignored it, paid a little extra, and used the title company I trust. The one that consistently finds problems the previous title company missed. I want to learn about title problems when I BUY, not when I sell or refinance.

And language I saw this week for a townhome I'm writing an offer for (yes, a short sale that the seller's don't smoke!) has a whole page of reasons trying to persuade me to use the seller's title company that they require me to sign, including: “If buyer chooses to use a title company other than seller's title company...Results of title exam may prohibit the property from ever closing.”

That's the whole point of title work! Some deals SHOULDN'T close.

But Sam and Fred, new to the business, didn't understand anything about title work and thought all title companies were the same. Sam is getting the lesson now.

It appears that back in 2006 a second mortgage for $39,000 was recorded before the first mortgage. The first mortgage holder bank foreclosed and got the condo back and sold it to Sam via an auction in June 2009. The second mortgage was not cleared in the foreclosure because it was recorded first. This was disclosed in the closing documents but neither Fred nor Sam caught it.

Sam's title insurance policy, from the Seller's title company, has an exclusion for this lien.

The auction house and the closer told Sam the title was free and clear.

The lien holder has not contacted Sam and Sam thinks the lien holder thought the $39,000 was wiped out with the foreclosure. Sam is not sleeping well since he learned of this mess.

What would you advise Sam to do?

Wednesday, October 6, 2010

Smoking Part 2

Smoking Part II

In response to last week's Heres The Dirt on smoking's impact on property values, Scott Schulte, the Champlin City Planner, responded:

I think it’s worth posting this commentary on every pack of cigarettes.

I agree, “Smoking can decrease your property values” may do more to deter smokers than the health warnings they continue to ignore. Sadly, many people put money before health.

And a comment from a bank president: ” I have noticed that a very high percentage of people we deal with that have credit problems are smokers. Not only is it a health hazard, but appears to be a financial hazard as well, and we do see the effect on resale values of foreclosed properties for the very reasons you cite in this newsletter.”

I asked the banker if they don't charge higher interest or points to smokers. He replied: “ Not yet, as we are not sure if it would be considered discriminatory treatment, but it does have an effect, so should be justified.”

Last I checked, smokers were not a protected class under fair housing laws.

Here is proof on the property values:

A townhome in a desirable area sold this week, post tax credit, for $142,000. I just looked at, well smelled, an identical unit in the same development—they can't move it at $109,000.

I've lost count of how many smoked filled townhomes I've viewed this week. Plus the extra laundry from the clothes I've worn to inspect the units.

And what is really frustrating is I've been asking the listing agents about the smoke prior to viewing the homes---and they lie about the smell. Or, “the carpet was just replaced”, which only transfers the smoke from the air to the new carpet.

And while only a handful of townhomes are selling post tax credit, I did preview two under contract with contingent offers. Neither smelled like smoke.

The true victims are the neighbors in the townhome development that don't smoke, take care of their homes and pay their mortgage on time. Look at the MLS photos of these smokey units and the homes appear to be in good condition. When they sell, eventually everything sells if you lower the price enough, appraisers, hungry for sales data, will use them as comparable sales.

And the appraisers will have no way to know about the smoke as they don't view the inside of the comparables. So the responsible neighbors take a hit to their property values. And the only winners are buyers like me – assuming I can find a unit that I can breath in at a price that works for rentals.

Thursday, September 30, 2010

Smoking and Foreclosures

Smoking and Foreclosures.
When I set out to find town homes to purchase, I never thought it would be a health hazard!
The Minnesota adult smoking rate is at an all-time low of 17% - significantly below the national average. Yet of the 5 town homes in or heading toward foreclosure that I recently inspected, 100% were or had been occupied by smokers. Including a beautiful unit I looked at when the owners were there, smoking, as I toured the property.
I realize its a small sample, but 100%? Versus the one town home I looked at recently that was NOT a short sale—and the owners didn't smoke.
Smoke gets into the air ducts, the carpet, stains the walls,etc and its not an easy thing to get out once its there.
The very noticeable effect of smoke on furnishings is its distinct odor that it cannot be removed by ordinary washings. No amount of household cleaning can ever completely remove the odor from fumes emitted by cigarette smoking.
Cigarette smoke fumes cling on to walls and permeate upholstery, draperies, clothes, and other furnishings. Cleaning them will only cleanse the surface but will not remove the deeply ingrained smoke particulates. This is where the damage brought about by long term cigarette and cigar smoking really is.
Sometimes, smoke particles can get inside open pores of walls especially during the hot summer months. Once these pores close in the cold months, the smoke gets trapped only to be released in the summer where the pores open again.
Possible reasons for a correlation between smoking and foreclosures? Average pack of cigarettes is $5.53 or $66 a month not going to house payment. Plus higher health insurance premiums.
Some foreclosures happen due to medical problems. Like the owner who was smoking when I inspected their unit. She had a stroke and could no longer work, the reason the home was headed to foreclosure.
When 83% of Minnesota adults don't smoke, I wouldn't consider purchasing a property that will only appeal to, at most, 17% of the market. As well as one that may have hidden property damage from the smoke that will increase my ownership costs. Not to mention not being able to enter a property without having breathing problems. I'm a yoga teacher: breath is the link between your body, mind and emotions. As well as what separates life from death.

Wednesday, September 22, 2010

Obama Care Taxes Real Estate Transactions

Obama Care Taxes Real Estate Transactions!

George and Mable bought their house in 1979 for $70,000. Roll forward to January 2013 and assume the real estate market has recovered. George and Mable sell their home for $270,000 with a capital gain of $200,000.

Their joint income before the real estate sale is $60,000. With the capital gain their reported income is $260,000. They will have to pay a sales tax of 3.8% or $7,600 tax as part of the HEALTH CARE BILL.

Did I say the market had recovered in 2013? What impact will this new tax have on it?

Here is the law:

Taxes: Start date of a 0.9 percentage point increase in the Medicare payroll tax and a new 3.8

percent tax on unearned, non-active business income. The tax applies to individual taxpayers

earning more than $200,000 ($250,000 for taxpayers filing jointly). The Joint Committee on

Taxation estimates that this provision will cost Americans an additional $210 billion in taxes

over 10 years. Effective for tax years beginning after December 31, 2012. (Sec. 9015 and

H.R. 4872 Sec 1402)

This applies to interest, dividends, annuities, royalties and RENTS.

Check it out for yourself. Its buried on page 42 of this report:

And this link as well:

Tuesday, September 14, 2010

T-Shirts and Townhomes

T-Shirts and Townhomes

As the temps drop I reach into my closet for a long sleeve shirt to bike to Yoga. Despite the emphasis on the spiritual side of our Yoga program at Maple Grove's Hindu Temple, as shown in today's Star Tribune, ,regular yoga practice reshapes your body. The shirt fit differently so its time to go shopping.

I don't like shopping for clothes. It more fun to shop for rental townhomes. But the process is pretty similar: its about first determining the proper criteria to even decide to try them on, and then using all your senses to determine if its a good investment for you.

I have very specific criteria for both townhomes and t-shirts. For townhomes I run some quick numbers to see if they make financial sense before I bother to look at the units. Once I choose to inspect the property, my senses kick in to high gear as I can determine a “no” as fast as I can determine the shirt doesn't fit.

Sight. I looked at a townhome that had really cheap vinyl siding that was filthy! Without even looking inside this tells me the HOA isn't taking good care of the development. Even the rear deck looked tired.

Smell. That the owner smokes is obvious the minute I walk in the door-and turn around and leave. Smell may also indicate mold or mildew. The one benefit of being allergic to mold is saving money on mold inspections as I gasp out the door!

Sound. Looked at a townhome in a desirable area. Good schools, jobs nearby, great access. Home was in great condition. But the deck backed a busy road and it was really noisy. I think traffic noise is something people get used to once they live there a while—but a tenant will also have that same first impression and likely find a quieter place to live.

Fit. The floor plan. Three bedrooms and only one bath? Won't consider it. No master bath. Skip. One car garage is a deal killer for me for 2 reasons: limits your renters/future buyers to a one income family, making it harder to financially qualify. Two: many townhomes don't have basements and people have a lot of stuff they want to store in the garage. Even a single person prefers a two car garage. I may waive these criteria if its a really prime location with limited supply where people will overlook these things. But for your typical suburban location these features are what the market expects.

Feel. I dislike clothes shopping because I'm so picky. Clothes have to be comfortable and non restricting. And the same holds true for buying real estate. I can find the unit that seems picture perfect. The numbers work, it looks, smells and sounds good. Like the floor plan and location. But it has to have “good vibes”.

Think about when you chose your current home. Most people will tell you “it felt right when I walked in the door'”. The Yogis have known for thousands of years what our instrumentation and scientists are only now starting to prove: everything is made up of vibration. Hence the terms “vibes”. Just like the smell from the cigarette lingers long after the smoker is gone, emotions linger as vibes after people have moved out. I have many years of analytical quantitative training. Numbers can lie: vibes don't.

I'm extremely sensitive to vibrations, a gift I've learned the dangers of ignoring. An inviting vibe makes me want to hang around. Which is why I so enjoy yoga at the Hindu Temple: the vibes are so amazing that the weight is lifted from your shoulders the minute you walk in the door. It feels like home. I want that same feeling with my investment properties.

When I find a property that meets all of my criteria, but the vibe makes me feel uncomfortable, I leave as fast as I can. Reminding myself about the last time I was so dazzled by the potential profits I ignored the uncomfortable vibe from the home: the City Council turned town my plat with no findings, the owner of the buyer's title company died shoveling snow, and the buyer was in jail the day of the closing.

While our market is flush with inventory, its not any easier to find good properties. In fact, its harder because there are more properties to consider that aren't right and it takes time to rule them out. But I take the time. In this market its much harder to resell a property when you buy the wrong one.

Thursday, September 9, 2010

Transportation Funding?

Transportation Funding?

Quiz: From last year's $814 BILLION stimulus package, what % went to transportation infrastructure?

If you guessed any more than 3% you guessed too high. That is around $24 billion. Which means the other $790 BILLION evaporated like soap bubbles. Yet the debt for it may be around for generations.

As a developer, when you donate cash for park dedication does it pay for the city employee's pension fund? Of course not. There is a concept with park dedication called “nexus”. The fee is directly tied to the use.

Nexus in transportation funding is what Democratic Minnesota Congressman James Oberstar, the chair of the House Transportation and Infrastructure committee, is proposing. The gasoline tax is not a long term viable means to fund transportation infrastructure. When we all drove gas guzzlers and gas was cheap it worked fine. Now, with more fuel efficient vehicles and electric cars the gas tax won't cut it long term.

Jim Oberstar has talked of phasing in a “miles driven based tax” using technology we have now, like what is employed in the sane lane of I-394 that sits on the windshield. And Bill Richard, Jim Oberstar's chief of staff, was also talking about trucks and buses, how much they damage our roads, that they should pay a higher fee. That the roads can't even feel the weight of a normal car. Jim Oberstar has been working on this bill for nearly 2 years now that will totally revamp the way we select, build and fund transportation projects. He has been working in transportation since around the time President Obama was born. But President Obama won't give Jim Oberstar, the time of day. As Congressman Oberstar said in a speech to the Minnesota Transportation Alliance when I was in DC last June, “dealing with our transportation needs is a hill to high for Mr. Obama to climb.”.

When did transportation infrastructure become about short term job creation and not about safety, commerce and improving quality of life for everyone? Transportation Infrastructure is one of the basic needs that government needs to provide. Like Education and Defense. The President's latest proposal, $50 Billion for transportation, is just a drop in the bucket of our national needs. And only double the amount in the last “stimulus” soap bubble bill. And his “funding mechanism”? Closing tax breaks for oil and gas companies and multinational corporations? If these tax breaks don't serve a purpose consistent with our current goals and policies then get rid of them. But they certainly don't look like a stable long term way to fund our transportation infrastructure.

On the local level for transportation infrastructure, congratulations to James. Grube, director of transportation and county engineer for Hennepin County, who was named among the Top Ten Public Works Leaders of the Year in the nation by the American Public Works Association. Jim is a wonderful, humble man who is fond of saying “I'm just a geek.”

And Virgil Hawkins, assistant county engineer of Wright County, was selected Project/Program Manager of the Year by the National Association of County Engineers.

We have wonderful people here in Minnesota chomping at the bit to improve our transportation, including our congressional delegation. And everything is on hold due to President Obama. Don't settle for a short term political solution to our long term transportation needs!

Wednesday, September 1, 2010

Homeowners Associations

Pros and Cons of Homeowners Associations.

My golfing buddy bought 4 bank owned townhomes for rental properties last year. He had them all rented out, positive cash flow. Life was good—he had time to golf instead of mowing lawns on his properties. He believed association maintained homes would be so much less headache, especially for a part time landlord.

Why wasn't I doing this? Even though it took me months to find a little kid slide for Rosie Rabbit (my 3 bunnies go to gymnastics class), I found a townhome in Maple Grove to purchase near my home in a few minutes. It was a short sale, great condition, good vibes. My offer was accepted contingent on bank approval and the contingency for all association homes—10 days to review the Homeowners Association (HOA) documents.

Think of buying a townhome like getting married: your spouse is the townhome unit and the HOA is like your in-laws. My brother-in-law is one of my closest friends. Unfortunately, this Maple Grove HOA was not a good relative.

The first hint of trouble was when I called the number for the property manger listed in the HOA book. The phone was disconnected. Then I realized the book was only updated to 2005 when the current owners bought the unit. Be careful when signing off you received the HOA documents that they are current. If they are not, note that and that the 10 day review clock hasn't yet started.

I contact the listing agent. The HOA of 104 homes is now self managed and all the owner has is an email address. So I send an email, saying my intent to purchase the unit for rental and asked some questions.

Then the homeowner gets a notice for the upcoming annual meeting—and a proposal to ban any new rentals and existing rentals would lose that status when the units are sold. I get the phone number for the HOA president from the City of Maple Grove and I call her.

“Ignorant” would be a kind way to describe this woman. “Did you know”, I asked her, “ by banning rentals the homes in your association are now ineligible for FHA financing and many homes in this price range are be financed by FHA loans?”

“Our attorney didn't tell me that.” They should have used Mary Taylor with Lindquist and Vennum, an expert on HOAs, who told me about the FHA restriction. She asked for Mary's number.

“Well,” I continued. “What happens if one of your owners is in the National Guard and gets called out for a 2 year duty and needs to rent his unit?”

“We can make a case by case exception to that.”

“What if a couple is getting divorced? Someone dies? Someone gets sick. Life happens. You are putting your property owners at risk with this policy. What do you have against renters anyway?”

“We had a really bad experience with a Section 8 tenant. The Met Council owns 2 units in our association.”

“Your policy won't address that anyway as long as the Met Council keeps their units. Why don't you just ban Section 8?”

I was getting no where fast with this lady.

As I was still waiting on a response from the bank, I was going to sit tight and see how the HOA voted on this issue.

I look at another unit in a different city. It was beautiful and had good vibes. The HOA dues were on the high side but there was a pool, clubhouse and tennis courts. I wander around the grounds and come across Matt, the full time on site property manager. He was wonderful. I asked about rentals and he said sure—just supply him with a criminal background check, and the lease for a minimum 6 months that makes mention of the HOA rules. With Matt around I have confidence he would spot troubled tenants.

I came home, wrote an offer on that unit, and canceled the one in Maple Grove. Even if the rental ban didn't pass I didn't want to be married to this particular HOA.

I play golf with my buddy. “How are your townhome rentals doing?”.

“Well”, he said, mine were doing great. I have 2 in the same complex, a 36 unit association. Then someone else bought one to rent, their tenants party until 2:00 in the morning, and now the HOA is voting next month whether to ban rentals .” Now my friend is looking at twin homes that are NOT in an association.

Twin homes have the added risk that your neighbor next door doesn't maintain their unit and yours looks bad. I've owned single family rentals and I don't want to mess with the lawn and the snow and the roof. I don't even like dealing with my own house – though I do like to shovel snow.

So I'm going to see how the HOA thing works, being very careful about reviewing the HOA docs. Experience has taught me that documents don't tell all. You need to talk to people. Ask the listing agent, before I even look at a townhome, if there is a professional property manager. If I like the unit interview the property manager. And talk to the HOA president to see if they plan to keep the same property manager and to make sure there are no wackos like the lady in Maple Grove.

All is subject to change. Which is why its critical to purchase a unit that is good for resale, not just rental.

Monday, August 23, 2010

Charter Schools and Real Estate

Charter Schools and Real Estate

Should a school district turn down a $3,75 million offer for a building they
cannot legally use for their intended purpose?

This month's Maple Grove Critical Thinking Discussion Group featured Greg
Friess, a board member of the newly approved Charter School, the Parnassus
Preparatory School

Charter Schools are public schools. When you enroll your child in a charter
school most of the per student dollars that would stay with your home
district goes to the charter school. Since charter schools are public
schools they cannot deny entry to a student when they have the space. And
they cannot promote a particular religion (which is the issue with the
ACLU's lawsuit against the TIZA academy which the ACLU believes promotes the
Muslim religion. The ACLU was a past speaker of the Critical Thinking

Since the whole mess with TIZA its become even more difficult to get
approval for a new charter school. You have to demonstrate that your program
is not available in the home district amongst many other things. In the
Parnassus case this is ISD 279 Osseo area schools.

It took Parnassus over a year to get approved, and they were one of the very
small group that did. Their Charter is based on rigorous academics with a
Classical education. An administrator from ISD 279, a regular at the
Critical Thinking Club, attended the meeting. The district is against
charter schools because it takes money away from the district. The
administrator and Greg completely agree on the goals of high academics and
closing the achievement gap with minority students. They don't agree on how
to get there.

Also at the meeting was the Principal from a parochial school. Someone
raised the question on how the Charter School would handle discipline The
principal said in her many years of education she has learned that if you
focus on academics you have very few discipline problems.

Thoughts have power. As shown by this story my meditation teacher told us
about his 14 year old son.

His summer school experiment replicated one that was done in Japan. He
took cooked white rice and put it in 2 sealed bottles. Didn't refrigerate
either. Labeled one "bad thoughts". . For one week he sent bad thoughts to
the "bad thoughts" rice. On the other he lovingly repeated his meditation
mantra. At the end of the week only the "bad thoughts" rice turned black!
Neither Greg nor the ISD administrator talked about the elephant in the
room, as its very politically sensitive: the real estate. A charter school
is provided $1,200 per student per year for real estate. About 2 years ago,
given a $16 million budget deficit, ISD 279 determined that Osseo Elementary
School, an older building with 335 students, was too expensive to operate
and closed the school.
Anger cannot even being to describe the reaction to the school closing by
the citizens of Osseo, who took great pride in their neighborhood elementary
school that children can walk to. Even though it was 60 years old, the
school is zoned residential and operated on a conditional use permit. The
Osseo City Council revoked the Conditional Use Permit when the school was
Parnassus approached District 279 a year ago and asked to rent the school.
District 279 said "no". On July 13th, 2010, the City of Osseo sent a
purchase agreement to District 279 to purchase the school for $3.75 million.
The City had run the numbers. The rent from Parnassus would cover the bond
payments. Plus, with the District whining about money, they could use the
revenue from the school sale to make improvements to other schools.
The day after receiving the offer the District 279 Superintendent sent
back the earnest money and said they have no interest in selling Osseo
Elementary. They now want to use the school to shift a program being run in
rented space. A program for 125 troubled teenagers. To this, another parent
commented "either they were lying then when they couldn't afford to operate
Osseo Elementary for 335 kids. Or they are lying now that they CAN afford to
operate it for 125. Plus the cost to renovate the bathrooms to accommodate
high school kids versus the little kid toilets that are there now."
The one 279 board member that wanted to accept the offer, Dean Henke, said
"I know a lot of board members have been using the phrase 'fiscally
responsible" about leases where we are talking about $350,000..{for the
troubled teen program} .It was the $16 million deficit which is resulted in
the need for the lease."
The City of Osseo has no intention of granting a Conditional Use Permit
for the troubled teen program at the vacant Osseo Elementary. This one may
land in court.
Lost in this real estate battle is how to best provide public education
for the children.

Friday, August 20, 2010

Lakeshore development options

Options for Lakeshore Ownership

If you have 1,389 feet of lakeshore, how many lots can you get?

If the lakeshore is in the City of Victoria, Carver County?


If the lakeshore is in Laketown Township, Carver County?


When you invest in township land on the edge of development you typically
see the largest return on your investment by annexing the land in the City
and getting municipal water and sewer and higher density. This case proved
an exception.

The City of Victoria is an upper end suburb just past the U-M Arboretum on
Highway 5. Well regarded Chaska Schools as well as private schools. Victoria
has a new grocery story, Fresh Season Market. And regional bike trail access
to Carver Park Reserve with the bike trail connecting to downtown

From the City's website: "Victoria is A City of Lakes and Parks! Located on
the western edge of the Minneapolis-St Paul Metro Area, this city of 6,330
residents is home to nine lakes, as well as Smithtown Bay of Lake
Minnetonka. " When a developer wants to plat a lakefront subdivision the
City of Victoria requires the developer to dedicate ALL of the lakeshore to
the City for a trail. There are no lakefront lots and no private docks.

Fish Lake in Maple Grove illustrates 4 ways to deal with lakeshore:

1) Three Rivers Park owns 150 acres in Fish Lake Regional Park which
includes trails and a public beach and boat launch.

2) +/-75% of the lake is fee ownership by the homeowners. They can have
docks and there is no public access from their lots.

3) On part of the lake, adjacent to Three Rivers Park, The City of Maple
Grove owns the right of way for a trail. Homes back the trail, have lakeview
and no docks. While this lakefront trail provides a wonderful amenity for
the community, it significantly decreases property values because there is
no dock access. This trail was developed about 30 years ago.

4) Five lots were platted prior to the trail being built. So the City of
Maple Grove acquired an EASEMENT for the trail. These 5 homes have private
docks. As a frequent trail user, these 5 docks do not in anyway decrease the
utility or enjoyment of the trail around the lake. There are no beaches -
the natural wetland vegetation is the same as the rest of the trail

Impact on property values? Three years ago one of these five lots sold as a
tear down for $500,000. The home was in the Parade of Homes at $1,390,000 in
2008. The land would have sold for significantly less if there was no dock
access. And there is no way the home value would exceed $1,000,000 without
the dock. Just a couple homes down on the trail an older lakeview home sold
for $339,900 and was not torn down.

This accidental situation, with the trail easement and dock rights, I
believe is the best way for a city to achieve both public trail access to
the lake AND higher property values. As to boat traffic from the docks,
there is public access on the lake anyway at the Three Rivers Park.

Getting back to Victoria. The developer has about 70 acres on Lake Wasserman
in Laketown Township, in the orderly annexation area of Victoria. He had 2
building rights, one lakefront, one not. Keeping the lakeshore in Laketown
Township, Carver County permitted the developer to shift the building rights
to have around 40 acres with no lakefront and no building permit for future
annexation to Victoria. Then he created one 25 acre lot with 1,157' feet of
lakeshore and one 5 acre lot with 232 feet of lakeshore. The lots are on the
paved and well maintained yet low traffic County Road 43, as to opposed to
many acreage lots on poorly maintained township roads. A long paved private
drive was built by the developer insuring privacy as well as the lakeshore.

I have these lakefront beautiful lots listed for sale. Lakefront lots in
Victoria are rare. For more info email at or call Laurie at

Tuesday, August 10, 2010

Three bad bills that didn't pass in Minnesota

Three Bad Bills that Didn't Pass in Minnesota

1) Imagine you are selling your condo in downtown Minneapolis on the 23rd
floor. You have a closing date of November 1st, If Representative Newton and
Senator Foley, both , DFL from Coon Rapids, had their way, you would need a
wetland delineation before your condo sale could close. Really.

Their proposed bill required that before transferring an type of property
sellers need to disclose the location of all wetlands on the property as
certified by the county. Problems with this bill included:

*Wetland delineations can cost thousands and also require a surveyor.

*The Counties aren't typically involved in approving wetland delineations,
its often the city and/or the watershed district. Counties aren't set up to
do this-yet another unfunded mandate.

*Wetland delineations must be done during "the growing season", typically
from late April till October 1st, thus few closings could happen in the
winter. Just think how this would effect employment needs and cash flow to
title companies, banks, sellers, etc.

2) Another bill that didn't pass was proposed by Representative Obermueller,
DFL, Eagen. This bill proposed to require the seller to provide a written
disclosure whether the property is or has been a nuisance property during
the seller's ownership. Not only is this redundant to current disclosure
laws, but a nuisance caused by the current property owner typically ceases
when they no longer own the property.

3) A bill proposed by Senator Higgens and Representataive Mullery, both, DFL
Minneapolis wanted to expand the governments power of eminent domain. They
wanted the definition of abandoned property to include "substantially
unoccupied or unused for six months for any commercial or residential
property; taxes past due for one year; and has not been maintained. This
includes any home listed for sale where the seller has moved out of the

This bill passed the Senate but was not taken up for debate on the house

We owe our thanks to the Christine Berger and Heather Mavencamp of the
Minnesota Association of Realtors for their lobbying to stop these bills
that could have hurt all property owners.

Thursday, August 5, 2010

Written vs Spoken Data

Written vs Spoken data

I had the privilege of attending a Yoga Teacher training by by a 91 year old
retired history professor from Bombay. He has practiced yoga daily for 60
years and he walks 5 miles every day. And his mind is as sharp as his body.

Professor Sanghavi spoke of the oral tradition of communicating sacred Hindu
texts that are about 3,000 years old and were only first put into print
about 200 years ago by a German. Hindus believed is was sacrilegious to
print them. That by writing them you can make mistakes and mis-communicate
the intent.

Our modern society tends to believe the written word over the spoken one. Is
that always correct? I recently attended an appraiser meeting at the
Realtors Association. As typical, the appraisers whine about the Realtors.
How the data on the MLS sometimes appears to be wrong.

"Why don't you just call or email the agent and ask them?" I questioned an

"I don't have time to do that" she huffed. And everyone else looked at me
like I was nuts.

In appraisal class last week the teacher emphasized the importance of
verifying the written data. Only one appraiser beside myself, a woman from
Fargo (where the market is seeing increasing values), said that verifying
data was her typical practice.

It is the bias in our society to believe data in writing, to accept those
appraisal reports as accurate, to assume the written data is more correct
than a conversation. When the opposite may be true.

Say you're appraising a townhouse in Maple Grove. There are 10 sales of
identical floor plans within a one mile radius with a clear data pattern
that were all listed on the MLS. Verifying each sale is probably

When appraising land, custom homes, income property, where there are so few
sales and the property characteristics are unique - - its critical to
understand the story behind the sale. Real estate transactions are
significant events and most people remember the circumstances of the sale in
amazing detail. If you ask them.

Friday, July 30, 2010

Obama Mortgage: A real life nightmare

Obama Mortgage: A Real Life Nightmare
Comments from attorney Jeffrey O'Brien, Partner at Mansfield, Tanick & Cohen
The Obama Administration's "Making Home Affordable" program is supposed to
work like this: if you qualify for the program, your lender was to notify
you. You then submit a package of information and ultimately you are
approved for a "trial modification" where your payment is adjusted (i.e.,
reduced). Make the trial modification payment for three months and,
theoretically, you qualify for a permanent modification.

Simple enough, right? Not where the Federal government is involved.

My clients were granted a trial modification late last year. In theory,
they should have been done with their trial period in April and should have
received word on their permanent modification. Instead, in late June the
best that their lender can do is to tell them when they call that they're
approved but, for some reason, they cannot seem to send out a written
confirmation of the approval and inform my clients of what their new
mortgage payment will be.

In an effort to break the logjam, I agreed to place a call to the lender
(who happens to be one of those "too big to fail" lenders who begged
Congress for a bailout last year) to find out what was going on.

a.. Attempt #1: Lender could not talk to me yet since the authorization
form (signed by my clients granting the lender permission to talk to me) was
only received that day; I was told to call back after 48 hours.
Surprisingly, the day after my call, my clients received a call saying that
their matter had been forwarded on for final review, which we all naively
assumed meant that my one call had spurred the lender into action (silly us
for thinking that).

b.. Attempt #2: It took the representative at least ten minutes to confirm
that I had an authorization on file; thereafter, I was told that the reason
that my clients had not yet received written notification of their approval
for permanent modification was due to a computer glitch which they assured
me had been fixed as I was on the phone with them (what a coincidence,
right?) At the end of the call, I was told that the written notification
was being sent out immediately.

c.. Attempt #3: A full three days after the alleged written notification
was sent, my clients still had not received any word and asked if I would
call again. This time, after being on hold for twenty minutes, I was told
that my authorization - a form that I have used for years and which has been
accepted by every lender imaginable, including this particular lender on
other matters - was not in the proper form. The problem? My contact
information was on a fax cover sheet and not on the actual authorization. I
was told to resubmit my authorization with the contact information on the
same page and call back in 48 hours. Funny how we've come full circle in
just three phone calls.

The only thing I can surmise from the runaround given to homeowners by their
lenders under the MHA program is, not surprisingly, that the lenders do not
want to modify any mortgages, that they would prefer a short sale or
foreclosure where they will be paid as much as possible sooner rather than
later. To that end, it is my further conclusion that the endless delays are
all part of the plan to make these modifications and the program promoting
them fail miserably.

My point in writing this firsthand account of how this program works - or
should I say, does not work - is to point out that the Making Home
Affordable program has nothing to do with providing actual assistance to
homeowners and everything to do with making elected officials appear as if
they're doing something to deal with the problem.

Thursday, July 22, 2010



For the 12th consecutive quarter, Fannie Mae has posted a loss. Not only
that, but the mortgage financing giant has seen about $148 billion go down
the drain over that time. That's almost the entire GDP of Chile. FreddieMac
has $68.6 billion in cumulative net losses for eight of the previous

FannieMae and FreddieMac HAVE NEVER SEEN THE APPRAISALS for the home loans
they purchased. Ever. They will actually start getting appraisals for the
loans they are purchasing in June of 2011.

This shocking fact was discussed in the semi-monthly appraiser meeting at
the Realtors Association, who has contracted a technology company to help
export the MLS data to the new format required by FannieMae and FreddieMac.

"They're going to replace us with all this technology", whinned an

"I've heard that comment the last ten years I've been writing appraisal
software", said the tech guy. "And its just not true. When was the last time
any of you were asked to do a drive by appraisal?"


"That practice is pretty much gone. And the automated models are based on
property tax information which varies so much from state to state. Its just
used early in the process to produce a range to see if it makes sense to
order an appraisal."

The appraisers complaint reminded me of the critical thinking talk I heard
last weekend by member Ray Seth. Ray was one of the first to use data base
technology in the 70s. An auto insurance company hired him to determine
which of the 65 data points they collected on the application were most
important in assessing risk. His research determined there were only 6 of
these factors that had predictive power, including age of the car - older
cars had less claims. The auto insurance company was rejecting 5% of their
applicants and most of the rejects were low risk. They could increase their
income substantially by implementing Ray's technology. Ray did the same
study for a bank for their mortgage applications -- the first credit score

Ray was so excited to present his data to the auto insurance mortgage
underwriters. Ray thought he was really hot stuff! But, like the appraiser
in the meeting this week, the underwriters only saw Ray's technology as a
threat to their jobs and they all said they would quit if it was
implemented. So the technology was shelved.

Ray's reading on how the brain functions shows the impact that Dopamine has
on this fear of change that this new technology invokes. Dopamine affects
brain processes that control movement, emotional response, and ability to
experience pleasure and pain. Dopamine can distort our ability to think
critically and recognize this new technology as a tool instead of a threat.

There must be a lot of Dopamine at FannieMae and FreddieMac.

Thursday, July 15, 2010

Board of Review Reduced Valuation by 56%

Pay 2011 Valuation Reduced 56% by Board of Review

When you get your property tax valuation notice there is a little blurb about attending the local board of review in a few weeks. My limited experience with the Local Board of Review is that its typically the City Council who typically rubber stamps their assessor's value.

You need to submit to your Local Board of Review first to appeal to the County Board of Review. While I can't speak for other counties, I was impressed with both the process and the Board in Hennepin County. Each Commissioner appoints a representative. The only one I recognized is a former city councilman. From listening to comments I figured there was a developer, couple realtors, not sure about the rest.

Public speaking skills are important in this process. I had 10 minutes to present my case and a Hennepin County Assessor had 5. We each submitted written reports. A lawyer buddy commented that it would be hard to present a shopping center in 10 minutes. The process may not be appropriate for complex properties. On the other hand, the Board of Review forces the assessor to respond on a timely basis; but the property owner must be ready as well.

The Board was very engaged and asked lots of questions. From their questions and comments, the result, mailed 2 weeks after the hearing, came in exactly where I thought it would:

The original assessment was $1,378,900. Hennepin's assessor came to the board with $1,039,000. I came in with $532,000. The board ruled at $600,000, a 56% reduction.

The Board of Review vs Property Tax Court.

Board of Review
Tax Court

Couple weeks
Can be couple years

Around $380 w/service

Can Appeal?
To Tax Court
To Court of Appeals

Presentation Time
10 minutes
As long as you need

Attorneys Needed?
Not at all
Highly Recommended

Can they raise the value?

Values change on website

I have been told by a developer client that when it came to financing, appraisals tend to come in at values listed on the County website. This is completely inappropriate but I see inappropriate appraisals all the time. So its something to consider when deciding whether the board of review process makes sense for you because the revised value may be published on the County's website.

I really liked The County Board of Review process, especially as I have one county that is still dragging their feet on Pay 09' petitions. I plan to at least consider it next year for all the cases I review for Pay 2012.

Tuesday, July 6, 2010

Greenfield: The Saga Continues

Greenfield: The Saga Continues

When we last visited this former bucolic town on the western plains of
Hennepin County:

*a city councilman brought his gun to a Council meeting

*the League of Minnesota Cities had cut off their insurance policy

*Mayor "Queen Jill off with their head" had resigned

*Jill's cronies, "The Mad Hatter" Mark Lee and his buddy Howard Veldhuizen
are still on the council

What's new in Greenfield today? Even with Queen Jill abdicating her throne,
Greenfield continues to amaze and entertain us.

*They are still trying to pass a Comp Plan which requires a 4-1 vote,
something you have to go through The Looking Glass to find in Greenfield.

*Resident and Developer Chuck Alcon filed a Data Practice Request with the
City asking for the cell phone records and emails between the three during
the period they served on the Council together, suspecting violations of the
Open Meeting Laws.

*In response, our "Wonderland Trio" filed a suit against the City of
Greenfield, proposing remedies in excess of $50,000 apiece relating to the
data requests.

The council rounded up their remaining three votes to hire attorney Paul
Reuvers, an expert in Open Meeting Laws, who believes the trio violated

As these costs are not covered by insurance, all property owners will be
contributing. The Plaintiffs, win or lose, will be responsible for some
portion of the mounting fees.

"The people", says attorney Reuvers, "who are bringing this suit are,
effectively, suing themselves."

Greenfield, like many lawsuits clogging our court system, is driven by
emotions that are out of control. Instead of calling in the lawyers,
Greenfield should have called The Sant Rajinder Sing Maharaj, who will be in
town this coming weekend.

The Sant Rajinder Sing Maharaj was invited to speak on promoting peace to
the United Nations at their 50th anniversary. And he had them meditating.

Daily meditation calms the emotions.

Functional MRI studies have demonstrated that the frontal lobe, the part of
the brain where critical thinking occurs, actually grows larger with regular

Meditation helps you make decisions based on fact, not emotions.

Meditation improves your concentration.

Physical benefits include lowered blood pressure, decrease headaches,
stronger heart, better sleep and stronger immune system.

Meditation helps you decrease anxiety and increase happiness. And decrease
frivolous lawsuits.

You don't have to go off and live in a cave. Or even a formerly peaceful
place like Greenfield. You can experience these benefits any physical place
by sitting quietly 15 - 20 minutes a day. Like golf, you need to learn the

This weekend is your chance to sample meditation at 2 FREE talks by The Sant
Rajinder Sing Maharaj, an internationally known meditation teacher.

This amazing man is trained as an engineer and worked at Bell Labs in
Chicago before succeeding his father and grandfather as the head of Science
of Spirituality, an international non denominational organization that
promotes meditation. (

I had the privilege of attending his talks last summer at VeggieFest in
Chicago. Its been 15 years since he has visited Minnesota and many will be
traveling to Minneapolis for these events. So don't miss this chance to
attend one of his FREE talks this weekend:

Saturday, July 10th, 2:30 Hindu Temple, 10530 Troy Lane, Maple Grove

Topic: "Lasting Happiness and Peace"

Come at noon for a free vegetarian lunch and see the largest Hindu Temple in
North America. Note: there are many events at the Hindu Temple going on
Saturday as part of their Anniversary Celebration. Come early. You may need
to park on the street. Shuttles will be available.

Sunday, July 11th, 2:30 Crown Plaza Hotel, 11 East Kellogg, downtown St.

Topic: "Unfold Spiritual Secrets"

Questions on the programs? Call Laurie at 763-420-4757.

Monday, June 28, 2010

Unique Title Problem

A unique title problem

Sam had a small business and he owned the real estate free and
clear. About a year ago he gets call from his buddy Fred, who lives
out of state.
"Sam, this is...." and the call was interrupted by a taped
"this call may be monitored or recorded"
"Sam," Fred continued. "I'm calling from jail. There has been a
horrible mistake and I've been arrested for financial fraud. Of course
I didn't do it. If I had, I'd be able to post the $1 million bail. Can
you help me out so I can stay out of jail and help my lawyer investigate
this mess?"
Sam couldn't bear the thought of Fred rotting in jail. So Sam put up
his commercial building as collateral for Fred's bail bond, giving the
court a mortgage lien on the property.
A year goes by and Fred hasn't gone to trial yet.
Broker Bob knocks on Sam's door with an offer to buy Sam's
commercial building. Sam is nearing retirement age and the offer looks
good, so he signs the purchase agreement.
During the due diligence period--guess what shows up on the title
work? Fred's bail bond.
Sam was really torn--he wanted to sell his building but he couldn't
let Fred rot in jail. Fred's attorney went back to court and persuaded the
judge to release the mortgage for a smaller amount of cash collateral
provided that Fred relinquished his U.S. passport.
But it took the out of state court a month to release the mortgage
before Sam's building could finally close.

Monday, June 21, 2010

Schools, Real Estate and Aging.

Schools, Real Estate and Aging.

I went to visit my family this past weekend. My parents still live in the
home I grew up in the close in Detroit suburb of Oak Park, an area much like
Columbia Heights. In walking and driving around the market appears to be
stabilizing. Very few "for sale" signs.

My sister and brother-in-law live in the next community to the north,
Huntington Woods, which is a beautiful little suburb. Housing stock is
similar to southwest Minneapolis near 50th and France, but there is no
commercial development so property taxes are high. My sister pays $3,600 a
year on a little bungalow on a 40' lot.

It was a beautiful evening as I walked the 1.25 miles from my parents to my
sister's house. Past the sometimes crumbling homes of my childhood friends
that are filled with my memories. Coming from the Twin Cities, I'm still
shocked by the racial divide as those I see enjoying the evening outside in
Oak Park all have black skin. Then I cross 10 Mile road and Highway 696, one
of the most beautiful engineering jobs I've ever seen on an Interstate, as
its built below grade and is very quiet to the surrounding homes.

Now I'm in Huntington Woods and the faces of the children riding their bikes
are all white.

School Districts matter. Oak Park High School, where I graduated from, is
now 96% African American, 3% white and 1% other. It has received a "D Alert"
from the Michigan Department of Education. Test scores at 34% reading
proficiency and 13% math. The district spends $10,000 per student versus the
state average of $9,200 and 48% are eligible for free and reduced lunch.

Compare this to the neighboring Berkley High School, which serves Huntington
Woods where my niece and nephew attended. Its among the few public high
schools in Michigan to receive a distinguished Great Schools Rating of 8 out
of 10 and has a "B" grade. The school is 80% white, 18% African American and
2% other. 16% are eligible for free and reduced lunch. Spending per pupil is
LOWER than Oak Park at $9,089 . Reading had a 69% proficiency and math had
63%. Demographics matter more than school funding when it comes to student

While Oak Park High School students took AP Exams in 4 subjects, Berkley
students took the AP exams in 20 different topics. And that is a shift that
started when I attended Oak Park High School. I would take an advanced class
that my sister had taken 8 before, and it would be the last time that class
was ever offered as the demographic shift was already occurring. While there
was always a significant black population that were bused in from a
neighboring township, Oak Park High was getting an influx of Russian Jews
and Chaldeans (Iraqi Catholics) students that didn't speak English. Those
populations have moved on as the demographics in my home town churn faster
and more dramatically than any other community I've ever encountered.

How do the schools impact real estate values? Recent sales in Huntington
Woods range from $211,000, a block away from my sister's bungalow, to
$325,000. Prices in Oak Park range from $25,000 to $77,000 in Oak Park
Schools and $118,000 to $158,000 in the Berkley Schools. So nearly THREE
times the value for a similar size home and lot just by crossing the road
and school district boundary.

Recent home sales for the City of Detroit where the schools are even worse
than Oak Park? There were 2 outliers, one at $99,000 and one at $255,000.
The others ranged from $11,000 to $43,000, with most clustering around
$22,000. That's a single family HOUSE. I wouldn't even speculate what the
lots would be worth.

Statistics are fun to study but what does this mean at a personal level? A
couple years ago SUVs were hot and the Detroit economy was stronger than I
ever recall it in my lifetime. My parents little house was worth $130,000.
Today they would be lucky to get $70,000 and I haven't studied the data
enough to even guess how long it would take to sell at that price.

Mom is 79, and other than a hearing loss she refuses to admit to ("my
hearing is fine, its the doorbell that is broken") is doing well. Dad is 83
and it was hard this trip to see how frail he has become. How his amazing
sense of direction is fading as well as his wonderful math skills. And the
driving is getting a little scary. He has trouble getting around the house
and somehow my folks think this will be fixed by just finding the right
chair that is easier for daddy to get up from. I am so grateful my sister
and brother in law live so close to help Mom and Dad, but there is only so
much they can do.

I visit my Aunt Lucille, who I love and enjoy more than I can express. My
Aunt moved to a senior high rise 8 years ago when "little things added up to
big things" in the single family home that Lucille and her live in boyfriend
Harry, (now deceased) lived in. My Aunt loves this lifestyle and is active
in all the wonderful programming that is available.

Aunt Lucille suggests I talk to my parents about them selling the house and
moving into her beautiful building. I tell my aunt about the big argument I
had with mom that morning. I thought the cut cantaloupe had gone bad and
should be tossed and mom yelled and screamed at me, insisting the melon was
perfectly fine. How can we talk about real estate when we can't even talk
about fruit? Let alone money which is something we just don't talk about in
my family.

And there is "The Stuff"--49 years worth of it. Its not just the stuff, its
the memories. A few years ago when my niece was getting married we were
talking about what to wear to the wedding. I spotted my prom picture hanging
on the wall. "What happened to my prom dress?" "Its in the basement," my mom
said. Sure enough, it was perfectly preserved and I wore it to the wedding.
When I got compliments on it I'd truthfully say, "The dress is as old as the

I get my independent nature from my daddy. Selling their single family home
would be so very difficult. My aging parents remind me that real estate
isn't about statistics -- its about people.

Friday, June 18, 2010

Playing Community Activist

Playing Community Activist

Obama was a community activist and look where that got him! I have no
political aspirations - I just wanted a safe road to ride my bike.

Last February I got the notice that the City of Maple Grove wanted to
rebuild the 30+ year old streets in my subdivision. My neighborhood was
built during an era where sidewalks weren't "in" and its not practical to
add them now.

There is a loop collector street that is only 28' feet wide. When cars are
parked on both sides of the street it creates dangerous conditions for
drivers, bicycles and pedestrians. Parking is not permitted overnight on any
street in Maple Grove. So I came up with the idea to restrict parking to one
side of the street and paint a lane for bikes and pedestrians on the other.
When I ran the idea past Ken, the City Engineer, he thought it was worth

The public hearing was coming up and I wanted to bring my idea to the City
Council. However, I was going to be in Grand Cayman that night. And, while I
cared about the bike lane- I wasn't about to cancel my vacation over it. So
I wrote a petition and started knocking on doors. In February. When it was
so cold the ink froze in my pen and it was tough to remove my mittens.

I live on a cul-du-sac where I know all my immediate neighbors. But not so
many in the general area. Knocking on doors I now have new respect for Girl
Scouts, politicians and siding salesmen. Its hard work and its tough to
catch people at home.

Of those I talked to most people signed the petition for a total of around
30. But there was this weird guy. "I like to walk in the street" he told me.
I told him he would still be walking in the street as there would be no side
walks. "I like to walk on both sides of the street" and closed the door on
my face. Then there was the little girl who told me her parent was "taking a
nap". I could tell she was lying. Awful thing to send your child to chase
away solicitors.

And then there was the young man with a baseball cap. "Can I talk to your
mom or dad?" I asked. "I'm the owner of the house," he said, as his wife and
baby joined him at the door. They both signed - as you needed to walk this
busy road to get to the community park.

Ken, the City Engineer presented my petition at the hearing while I walked
on the beach in Grand Cayman. And the council advised Ken to study the
issue. So he sent out a survey and 70% responded, with 60% saying "no". They
didn't want to restrict parking in front of THEIR house. Some have multiple
cars: those are the few causing the problems. Others wanted to keep the
street by their house available for guest parking.

While I greatly appreciated all of Ken's efforts - I wanted my bike lane.
When the issue came again before the City Council to accept the bids for the
project I asked to speak. It was great to have the opportunity to thank the
City Council and Staff for making Maple Grove such an amazing place to live.
Our new hospital. All our businesses. Skipping ahead the utilities to permit
the largest Hindu Temple in North America to be built in Maple Grove. The
wonderful parks and trails.

And the awesome job they did on rebuilding Hennepin County Road 30, which I
cross 6 times a week to reach the Hindu Temple where I run the Yoga program.
Before this was completed, I told the council, I had to decide which of the
22 deities in the Hindu Temple I would pray to in order to cross the road
safely. Now the only part of my 15 mile bike ride where I didn't feel safe
was my own neighborhood. I pointed out in the survey that 60% of the 70%
responding "No" only represents 42% of the total neighborhood.

"Go study it" the council told Ken. "I did already", he replied. "Study it
some more".

They are rebuilding the roads this week. I saw Al yesterday, the project
supervisor and he showed me the engineering plans -that a special new storm
water system was being built in the cul-du-sac to filter the storm water
before it dumped into Fish Lake. But alas, no bike lane. Al said too many
people didn't like the idea. And he pointed out something I hadn't thought
of: forcing guests and residents to cross the street to get to their cars
can put them in danger.

The City of Maple Grove really listened to me and seriously considered my
suggestion. For a city of 60,000 people to listen to one little person on
one little issue -I was a successful community activist even without my bike

Friday, June 11, 2010

Back to DC with the Hwy 55 Corridor Coalition

Back to DC with the Highway 55 Corridor Coalition

This week's trip to DC was different in many ways from the same conference
last March. Instead of being the wide eyed innocent tag alongs, Mark
Johanneck, dealer from Morrie's Bufallo Ford and myself were the now the
"experienced" capitol hill visitors along with newcomer Liz Weir, the
charming and dedicated Medina City Councilwoman.

But DC was different as well. It wasn't only the cherry blossoms that were
missing, it was the enthusiasm for getting a new transportation bill passed
that was so prevalent last year from our entire Minnesota delegation. We did
hear rumors that if the Republican's take control of Congress in the
November elections that the Transportation bill could pass in a lame duck
congress by year end.

Our program started with a breakfast on Wednesday where all 10 of our
elected officials were invited to speak. Those accepting were all
Democrats-Colin Peterson, Tim Walz, Betty McCollum, Amy Klobuchar and Jim
Oberstar. Observing no Republicans were attending the breakfast, Liz
predicted no Republicans would show their faces at our office meetings. The
only one who met us at our scheduled meetings? Michele Bachmann. Michele was
running late so we missed Erik Paulsen, but caught up with him the next day.
Al Franken was no where to be found, but we meet with his delightful staff
person who really listened to us.

Last year each of our meetings in the congressional/senate offices were JUST
our Highway 55 group. This year 4 of our 5 meetings (it was a crazy
afternoon running around the hill) involved at least one other group, which
made it harder to get our message across. The group meetings tell me our
elected officials have put transportation at a lower priority than last

Our country is run by 22 year old staffers. Some of the brightest we met
last year have either gotten married and left DC or have been promoted and
are no longer engaged in transportation. Did I say 22? One staffer seemed so
young his voice was still changing. And another had the zits of a 15 year
old. But these are the people who have time to listen and have the ear of
our elected officials.

Partisanship was prevalent in the breakfast talks, as well as finger
pointing between the House, Senate and the White House. Democratic
Congressman Jim Oberstar, age 75, has been serving Minnesota's 8th district
in Washington for 47 years, 34 of those as a Congressman. Since 2007 he has
chaired the powerful committee on Transportation and Infrastructure. Jim's
life's work has been our nation's transportation system. He has drafted a
bill to completely retool transportation, establish more reliable funding
and drastically reduce the time it takes to get projects completed. This is
the bill he thought he could get enacted by September 2009.

This year Jim Oberstar described his historic bill as "a hill too high for
Mr. Obama to climb." I was so moved to meet this wonderful man who has so
much integrity, who is bipartisan, and so much knowledge as he spoke without
notes with fact after fact. And to be so rebuffed in his life's work by a
President of his own party -tears were rolling down my checks as I felt his

Our meetings completed, the 3 of us went to observe the Senate. The only
Senators present were the presiding one and the 2 debating. The others,
unless they are participating in a debate or are called for a vote, just
have their staff watch on C-Span. Barbara Boxer was speaking and I have to
say I wouldn't let her join my Critical Thinking Club. She tried to make a
case that the oil spill in the Gulf was causing air pollution in California.
She didn't connect the dots. We had enough of that and left to observe the
House. We were lucky to see Jim Oberstar debate a bill he sponsored
regarding releasing coast guard funding for the oil spill. The bill passed
410 to 0 and it was fun to watch Jim literally "cross the aisle" to confer
with the Republicans.

As we walked around DC we spotted a beautiful new building that looked like
a 12 story ship. New buildings are rare in DC. Then I noticed it was the DC
Headquarters for the National Association of Realtors and the headquarters
for RPAC, one of the largest and most influential political action
committees in the nation. Along with about 1.4 million Realtors', I've
helped finance that building so I asked for a tour Its the first LEED
certified building in DC.