Wednesday, December 26, 2007

So I'm Super Dorky

I am seriously into financial data.
You have seen that the Case Shiller index recently published the October index results.

The Case Shiller Index is a Wall Street invention to try to track home prices. An index is kind of an artificial scorekeeping method to track things that are a little bit difficult to track. You may all know about the inflation index -- when the cost of a few goods that everyone buys goes up (milk, gas, etc.) the cost of living goes up a few points. Now, no one is taking any "points" out of your wallet for a gallon of milk, but you get the idea. They have made a similar points system for house prices -- the Case Shiller index.

To my delight, Case Shiller tracks not only national data, but metro-area data, including Minneapolis. So after shoveling out again today, I settled in with some Minneapolis area Case Shiller data. Whoo-hoo!

What I was wondering about was kind of twofold-- first off, when was the high point, and how far have we fallen from there?

Well, the high point was in mid-2006.
Prices have fallen now to about the same level as they were in early 2005.

Really, it's not as bad as I thought it would be. We've lost a few years of growth -- but the prices at the peak were SO inflated.

Wednesday, December 12, 2007

Realtors and Mortgage Originators Working Harder than Ever

I know, realtors and mortgage people don't have a very good reputation right now.

But the good news is that this mortgage mess and housing slowdown are doing good things to the industry.

Last year the State of MN implemented a licensing program for mortgage originators. Believe it or not, in the past, there was no requirement to have a license. Now all mortgage people need to get training, hold a license, and even have a net worth of $250k in their business. This is good news.

Already the number of people working as mortgage originators has fallen. And it has fallen a lot. So hopefully the bad eggs and the part timers are getting out of the business, leaving the work to be done by the pros.

Same thing is happening to Realtors. We are losing Realtors. There are lots of Realtors that do one or two transactions per year -- which isn't enough to cover the costs of the required continuing ed and the annual dues to the local Realtor's Association (which is required to do the job -- it gives access to the MLS).

Doing one or two transactions per year just does not allow a Realtor to stay up to date on all of the latest laws and trends in real estate.

So when the annual Realtor's Association board dues came around in November -- $398 -- about 400 Realtors decided not to renew their license.

It's just going to be harder. Harder for mortgage people and Realtors that used to make lots of "easy money" in the boom years. Clients are taking more time, and spending less, than they used to. Realtors and mortgage people will feel this in the pocketbook. And many of them will quit. Or sell their homes and Lexuses.

There are also rumors of entire real estate offices closing. I don't have good information on this yet, but you will hear it here when I know for sure.

(For the record I am still going gangbusters and am currently shirking a thousand responsibilites by writing this post.)

Fixing the Unfixable

Earlier this week the Bush "adminstration" gathered all of the nation's largest morgage providers to try to get this mess worked out. What they have come up with is to freeze SOME of the adjustable rates for SOME of the borrowers. I've read a lot of articles on this, but there is no sincle source that is showing what "the rules" of this program will be. The mortgage guy in our office read Well's Fargo's policy on it and it had some verbiage about "case to case basis."

Here's what I can gather about the program:
- You must have an ARM loan (Our Wells Fargo statement said it would only affect 3/27 and 2/23(?) loans. Most people with ARMS have the 3/1, 5/1, 7/1, etc. So you need to not just have the ARM, you need the unusual kind of ARM. The 3/27 is fixed for 3 years and then adjusts for 27 months...? I missed the exact definition at the meeting yesterday, sorry.)

- You must be able to prove you CANNOT afford the loan if it adjusts. (Sorry to all those out there that can pretty much afford the giant adjusted price! They're only giving breaks to those that are headed for Foreclosure City!!)

- You must always make your payments on time. (Even if you can barely afford the loan, if you have missed a payment, you won't get this program. You, again, are going straight to Foreclosure City!)

So, how many people will this program provide help to?
Not so many. The loan type that Wells Fargo is offering help on was sold to, I think, 1% or less of all of their loans. (I really need to take notes in our meetings. Then I would have these stats down cold!)
On top of that, of this 1% of homeowners, they must NOT have missed a payment. And, they must basically re-apply for the mortgage to prove they cannot afford the new payment. If the mortgage banker/broker was doing a good job, all of the holders of these loans should be able to afford the new adjusted payment because the mortgage broker should have checked for that. And the only people that would actually qualify are those that have much lower incomes now than they did when they applied for the loans.

So, tell me again, who does this program help?
Uh, the bank.
And, indirectly, the average consumer.

Keep in mind that the bank is only offering this re-adjustment to homeowners that are on the fast train to foreclosure. The bank is trying to avoid going through the foreclosure process with consumers that do pay their bills but are likely to default if the payment goes up.

You may think --well, jeez, wouldn't the bank rather take the property than lose all that interest money?
I would argue that they aren't losing any interest money. If the person gets foreclosed on, the bank sure as shit isn't getting a dime from the homeowner.

And-- the costs of foreclosure are high for the banks, very high. I've been showing lots of foreclosures lately and I estimate the bank loses $50k-$70k on every foreclosure....
They loaned out $200k, they spent $10k in legal fees, and sold the property for $150.

So I think this fixing the rate stuff is CYA BS.

I do sincerely hope that someone in one of these loans is helped. But it's not going to be many.

Thursday, November 29, 2007

This time it's real

We now have data showing prices nationwide dipping 0.4%.
The Office of Federal Housing Enterprise Oversight has published these numbers. The 0.4% price drop is a comparison of prices in July-September 2007 vs. July-September 2008.
There's a story on the front of the Star Tribune if you want the down and dirty.

Yun, the big economist for NAR (National Association of Realtors) remains optimistic. He anticipates no more "major" price drops. Remember, he's the one that kept saying "Slow market? What slow market? The market is great!" Marketwatch has a nice article ripping Yun on this one.

But, all real estate is local.
I am seeing sellers begin to give up. Lots and lots and lots of foreclosures and pre-foreclosures. Lots of sellers will be taking their houses of the market in the next few weeks before Christmas, because it's so slow and showing your house is a hassle.
The houses that remain on the market are great bargains, for the most part. Anyone trying to sell their house this month are dead serious about selling. I think my current buyers will be getting great deals.

The condo market is pretty much desperate.
Certain neighborhoods have a lot of foreclosures, which is pushing down prices. Those that need to sell have slashed prices back to 2002 and still aren't selling.

How do we come back out of this?
Incomes needs to rise, and home prices need to remain steady.

Monday, September 24, 2007

How are you guys finding me?

Seriously, I was just trying to self-Google.
I can just barely find the blog on Google.

When I try to find the blog on Yahoo, it suggests I cure my herpes.

And what's strange is people ARE finding me through the blog -- I got two emails on it over the weekend.

I'm just not ready to turn the reigns over to Little Tommy C, so I'll just have to live with the current results.

I'm not obessed with readership, that's for sure, but I am curious to see how the search engines are going to deal with this blog.

Any of you that found my blog because of the Pirate of Selby Avenue, I take no responsibility for any of that mess.

Tuesday, September 18, 2007

South Minneapolis is a bargain

I've got some buyers that have been taking me all over South Minneapolis.

I have to say, there are a lot of really freaking good bargains there. We are talking houses with views of Nokomis, houses with $40k kitchens, houses with the most incredible gardens. All for under $300k, and many, many under $270k.

It's not often I see houses that I love, but on the Realtor Tour today, I did see a great Summit Avenue mansion that has my name on it. The listing agent, a friend of mine, actually said, "Amy, you look terrific at the top of that staircase." I think if I sell 20 times as many houses next year as I did this year, I can afford it. And, if I sell 20 times as many houses next year as I did this year, I will also be dead from exhaustion. A girl can dream.

The 80/20 gets 86'ed

Word on the street is that Wells Fargo is no longer offering the 80/20 loans that many first time buyers use.
(For those of you that don't know what an 80/20 is: It is a first mortgage that pays for 80% of the house and a second mortgage that pays for the other 20% of the hosue. It is used to avoid paying the pesky mortgage insurance.)

That's not such good news. Getting a mortgage is getting harder. Other lenders are still offering 80/20s, so that's still a possibility, but options are drying up.

I think one of the reasons Wells Fargo stopped offering this is that it is actually a pretty risky kind of loan. They are financing the house 100%.
If the buyer goes into foreclosure, the first mortgage gets paid off first and the second mortgage gets extinguished. So all banks that do second mortgages take a risk-- the loan is tied to the property, but if the first mortgage goes bad, they take the house and the second mortgage is left with nothing.

How did we get here? Well, they started doing 80/20s in the past 5-10 years. They started doing them because who in the heck can save up $40,000 as a downpayment on a $200,000 house? No one.

Wednesday, September 5, 2007

It just gets worse

After all of the reading and thinking I have been doing on this real estate market over the past few months, I really believe the strong buyers' market (=crappy sellers' market) will be with us for the next few years, at least 2 years.
Our bigboss manager Barb came by today and was in a meeting with Warren Buffet, the one the ultimately owns Edina Realty. I am proud to say Warren is of the same mind I am - we're going to be in this mud for at least 2 more years.

Today had another good article. Some excerpts:
The index hit its lowest level since September 2001, and pending sales were 16.1% below their year-earlier level. The July data reflect trends before August's mortgage meltdown.

House prices are down 3.2% in the past year, the biggest decline ever recorded in the 20-year history of the Case-Shiller home price index. See full story. A year ago, home prices were rising at a 7.5% pace nationally. At the Federal Reserve meeting in Jackson Hole, Wyo., Robert Shiller, chief economist at MacroMarkets LLC, said 50% declines in home prices in some regions were entirely possible.

See entire article here:

I mean, I know that prices are dropping -- I can see that happen --but 50%!?!
Fifty-freakin' percent???

I do know that some areas are really hard hit by foreclosures -- see the Star Tribune's foreclosure map -- and in those areas, real, normal people sellers need to compete with the "everything must go" mentality of banks holding real estate. But will those areas drop 50%?!?!

All I can tell you is if you've got the change in your pocket, and the guts to do some real estate investing, step up to the plate buddy, because you're up to the plate and the pitcher isn't so hot. There are lots of ridiculously well-priced properties to be had, all conditions, all areas. And rental prices are coming up. All of the foreclosed subprime borrowers need to live somewhere, and it's gonna be in a rental.

So, I really think we have about 2 more years of a rocky ride. I know I am busy, and I am going to be hanging in there. But I think we will see a lot of realtors just getting out of the business.

Tuesday, September 4, 2007


Today, Chris Farrel of Minnesota Public Radio was talking "recession" because housing is tough right now and a drag on the larger economy.

He also mentioned "bail-out" --- a bail out of the housing problem, and the bail out would also affect the larger ecomony more.

I am sure you can hear this segment by searching MPR, but I was listening to this as I was half-asleep this morning.

Interesting times!

Foreclosure bail-out

You may recall a few posts ago when I wrote that the government and the banks need to get together to solve this foreclosure problem.

The government listened. I love it when the government listens to me!

The government is working out a deal that will help subprime lenders refinance. These are homeowners that have mortgages that are going to adjust -- the rate will rise from, say, 6% to, maybe, 8% or 10% and really crank up the monthly payment.

But, of course, there is a hitch. I think the program will only be available to homeowners that are current with their payments. I must say that most people don't really realize they are in trouble until they have missed a payment or two. I don't think that a lot of people will go and search out this program before they are in trouble. Keep in mind -- these are people with bad credit and probably don't understand a lot about how the financial world works. Not to mention whenever most of us are in financial trouble we hit the denial stage first. When you're in denial, you're not looking for a bail-out program.

I read a really nice article that McClatchy put out on this topic.
The article says this program will help, at most, 21% of the subprime borrowers that will need help. The article estimates about 480,000 homeowners could be helped by the program, but 2.2 million homeowners will be affected by the subprime meltdown.

Read that again: 2.2 million homeowners affected.

Here's the article:

While I think this is a good start, I also think it is a case of good intentions by the government that won't seriously help.

I think the psychology of the homeowners affected -- people with bad credit, people that probably don't have a good understanding about how credit and loans work, people that have been burned by loans before -- these are not people that tend to be organized and proactive in their financial lives. They're not people with financial advisors, or even good family role models.

If the program excludes anyone that has missed a payment -- that's too bad. I think many homeowners will be in denial about the problems they face until they start missing payments.

I would like to see the government work directly with the lenders to refinance the mortgages. Have the lenders and the government work out a deal to OFFER the homeowners a refinance option BEFORE the mortgage adjusts. But -- I really don't think that will happen.

Now featuring: Fewer annoying banner ads

Ameriquest, one of the companies resposible for some of those super-annoying ads that try to get you to refinance, has closed down. They stopped taking mortgage applications on August 1, and the rest of the company was sold to Citigroup. Ameriquest was mostly a sub-prime (bad credit) lender, so no one is very surprised.

Viewers of the internet thank you.

Monday, August 27, 2007

"Full-Blown Recession"

Dude, that is a huge statement.

Mark Zandi, chief economist at Moody's, says that housing is in a "full-blown recession."

Listen to this interview at{7AE3CA10-3E79-4840-87A0-6FDC5F3862FA}

Zandi is reacting to the National Assn of Realtor's report, which came out today.
The report's overall message is that sales are very slow and prices are down. You can read about it in the Star Trib:

Zandi has some good points, but I don't agree with him on everything.
He says on of the reasons we have such a big backlog of homes on the market is because of the number of foreclosures (agreed). But, here's where we disagree: he believes that the number of foreclosures will slow down, and the market will catch up. I actually believe we will see more foreclosures in the next year or two. If the market picks up, it will have to be in spite of high numbers of foreclosed properties on the market.

I believe foreclosures are because of the ARM financing and refinancing, and I don't think all of the ARMs that were sold have kicked in at the high rates yet. We've got a couple more years.

In the Zandi interview they say foreclosures represent about 7% of the market. I will tell you that some neighborhoods have more than than. St. Paul's North End is hit hard, North Minneapolis, St. Paul's East Side....
The Strib has a very well done map of foreclosures you can access from the front page of the Strib site.

I also published a post a while back about how foreclosures weren't such a great deal. The Strib did a story on another angle of that -- it takes eons for the banks to respond to your offers on foreclosed properties.

The foreclosures are throwing this market for a real loop.
If you are an owner of a 3 bed, 1 bath, 1500 square feet, and you think your house is worth about $250,000, but the foreclosed 3 bed, 1 bath, 1500 square feet with no appliances and smashed walls goes for $180,000 --- well, your $250,000 price will get close scrutiny.

The good news that everyone keeps missing in all of this is that it is a fabulous time to buy property. There are tons of options out there, and prices are amazing.

But to stop the bleeding in the foreclosed properties, both the government and the banks are going to have to step up. People got sold into products that were inappropriate for their financial situation (ARMs, etc.). The bank should be willing to refinance these mortgages and spare everyone the work and money that a foreclosure costs everyone. Certainly, there are some people who are actual deadbeats that aren't paying the bills -- but there are others that got suckered into a mortgage product they don't understand. Like 78 year old ladies and Hmong single moms that don't speak very good English. Those are the people that need a bail-out -- they were sold inappropriate products. I wish the damn mortgage brokers that sold them the products were held accountable and were required to fix those situations.

A concerted effort between banks and government could do a world of good -- but I don't think that will happen.

In the mean time, happy shopping.

Friday, August 17, 2007

Mortgage Meltdown Explained

There is a fabulous, fabulous article on today that pulls back the curtain to show us exactly what's going on in the investment world with mortgages.

Thursday, August 16, 2007

How to Respond to the Market

What to do if you are in the real estate market today?

Well, I am always a backer of the downtrodden, and always a cheerleader of my industry, and I honestly bought stock in a lender at a bargain price. I didn't buy much -- even if I lose it all that's okay.

If you are considering buying a house, get on it. There are really wonderful bargains out there, not just last year's prices but 4 years ago prices. And especially shop very carefully for your mortgage broker/banker and lender. A strong reputation backed by a strong lending institution is what you need today.

If you need to sell your house, don't mess around. Just get it done.

If you want to sell your house but don't have to, think twice. One one hand, it's an amazing opportunity to buy something really really fabulous at rock-bottom prices. But remember, you will also be selling at a rock-bottom price. But think of it this way: someone coming down 5% on a $400k house is a lot bigger chunk than coming down 5% on a $200k house.

Don't Call It a Comeback

I'm really fascinated by the financial news today.
Countrywide, the biggest lender in the country, is struggling. They've borrowed $11 billion to cover their butts. The analysts are not happy and are downgrading Countrywide's credit rating, and investment-worthiness ratings.

Earlier this week, Yun, the guy that does all of the commenting for the National Association of Realtors, says this is the bottom.
I think we've heard that one before.

All of the mortgage guys I work with are sending out "all clear" type emails to let us know the local firms are doing fine. One called me yesterday, just to chat about it all. I think everyone's a little scared.

One of my mortgage guys sent out an email talking about his take on "the bottom." Here's what Todd wrote:
From my perspective or explanation for the volatility is that we are bottoming out. One major key component or characteristic of a bottom is bouncing off of the floor. In this case I am talking about the bottom of the real estate slump. It is pubic knowledge and all over the newspapers and internet of the collapse of the secondary market for certain types of mortgage products such as sub prime which is no longer around. If this is the bottom now we must start the long climb upward. Granted there is a lot of foreclosures taking place and that will be a lengthy process to filter out. The climb could and should be shortened with some help from the FED regarding rates. This past weeks meeting showed that the FED is starting to take notice of the risk of the credit crunch and they followed quickly by adding liquidity to the markets almost $20 million worth. Many economists now believe that the stage is set for the FED to lower rates more quickly than they thought.

I really hope Todd is right, I really do. However, I just wonder if all of the flailing about is really about uncertainty -- will some of the biggest lenders in the nation topple? Thornburg? Countrywide? Countrywide, really??

Interest rates have also been steady, and some in the mortgage industry think Bernanke is holding rates to pacify the larger market to the peril of the mortgage and real estate industry. (Where does the middle class hold wealth? Real estate.) If the Fed pulls down rates, it may trigger a small, and probably short-lived, rally in buyers of real estate.

How did the mortgage industry get into this pickle? Some say they are a victim of their own success. They sold anyone and everyone a mortgage, in the name of the "American Dream."

I am a Realtor, and bought my first house at 22, and really believe in that "American Dream." However, I once heard someone say, "He's just not cut out to be a homeowner." And I think that's really true. Not everyone has the dedication and financial stability and responsibility to do it.

But in the go-go times of recent years, anyone and everyone could get a mortgage. People with bad credit, people just out of (and probably in) bankruptcy, people with eyes bigger than their stomachs got into big mortgages. Too big. And now they can't pay, and the banks end up getting the properties back.

Much of that property was bought at the height of the market, and the bank now holds a house that isn't worth what it was when it was purchased.

Todd is right -- it's going to take a long time to sell of the foreclosure inventory, and for the banks to tally up the losses they took on those properties. It's going to be huge. And on top of that, the banks have a terrible liquidity problem right now that goes beyond the mortgage industry and into the whole economy. has a great article about the lenders today:

Wednesday, August 15, 2007

Trouble in MortgageLand

There has been a lot of press in recent months (heck, years) about the stagnating (heck, dropping) prices of residential real estate.

Well, that was bad but not as bad as the current state of the mortgage industry, in my opinion.
Here's a snip from a story on
Several lenders such as American Home Mortgage Investment Corp. and New Century Financial Corp. have already filed for bankruptcy after facing margin calls. Now, other mortgage REITs such as Thornburg Mortgage Inc. and NovaStar Financial Inc. are struggling to survive.

Struggling to survive???? Some big, publicly-traded, reputable mortgage companies are "struggling to survive"? These companies don't do just the sub-prime loans, either.

This shakedown could get bad, and could affect all of us in a really dramatic way. If the bigger mortgage companies start to go under, or if it becomes more risky for investors to buy mortgages, it becomes more expensive for banks and brokers to sell mortgages. That means rates and fees could increase for everyone.

All I can say is if you are a buyer on the fence, not sure if you should buy or not, I will tell you that rates aren't going to get any better.

There's also a good story on this topic at WSJ:

And always has great articles. They have one about a tough situation: if you were preapproved and the lender goes bankrupt. Yikes!!

I think this is going to be a major, major story this fall.

Mayor Coleman Proclaims: Sheila Connolly Day, Friday August 17, 2007

My boss, Sheila Connolly, is retiring on Friday.

Mayor Chris Coleman stopped by the Edina Realty Grand office Tuesday to let us all know that Friday, August 17, 2007 has been proclaimed Sheila Connolly Day in the City of Saint Paul.

I have really enjoyed Sheila. I've learned a lot from her. She's one of the best no-B.S. people I have ever met. She's good at identifing what is the issue and what is ego.

We don't yet know who will be the new manager of the Edina Realty Grand Avenue office, but word is there are a lot of people that want the job.

Our office is one the best in Edina Realty, with agents that are all really strong. That's credit to Sheila -- she has recruited and attracted the best talent. I am very lucky that she chose me, and I am very lucky to have the support of Sheila and all of the other fabulous agents in my office that help me out when I need it.

One of the first questions I had for Sheila was if the office was more collaborative or competitive. She told me it was certainly collaborative -- and that was true. It's kind of amazing, because in a lot of ways we are all in competition with each other. But Sheila has set the tone so we can all work with each other instead of against each other. Again, cutting the B.S. so we can get some work done.

Thanks Sheila!

Monday, August 13, 2007

What Realtors do in August

It's hot. Lots of people are on vacation. People with kids in school aren't looking to move right when school starts. August dog days.

I'm just waiting for a few closings, and I really have just one kind-of active buyer client and I'm keeping my fingers crossed that the last showing is going to sell my listing.

It's a real contrast from April, the month of unending showings and stagings and signings.

So what do I do? I clean, something I did not do much of in March, April and May.

I attacked my house's clawfoot today. I have a medium to large size tub, not as big or grand as the old place's tub, but still a luxury. I always struggle with finding the perfect thing to clean the tub with, and yesterday I bought my mom's old standby: Comet, with bleach.

The tub came out so shiny and beautiful, but had old a few stains left in the areas that have lost it's finish and is now porous. I don't think Comet is a very good solution for a tub in good shape, but mine's on it's last legs and I figure what the heck. It's over 100 years old and has been losing finish to the previous owner's tough cleaning methods for many years.

I am always sad to see what I call the "hotel tub"in so many homes. New places, mostly. And when you remodel the bathroom, really, spend a little more to get a really great tub. It's worth it. The clawfoot is the best tub you can have -- deep, smooth, and keeps the heat of the water for a long time. I could almost lay down in a foot of water in the tub in the old house.

My favorite bathrooms are the old Ramsey Hill mansions with marble walls (sometimes creating a marble-walled shower stall) or subway tile walls, small octagonal tiles on the floor, and Carrera marble sink tops with giant clawfoots. Sometimes you even run into a great original toilet.

My bathroom's overdue for a remodel. It's gonna be a classic, to match my 1905 house.

In the mean time, I'll be buying Mr Bubble and steaming the house up, making good use of the simple luxury that is a claw foot.

Wednesday, August 8, 2007


A lot of people ask me about foreclosures. They want a "good deal."

From today's Strib article about Invest St Paul:

The city experienced more than 1,100 foreclosures from January through July and currently has 1,200 vacant buildings.

There have been so many foreclosures that the Sheriff has had to hire extra staff to complete all of the paperwork. (Yes, the Sheriff is actually the one that "sells" the property back to the bank.)

Here's the interesting thing about the foreclosures out there today: many of them are priced above market value, because the previous owner bought the home when the market was high and supported the price. Prices have fallen in some neighborhoods. Also, when people are foreclosed, they don't leave the property in a very good condition. That affects the sale price.

I did see one foreclosure that had the tub, toilet, tile, switchplates, lighting fixtures and other pieces removed from the house. It was pretty ridiculous -- the switchplates?? Those babies are 30 cents each at Home Depot.

I've also watched a foreclosure listing in my neighborhood drop the price by over 38 percent. The previous owner paid over 50 percent more than the property is currently listed at. And the thing won't sell. It's not a high-priced house, either -- 38 percent is more than $100,000 in this case. And it is still priced too high for the market to absorb it -- no one will buy it for almost half off of what someone paid for it a few years ago.

So, no, not all foreclosures are a "good deal."

It can also be difficult to purchase a foreclosure, which I will talk about later. If you really were getting a good deal it might be worth the work it would take to purchase the property, but so many of them are overpriced right now. You're better off to look at other things that don't require negotiation with a bank.

Invest St Paul

Yesterday the budget for the City of St Paul was announced. Mayor Coleman is working up a program called Invest St Paul, and it looks as if he is targeting the city's toughest neighborhoods to do a little clean-up. From the Strib:
If the mayor's plan, called Invest St. Paul, is approved, the city will put those funds into beautification, demolition and rehab projects in four neighborhoods -- Dayton's Bluff, Lower East Side, Frogtown and North End. Those neighborhoods would receive most of the funding connected to the initiative.

Strib says a special half cent tax will generate up to $25 million. Sounds like the heart of the plan is to buy up vacant buildings, beautify streets and sidewalks, and create more neighborhood programs.

For the sake of those neighborhoods, I hope the program works.

My first condo was at Laurel and Dale ... when we first moved in, Selby and Dale was a really cool place to sell rugs featuring tigers, lions and Tupac as well as off-brand athletic shoes. Pretty likely it was a place to pick up your favorite flavor of illegal substance, as well. The city started pouring money into Selby between Dale and the Cathedral. Then Mississippi Market came in, and suddenly it wasn't so fun to sell crack in front of the organic food store.

Do I think the North End is the next Selby Dale? No. I don't. Selby had been a city project and community project since the mid to late 70's. It takes a LOOONG time. And, the Historic District (the neighborhood East of Dale) is a very wealthy neighborhood that attracted business.

But I do think City investment in these communities is important.

But I also have another angle on all of this. I do know that it's not the buildings or the sidewalks or the businesses that make a neighborhood, it's the people. And if there are people in those neighborhoods that are not good neighbors (criminals, drug dealers, gang members) all of the money in the City budget won't change that. So it is possible we will spend a lot of money on some neighborhoods that could be great (Dayton't Bluff, I'm talking about you) but until the absentee landlords and criminals are driven out, the place won't change.

Another phenomenon I have been interested is something the St Paul Police told one of my neighbors. I mentioned the development of Selby ... some call it "gentrification" but I prefer development. As the area improves, housing costs increase. Most of the riff-raff has been moved from the area east of Dale, but we still get some riff-raff north of Selby between Dale and Lexington. The St Paul Police told a neighbor that neighborhood is improving and the worst of the tenants are being removed, and are finding housing in new neighborhoods (like mine).

The bad tenants are having a hard time fitting in here in my neighborhood, and have a very short time left before the eviction is final. But -- it leads to the bigger question --- where do the bad people go when a neighborhood improves and they are pushed out due to higher costs, sale of buildings to landlords that care, etc.?

You could house the bad tenants in a perfectly designed house, with perfect sidewalks and perfect streetlights. But that won't change the behavior.

The Twin Cities experiences a migration of these bad seeds every once in a while. From Selby to the East Side. From the East Side to Brooklyn Center. You never really know which neighborhood will succeed in getting rid of the bad landlords that keep bad tenants and which neighborhoods will suddenly get an influx of the bad tenants.

Criminals, drug dealers, gang members, and the sociopaths do live somewhere. They're in every neighborhood, really, just to different levels. I think absentee landlords have a lot to do with accepting renters that no one else would want living near them (the criminals, gang members, drug dealers). I don't think this $25 million from the City will change that.
Every neighborhood crosses its fingers -- "Maybe this is the program that will shove all of our bad seeds to the other side of the freeway!"

We just move them around....

Tuesday, August 7, 2007

Fiduciary Duties

Realtors in Minnesota have fiduciary duties to clients. Kind of like attorney-client privilege or the secrets that your doctor keeps about those bumps you have.

I actually enjoy this aspect of my job a lot. The client really has a lot of control of the agent, because it is the client that needs to make the decisions, not the agent. The agent should advise, and educate, but not make the decision.

Here are the fiduciary duties every agent in the State of Minnesota owes clients, from the Agendy Disclosure Form:
Loyalty - broker/salesperson will act only in client(s)’ best interest.
Obedience - broker/salesperson will carry out all client(s)’ lawful instructions.
Disclosure - broker/salesperson will disclose to client(s) all material facts of which broker/salesperson has knowledge which might reasonably affect the client(s)’ use and enjoyment of the property.
Confidentiality - broker/salesperson will keep client(s)’ confidences unless required by law to disclose specific information (such as disclosure of material facts to Buyers).
Reasonable Care - broker/salesperson will use reasonable care in performing duties as an agent.
Accounting - broker/salesperson will account to client(s) for all client(s)’ money and property received as agent.

Every agent has a time when one of these factors is tested. There are times when loyalties get split, when proper disclosure becomes difficult, when you just accidentally screw up and you didn't show reasonable care. I hope never to have a problem with the accounting requirement. I am very cautious with my clients' earnest checks and property.

I could write all day on this topic. More to come.

What's a Realtor(r)?

I recently ran across an article in Realtor magazine (yes, I read it, and yes, it's super-dorky) about the difference between a Realtor(r) and a real estate agent. I didn't know this until recently.

Here the thing: Realtors (r) are members of the National Association of Relators (NAR). I keep putting that (r) after the word Relator(r) because it is a registered trademark of NAR.

I guess there are some real estate agents that are not Realtors(r). It's a small minority nationwide.
How it works in the Twin Cities is that you must have a broker hold your real estate license (essentially you need to get recruited into an existing real estate office) and then you must become a member of a local real estate board (such as the St Paul Area Association of Relators or Minneapolis Association of Realtors). The local real estate boards are also members of NAR, so it's a group affiliation thing. Kind of like a union. So, if you become a real estate agent in the Twin Cities, you must join the local board that hooks you into NAR and their members are called Realtors(r).

The State of Minnesota's Department of Commerce regulates and licenses real estate agents and brokers.

If a Realtor(r) does something bad/unethical, they are taken to Realtor Court at one of the local boards. If they do something really naughty, the Department of Commerce will come down on you. If you really screw up and take money or embezzle, the Feds will come calling. It's serious. You can go to jail for the really bad stuff, and recently, people from Minnesota have gone to jail.

The beginning of the end....

So I used to work in the web world. I built giant websites for giant corporations, and then I managed the clients of those giant websites owned by the giant corporations. And some smaller corporations. And after over 10 years in technology, my number finally came up and I got laid off. It's quite a miracle I survived the boom and bust and everything in between without a layoff until late in 2005. I guess they just liked me ... or more likely, I was low on the payscale and never caught the eye of HR.

I had been an amateur real estate agent for many many years, carefully tracking my neighborhood market (Cathedral Hill, back then). I knew everything on the market and obsessively tracked it all.
When I got laid off, I sent off the resume, did the interviews, half-heartedly thought about shackling myself to a desk again. I had been told that a layoff has a way of changing your life, and I found that to be true.

One morning, I woke up, and went straight to the computer to check the new listings on
There was something fabulous with a great price in my neighborhood. I knew it would go fast. I put on my pants and drove over there, cell phone in hand. I called through my list -- which of my friends would want to buy this house? It's going to be gone soon! Other real estate agents were swarming around it in their Lexuses, on their cells, calling their clients to come see it.

And that's when I realized I was acting like a real estate agent and I should probably just commit to it.

My husband was in law school at the time. All in all, it's about a 4 and a half year process from LSAT to Bar Exam.

It took me 3 and a half weeks to become a Realtor (r). A few days of waiting for the training class to start and 3 weeks of training.

When I decided to change my career, it took 3 weeks. When Luke decided to change careers, it took 3 years.

So this blog is the beginning of the end. When I left the web world, I was pretty burned out and thought I would never again work with the web.