McStain Files for Bankrupcty

McStain Neighborhoods, a local Boulder area builder has filedchapter 11 bankruptcy.  McStain has been building homes in the area since the 1960’s originally under Horizon Building Co.  Tom and Caroline Hoyt, the companies founders have enjoyed a good reputation throughout the years and have built many good homes throughout the front range.  I have sold many homes to happy buyers and I own a McStain townhome as a rental property.  Their focus has been green building and sustainable neighborhood design.

The first sign of financial trouble came last summer when the company laid off about half of their staff and closed their offices.  New home builders have been scaling back production during the last few years but obviously they need to have some volume in order to survive.

All of the recent buyers of McStain homes will be disappointed to find out that the company will not be servicing it’s warranties.  This is a big advantage of buying a new home and when that confidence is shaken it is hard to get back.

McStain is currently building homes at the SW corner of Baseline Rd. and 95th Street under a separate LLC not affected by the bankruptcy.  I wonder how that project will be affected by the bad press and the precedent of unfulfilled warranties?  Their website is www.mcstain.com.

The Hazards of Working with D.I.Y’rs

I have been showing a lot of property lately.  This is great, I love to do it and it is at the heart of my job.  There are however some side effects which throw up a bit of a speed bump as far as personal productivity goes.

Before I go forward, I’d like to take a few steps back into history.  In the old days, new listings were couriered on a weekly basis by taxi to each of the offices.  At that point, all the agents knew of the new inventory and there was a rush (of sorts) to get their hot buyers into the hot new listings.  In those days the information cycle was much slower and Realtor’s had a choke hold on the information that would make Hulk Hogan proud.

Today we have transparency.  When new listings come out the whole world knows about them within 15 minutes.  Emails are automatically sent to interested buyers who instantly begin comparing list price to a proprietary “market” price spit out by an inaccurate algorithm.  An algorithim which has one thing in common with the buyer, it hasn’t seen the house either.  The blind leading the blind.

Back to my main story.  When I set showings for buyers I need to find, sort, route, schedule and then call each listing office for approval.  This last step has changed a bit lately.  First the good, many offices, mine included, have outsourced the setting of showings to Centralized Showing Service (CSS).  All CSS does is set showings, and they do so for 12 hours a day.  As more companies use CSS, we who set showings have to make fewer calls to fewer companies.  Yea!

Now the bad, there is a trend out there called limited service listings.  Basically this means that an agent is hired by a seller to do no more than put their listing in the MLS.  I have many problems with this, but will stick to the topic at hand.   When I call to set a showing on one of these limited service listings I have to call the seller directly to get approval.  Let’s just say that this process doesn’t usually go as smooth as a call to CSS.

The other speed bump to my productivity when showing property, are the flood of feedback emails and calls I receive.  They start coming in the minute I set the showing and continue to be sent daily until I have time to respond.  I don’t mind doing it but it isn’t my top priority when I have buyers in from out of town.  When I am showing 20 or more listings over a weekend, I can find over 40 requests waiting for me on Monday.  On a limited service listing I get a call from the owner of the home looking for feedback on their house.  I have learned to keep these interactions brief because without the buffer of a competent agent, any constructive comment I make is taken as a personal insult.  Yikes, I’m only trying to tell the truth.

I have also found that many of the homes in the limited service genre are over priced.  Obviously they are looking to save a buck but many are not getting the advice from an agent which is so desparetely needed.  In the end, going with a professional Realtor who knows their area and market will net a seller more money.

The Story of Stuff

I was recently made aware of this video about the manufacture and consumption patterns in modern society.  It makes a very strong statement about the damaging effects of today’s throw-away society.  I have embedded the video below but found a higher quality version along with good companion materials at its home website, www.storyofstuff.com

The video has been criticized for advocating completely against capitalistic principles, but I don’t think that is the goal of the video.  It raises some very valid points and if we can all do a little, it will go a long way.  One point I thought was astounding, was that 99% of all goods and materials manufactured are thrown away within 6 months of purchase.  The video last approximately 20 minutes.

http://video.google.com/googleplayer.swf?docid=-9153550196656656736&hl=en&fs=true

What Kind of Boat do You Drive?

Look around, a fundamental shift is taking place.  People everywhere are re-thinking their lifestyle.  Some by choice and some by fire.  Foreclosure, bankruptcy, unemployment – these words scream change for those involved.  I think a mindset which lies beyond overarching consumption is taking hold.  Millions of families are realizing that it is not the stuff that makes you happy, it is having a purpose, stability, love and time.  This shift is painful but I hope it is one that will make our country as a whole more viable and prosperous in the decades to come.  Here is an analogy of our current situation.

Imagine that each of our personal financial situations is represented by a boat that we drive.  Some boats are big, some are fast, some are small, some are slow, some people are so bad off they don’t even have a boat and are just treading water to stay alive.  Now imagine that all of these boats are floating down a wide river.  The river represents the economy.

Every once in awhile, water levels begin to rise and all the boats begin to move more quickly.  After plodding along for so many years people start to get excited in the fast and deep water.  During this time people begin to get a taste for better boats and either trade up to a bigger, faster model or if they can’t afford a new boat, they do everything they can to quickly make their current boat look good.  Everyone starts to fill their boats with gadgets of all kinds and they justify all of the changes by thinking about their change in luck.  Many boaters start making plans based upon the water always being high and flowing easily.  Everything goes well and they have fun keeping up with their neighbors.

After a time, the water recedes and the boats slow down to normal level.  As the water level decreases many boats who only know how to navigate the edges of the river begin to hit a few rocks.  But since they love their boat and all that is in it, they adjust and make it work.  Not quite as much fun, but life is certainly better than it was before.  Right?

That is until the river begins to dry up.  The strong current which is left in the middle of the valley can only hold a small percentage of boats, most of the boats begin to navigate the shallow water, many boats begin to hit rocks.  Some of the boats are new boats and were built only for speed in deep water.  These boats start breaking up almost immediately.  Other boats are more resilient and throw an anchor and wait for higher water.  No fun at all.  Many people end up worse off than before the flood.

A fairly simple analogy, but I think there are a few lessons that everyone can stand to learn from it:

  1. Don’t make plans for the future based upon the high water lasting forever.
  2. Build a boat for strength and stability, not for speed and flash.
  3. The more the water recedes, the easier it is to realize that the stuff in the boat doesn’t matter.
  4. The water will rise again.  (and don’t forget it will fall again)

Boulder County Property Assesments – How to Appeal

If you are like me, you just received your property assessment from the Boulder County Assessors Office.  This mailing gives notice of the value that your property taxes will be based upon for the next two years.  Each envelope included a cover letter, a 2009 Notice of Valuation, an information sheet and an appeal form.

The assessed value for each property is re-assessed every 2 years and in accordance to state law the values stated reflect the market value as of June 30th of the year directly proceeding the assessment.  The timing is not good if you have felt a squeeze in value since last fall as have some neighborhoods.   

The Notice of Valuation page includes the physical details of your property as recorded by the county as well as the three of comparable sales they used to derive their value.  Keep in mind that no sales can be used that sold after June 30, 2008.

So what if you feel as if the assessor has valued your house too high?  You have the right to appeal.  To appeal you must fill in the enclosed form and send, fax or deliver to the assessors office no later than June 1, 2009.

My wife and I own three rental properties in Boulder County so we received four total notices.  I plan to appeal two of the notices by providing sold documentation of what I consider to be better comparable sales.

I am happy to provide the information for your appeal, just give me a call or send me email.

For more detailed information go to the assessors website.

Inspection Issue – Aluminum Wiring

When you have been around as many real estate transactions as I have, you begin to anticipate the possible challenge points in a transaction.  This is one of the reasons you hire an experienced professional, isn’t it?  Anyway, when I have a buyer interested in a house which was built in the early 1970’s my thoughts immediately turn to aluminum wiring. 

During the 1970’s aluminum wiring was extensively used instead of copper in many houses.  Since that time aluminum wiring has been blamed for many house fires.  But don’t panic if your house has aluminum wiring.  Aluminum wiring, when properly installed, can be just as safe as copper.  Aluminum wiring is, however, very unforgiving of improper installation.  It is at the connections where the latent danger can linger.

When purchasing a home that was built in the early 1970’s make sure your inspector checks for the presence of aluminum wiring.  If it is present, the inspector should check each receptacle to see if there is any loosening or signs of overheating.  What happens to the wire over time is a gradual loosening of the connection which causes oxidation and overheating.  If the connection becomes very loose the electrical current can arch and spark.  Most homes never reach this stage.

Once the presence of aluminum wiring is established it is important to know that in most cases it is not an immediate hazard. It has been functioning for over 30 years and caution going forward is advised but it is not a reason to run the other way.  The wiring can be fixed without tearing apart the walls.

Solutions:

  • The traditional fix for aluminum wiring was to pigtail (attach) a small portion of copper wire to the end of the aluminum wiring and then attach the copper to the receptacle.  This has worked well but some feel that the connection between the aluminum and the copper can come loose over time.
  • Another more recent (and more expensive) solution is a crimping method.  It is the same idea but it uses a special tool that fuses the copper to the aluminum wiring permanently.

My inspection philosophy is that it is a time where the buyer gathers as much information about the house as possible so that they know what to expect in the future.  It is not a time to use every minor ding to re-open price negotiations, it is a time to identify the major safety and maintenance issues and come to a win-win solution with the seller.  It is everyone’s goal for the sale to go through and the inspection can be handled in such a way that the buyer get’s a good house and the seller pays what is fair.

Here are a few links with detailed information on aluminum wiring.

http://www.alwirerepair.com/

http://www.inspect-ny.com/aluminum/aluminum.htm

 

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