Maryland Real Estate

Hopkin’s Choice Foreclosure Auction postponed

PNC BANK notified me that the Auction of the Dale Thompson Builder’s foreclosed lots in Glenelg has been rescheduled for September 9th.

Baltimore Good Ole Boys get pummeled by FBI

Last week a few men in their 70′s were indicted on Antitrust charges for price fixing real estate tax sales. Basically they allegedly colluded with each other to bid or not bid on certain properties so they wouldn’t have to compete and the county would most likely get less money while they got a better deal. According to the papers they were witnessed by the FBI giving hand and face signals to each other like a 3rd base coach at a little league game in broad daylight at the auctions.

http://www.sun-sentinel.com/topic/bal-md.liens17jun17,0,3171016.story?track=rss-topicgallery

It reminds me of 2 stories. The first was in the early 2000′s when 78 year old multi multi millionaire Alfred Taubman when to jail for price fixing auction commissions:

http://www.usdoj.gov/atr/public/press_releases/2001/8128.htm

I was also reminded of the story we were taught over and over again in real estate licensing class about the massive antitrust lawsuit involving the Montgomery County Board of Realtors.

Way back in the day several real estate brokers discussed fixing their commissions so as not to compete with regards to price, thereby causing the consumer to pay more most likely. I remember being told the story about one broker picking up his water glass, slamming it down on the table and walking out of the room. He did this to cause attention to himself so everyone would remember that he was the one that walked out. So that no one could say later……..”i don’t recall him leaving, he was still there when we cut the deal”. That broker was the smartest realtor in the room that day because all the others faced misery after that.

After 22 years of being a full time realtor in this business I can remember only two times where I’ve been propositioned by another competitor to fix our commissions. Although I didn’t slam any glasses down I quickly responded “We can’t talk about this!!” “We can both go to jail for that!!” and quickly became paranoid that it was a set up and they were wearing a wire.

It amazes me that guys in the 70′s with more money than most people will ever have get so caught up in the game that they allegedly break the law. Why risk it all to save a few bucks on a Baltimore City abandoned row house tax sale?

Unanswered Questions-Altieri Home’s Demise-Harford County building inspectors-bank lien release policies-swaying houses and more!!

http://www.baltimoresun.com/business/realestate/bal-bz.altieri07jun07,0,3861250.story

Many questions remain unanswered after the recent Baltimore Sun article regarding Altieri Homes published on Sunday.

1. Why weren’t lien releases given to deserving contractors before funds were given to Altieri for their own expenses?

2. Do beach homes really sway from side to side?

3. How did Harford County issue the proper structural permits on a house in Riverside where reinforced walls and a portal frame were missing? Is this something that can happen to anyone building a home? Are these things easy to miss?

4. Should a buyer of a new home ask for a “letter of good standing” from the bank the builder has the land financed with before they sign a contract to buy?

5. Wouldn’t declaring bankruptcy protect your company from future legal liability? Why has Altieri Homes not done this?

My grandfather used to always say “A breakdown is a break through”. What else needs to be asked here? What else can we learn from this?

Altieri Homes in News again. Whose fault is this anyway?

Altieri homes is in the Baltimore Sun today…

http://www.baltimoresun.com/business/realestate/bal-bz.altieri05jun05,0,2943742.story

the reporter of this article called me and asked me “who is to blame for breakdowns like these?”

While I believe that capitalism is in essence a game………and in games you lose as well as win, I also believe that more than just a builder can be blamed for such massive breakdowns such as this one. I really believe the banks hold some responsibility for loaning out so much money with so little collateral. A great question is “What was the Altieri family’s net worth when they borrowed these tens of millions of dollars?” Could it have been much more than 10% of what they were borrowing?. Many times loans were given at 10 times a company’s or individual’s net worth.

I would guess that most readers of this blog have a brokerage account with a company like Merrill Lynch etc.

On my brokerage account if I want to borrow money to buy more stocks or investments (margin), I can only borrow up to 50% of the account’s value. So if there is 100k in the account I can borrow 50k more on margin. Borrowing 10 million with a company worth or personal worth of one million is the same as using a margin draft of 1000%.

I understand that in a builder’s case the land is collateral where in a trader’s case the only collateral is the current account value but still………………. the land is not great collateral when your dealing with appraisals that weren’t worth the paper they were written on.

I’d love to hear your thoughts…

only 38% of sellers making a profit

Here’s a link I actually found on http://weblogs.baltimoresun.com/business/realestate/blog/ , Jamie Hopkin’s blog . It is the percent of homeowners who sold for more than they paid .

She got it from the Washington Post.
http://www.washingtonpost.com/wp-srv/business/graphics/2009/homeprices/

the lower end is stimulated while the upper end needs defribulation

I just got off the phone with a reporter from Patuxent Publishing and he asked me “Why do you think the lower end is doing so much better than the upper end?”. My response was “It’s stimulated”. Yes. The stimulus of 4.75% interest rates and an $8,000 cash bonus if you buy are working!!!! 442 home sales YTD in Howard County for homes under 600k. That’s alot of people moving in what some would consider a terrible real estate market. But as the chart on the previous blog showed, that’s 87% of the entire market. The 13% of unstimulated price range languishes on the market………………….(41 long months of languish for those homes over a mill) . You see the 8k credit is only available to first time buyers and the 4.75% is only available to loans under 417k. So it’s simple stimulation. Many question what will happen when the 4.75% rates rise to 7 or 8 % which they will eventually do (the 40 year average is 9.25%) and what will happen when the 8k cash bonus goes away in November?

We got a little help for the higher price range last week when the Feds came out with the “AGENCY JUMBO”. This raised the conforming loan limits to 560k. Bottom line, if you borrow 417k or less you can get a 4.75%, if you borrow between 417k and 560k you can get about a 5.25% and if you borrow more than 560k you are at 6% roughly. I think everything helps , the only caveat with this new “Agency Jumbo” or as some call it the “jumbo lite”loan is the home must be appraised 3 times!!! Twice by independent appraisers and once by the automated appraising computer.

Good luck with that.

Contracts up – inventory Stabalizes-That’s a good indication!

Dale Thompson Auction draws huge crowd. Columbia Bank accepts nearly 50% of list prices!!!!

I went to both auctions today. Dale Thompson Builders town home condos in Scots Glen and the estate home lots at Highland overlook. Columbia bank did an honorable job at disposing of their assets at market prices today. Many felt that the bank would want too high a price and the auction would be a waste of time. That didn’t happen. The condos in Scots Glen sold for 360k, 360k and 420k. Two others went unsold with low bids of 200k and 300k. The 420k was the former model with 4 finished levels and an elevator. The model was last listed at 740k and the other two were in the mid 600′s.
Last week Susquehanna Bank had an auction for some of the same exact floor plans and although received bids higher than today’s sale prices they chose not to accept them.
The lots in Highland drew even more bidders. Out of the 7 lots for sale, 4 sold at prices acceptable to the bank. The sale prices on the lots were 250k,255k,290k and 295k. The other 3 got bids of 150-180k and Columbia Bank chose not to accept those. It was quite an experience and it was good to see so many serious buyers there in earnest.
At one point the auctioneer yelled out “These are going for way less than the market!!!” and the guy next to me yelled back “Your looking at the market buddy!!! This is your market, right here right now!!!”

Columbia Bank announces Auction of Highland Lots

Columbia Bank will be auctioning off several of Dale Thompson Builder’s previously owned lots in Highland as well as several townhomes in Scott’s Glenn in Columbia.

http://www.americanaai.com/Highland%20Overlook%20PIP%20updated.pdf

Scott’s Glenn will be held at 11.00 a.m., this Friday the 24th.
Highland Overlook will be held at 2.00 p.m. same day.

Altieri defaults – Williamsburg Swoops in for 55 cents on the dollar

Across from the intersection of Route 99 and Bethany Lane in Ellicott City a neighborhood sits by the name of Hebron Manor. 2 rows of townhomes exist……..one row of about 4 look 90% done the other row is maybe half way finished. A long thick chain blocks the entryway. A no trespassing sign hangs on the chain. Altieri Homes, Maryland’s largest builder to be devastated by the real estate recession defaulted on thier loans here and the properties have remained vacant for over half a year.
It is alleged that Altieri Homes paid 11 million for this piece of land a mere two years ago. Today after it was worked through a transfer process by Susquehanna Bank, it is being taken over by Williamsburg Homes for approximately 55 cents on the dollar. (6 million).
PERSONAL QUESTION PAT: “IF I OWN A PIECE OF LAND IN ELLICOTT CITY DOES THAT MEAN IT’S ONLY WORTH HALF OF WHAT IT WAS A FEW YEARS AGO?”
ANSWER: PROBABLY-LOT SALES STINK. NOBODY IS BUYING.
Bradford Federal and Kay Bank………the lenders who allegedly loaned Altieri more money (after Susquehanna cut them off )to actually fund the building of the structures on the land are looking for buyers for these half done blocks of townhomes.
This is the second Howard County builder I’ve blogged about recently that closed up in the middle of a project. How do you protect yourself as a buyer if you are buying new homes? Great question and I am going to answer it fully in my next blog.
Please note that the information written in this blog entry is deemed reliable but not guaranteed.