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5/11/13, Southwest Florida control tower closings delayed - The News-Press »»

5/11/13, Exclusive: US decision on Keystone XL pipeline seen dragging past summer - Fox Business »»

5/10/13, Dollar Gains Most Since February on Jobs as Yen Falls Below 100 - Bloomberg »»

5/10/13, Privacy Breach on Bloomberg's Data Terminals - New York Times »»

5/10/13, True Religion board accepts $835-million takeover bid - Los Angeles Times »»

5/10/13, Carl Icahn Puts His Winning Streak Up Against Michael Dell - Forbes »»

5/10/13, Wall Street ends up, posts third week of gains - Reuters »»

5/10/13, Bernanke Sees Important Risks in Wholesale Funding - Bloomberg »»

5/10/13, Jack Lew: Debt Ceiling Won't Be Reached Until Labor Day - CNBC.com - CNBC.com »»

5/8/13, Jack Welch tweets support for Jamie Dimon - Los Angeles Times »»

Matt

9/29/08, Supply & Demand »»

There's not a whole lot of magic about supply and demand. If demand is high, a low supply will result in a high costs whereas a high supply will result in low costs. Because of the abundance of products in the marketplace, our economy is demand driven. Meaning, if demand is low, it really doesn't matter what supply is because the price will be low.

Well, in our real estate market, demand is high. People are always inheriting properties, getting sick, getting divorced, gettind addicted to drugs, losing their job or getting transfered. All of these result in people wanting to either buy or sell a property. Given a good economy, the average homeowner moves once every seven years.

This article at Bloomberg caught my attention because it clearly states that, on a national level, there is an over abundance of supply. "The top 14 homebuilders have seen their market value plunge 69 percent...since 2005." Ouch! Why so low? Supply and demand. After building and building, it resulted in over supply. The market is telling the homebuilders, "We don't need anymore new homes."

While this is certainly true on a national scale, here in Austin, the effect is more minimal. If you were to drive around the periphery of Austin, you'd probably run into new subdivisions all the way around. There have been lots of new homes built in the last 2 - 3 years.

Fortunately for us, though, we've had a very good job market that has attracted homebuyers and investors. But that doesn't mean all is dandy.

As lenders restrict lending and as homebuilders build less, what we are facing is a simple supply and demand function at work. Demand will dip (though not much), and supply will go up. Add these together and you're looking at decreased home prices. How much and what areas will be affected the most is a bit too much to get into here. But it will happen.

And that just further illustrates why now is the best time to start your education in how to invest in real estate. Opportunity is knocking.

-Beasley

9/26/08, Wait-and-Hope Strategy? »»

9/22/08, Be Afraid...? »»

Americans are responding to the market basically in two ways; fear and confusion. This article from Bloomberg touches on how the everyday Joe is reacting to all of the chaotic news.

The sounds of Lawrence Olivier's panic stricken voice from the Marathon Man seems to resonate appropriately; "Is it safe?" Americans are calling their banks, their financial advisors and their friends worried whether or not their money will be gone tomorrow. It is a geniune concern.

Many of today's baby-boomers apply the financial advice from their elders who suffered through Great Depression. They heard the horror stories of banks running dry and saving accounts being annihilated. We remind ourselves almost ceremoniously every Christmas when we watch It's A Wonderful Life.

The federal government is trying to get as much screen time on the televisions to tell people, "Yes, it is safe."

But we don't necessarily believe them. They were the ones who said Fannie Mae and Freddie Mac were fine and only Bear Stearns needed to be saved. The federal government's treasury division is designed to sell one thing; confidence. Americans are doubting Thomas'.

Reading the Bloomberg article puts into perspective how dubious the typical financial education is of an average American. In response to the crises, people are choosing to go to the dollar store. Other's are liquidating their cash and burying it in their yards. Others are starting to buy generic goods instead of name-brand. The confusion around the subject is daunting.

Which illustrates that opportunities, big opportunities, are on the horizon.

Today's mortgage meltdown is almost a play-by-play re-enactment of what happened in the 1980's. Back then, mortgages became easy to attain, people who shouldn't have gotten loans did, and the impending results decimated the Savings and Loans enterprises. Americans paid the bills and property prices plummeted.

But they came back.

And herein lies the lesson. While greed drives the market, fear slams on the brakes. Fear is on the rise, but greed will come back. The question is, while property prices decrease, are you going to be brave enough to start investing when everyone else is getting out?

-Beasley

9/18/08, Okay, Take A Deep Breath... »»

Okay, everybody needs to calm down. We all know there's a bit of an economic crisis going on. However, that doesn't mean we need to start making irrational decisions.

Let me explain how we got here.

This problem starts back in 1938 when FDR created Fannie Mae. This was a government-created and government-backed institution that could purchase mortgages. This put a surge in the mortgage market then because privately owned banks could originate loans and then, to make quick money and to protect their risk, they could immediately sells the loan to Fannie Mae. This is called the secondary mortgage market. Most likely, the loan you have on your house is no longer owned by the same company that originated it.

In 1968, Fannie Mae became a new institution called Ginnie Mae and a NEW Fannie Mae was created. This new Fannie Mae would be privately owned yet was IMPLICITLY backed by the government. Let me reiterate, even though it was a privately-held company, the public assumed it was backed by the federal government and the federal government never EXPLICITLY denied it. To make sure they didn't violate at monopoly rules, another institution was created identical to Fannie Mae called Freddie Mac.

Throughout the 1970's and 1980's, the lending guidelines between Fannie Mae and Freddie Mac began to loosen. They began buying loans on multifamily properties, which were riskier than an owner-occupied residence. They were then allowed to buy adjustable rate mortgages, which are riskier than fixed-rate mortgages. They were also allowed to purchase secondary mortgages, which are riskier than the first lien position mortgages.

While all of this is going on, Fannie Mae and Freddie Mac became publically traded companies that would package bundles of loans and sell them as mortgage-backed security bonds. These were very popular in the investment world because they were perceived to be safe as the bonds were backed by real estate and the company was backed by the government.

Well, as the loans themselves became riskier, Fannie Mae and Freddie Mac also increased the amount in which they would allow a loan to be. In 1980, they could only take loans nearing $100,000. By 2008, it had increased to $730,000. You've heard about the bubble in the marketplace, right? This bubble was caused by Fannie Mae and Freddie Mac increasing their loan amounts, then making loans easier to acquire, which raised prices, in which they responded to by increasing their loan amounts again.

If it wasn't obvious, a huge multi-billion dollar company in which its profits were privatized, yet its debt were paid for by the public started to become a magnet for corporate corruption. In the early 2000's, there was a huge accounting scandal. A BILLION dollar audit was performed that still never resulted in a true financial status of the companies. While it was obvious that the executives were involved in nefarious activities, there were no reprimands.

As Fannie Mae and Freddie Mac still had ties to the government, they were able to access much lower interest rates than their privately-owned competition. With this, Fannie Mae and Freddie Mac effectively seized the secondary mortgage market. They owned nearly 90% of all of the housing mortgages in the United States.

All of these factors began to reach a critical mass as people who never should have qualified for the loans they received started to default. Over the last 6 months, Fannie Mae and Freddie Mac lost so much money that they became insolvent. The federal government acted on their implicit promise, and bailed them out.

The big investment banks that filled their books with the mortgage-backed securities Fannie Mae and Freddie Mac offered started to fall. This includes Bear Stearns, Merrill Lynch and Lehman Brothers. Also, you should realize that all of these risk-infested, mortgage-backed securities were marketed to the world as safe, AAA investments. Our dollar has decreased in value because confidence has been lost in the international marketplace due to this false misrepresentation.

You have probably read that AIG just got bailed out too. AIG is an insurance company that insured the owners of these mortgages in case the borrower defaulted. The biggest insurance company in the country is now bankrupt.

This is what has happened.

As the federal government is bailing out Fannie Mae, Freddie Mac, Bear Stearns and now AIG, we are going to have to foot the bill in the form of higher taxes and inflation. Keep in mind that we are being taxed by the government to keep private companies afloat.

You should note that, aside from this, the market is doing fine. Unemployment is fine. Our import/export operations are fine. While the dollar has taken a hit, it is still relatively okay. The information-age based companies are still growing. Everything else is pretty much fine.

The root cause to all of the turmoil in the market place is a result of the federal government nationalizing the housing market through Fannie Mae and Freddie Mac. This is not a failure of capitalism, it is the failure of a socialistic program trying to integrate in a capitalistic marketplace. Anybody you announces that the solution to this crisis is for the federal government to seize control of the housing industry has NO CLUE what they are talking about.

I know emotions are running high, but to act flippantly and start making decisions without closely analyzing how we got here is likely to cause more problems than they are going to solve. I write this to try to bring some rationale into the discussion and I hope you do the same.

-Beasley

9/15/08, Oh M3, Where Art Thou? »»

Okay, I know this is going to sound rather technical and perhaps even boring, but understanding what M3 is what it means to you can have a significant impact on your life.

The Federal Reserve is responsible for determining how much money is circulating in the market place. However, it's a little more complicated than just keeping a tally of all the bills that are printed and subtracting all of the bills that are destroyed or withheld from the marketplace.

There is a statistic known as M0 that measures the actual physical currency that is in circulation. There is another statistic known as M1 that includes all of M0 plus checking account balances. Then there is M2. M2 is the M1 statistic plus small time deposits and mutual funds. M3 includes all of M2 plus large time deposits, institutional money-market funds and other large liquid assets.

As you can see, since our economy borrows and re-borrows money over and over again, the M0 statistic doesn't accurately reflect how much money is in the marketplace compared to the M3 statistic.

Here's what's interesting; in 2006, the Federal Reserve STOPPED calculating the M3 statistic! Why is this interesting? Well, to many economists, the M3 statistic best reflected our market's actual inflation. By not calculating it, the Federal Reserve effective hid what the country's inflation was!

Now, the Fed's response to why they cancelled the M3 statistic is that it took up too many resources to calculate and that they made very few decisions based off of it. I don't doubt that this is true.

Consider this. If this overall inflation rose, then costs of good would go up and, ultimately, salaries would go up cancelling each other out. The Fed's primary responsibility is to make sure this relationship isn't widely distorted. This relationship is called the CPI or, the consumer price index. Since the Fed's job is to moniter and maintain a healthy CPI, then overall inflation IS unnecessary and the M3 statistic isn't very valuable.

But, overall inflation IS valuable!

Now, you've heard that inflation is somewhere in the ballpark of 4% to 5%, right? Well, that number, called core inflation, includes all items NOT INCLUDING FOOD AND ENERGY COSTS! I don't know about you, but I can't live without food and energy, so, not factoring in those costs seems rather useless to me.

And it should to you too!

Since 2006, when the Federal Reserve stopped calculating the M3 statistic, overall inflation has risen from about 8% to almost 18% (of course, remember that this number is now calculated by private institutions and not the Fed).

And it's on the rise!

With the Federal Reserve promising to bail out Fannie Mae and Freddie Mac, the Fed is going to effectively print huge amounts of money. This will unquestionably effect inflation.

Now, who is this going to affect the most?

Retirees.

Yup, retirees, or anybody, who lives off of a fixed income is going get hit hardest by the rising costs of goods due to the hidden tax called inflation. All retirees should immediately look to finding ways to secure their finances other than just putting into a savings account. If your bank promises to pay you 4% of your money, but the overall inflation of the economy nears 18%, you're losing 14% of your cash every year!

PLEASE NOTE! Those not financially learned enough to understand all of this are going to get hammered in the near future. The rules have changed. What used to be risky is now safe, and vice versa. Saving is a loser's game!

-Beasley

9/11/08, Go Round Rock »»

9/9/08, Big Damn Hurry »»

9/8/08, Advice: Fire Yourself »»

9/8/08, The $200 Billion Bandaid »»

Although I'd like to think of myself as psychically endowed, my prediction that the government would step in to save Fannie Mae and Freddie Max was hardly a lucky guess. They've been seized and we're all going to be affected.

Personally, I'm a bit conflicted on the issue. I know that, had the government not stepped in, there would be a brutal recession around the corner that would affect not only our us domestically, but the rest of the world as well. It would be a quick and deep economic downturn that would seriously undermine the economic integrity of the United States compared to the other nations and it would be a long time before the economy, and our reputation, had been restored.

On the other hand, this act of governmental intervention is diametrically opposed to the sound principals of a free market. This intervention doesn't prevent a downturn, it merely stalls it. It undermines our economic principals which will permeate to more and more similar decisions. We're creating (arguably have already created) an unspoken rule in America that says if your company gets big enough, don't worry, the government will never let you fail. Since when it is the government's responsibility to tax the private sectors in order to bail out other private citizens who make poor financial decisions? I've read the Constitution many times, and I'm pretty sure this isn't authorized.

Yet, here we are.

The last element of this issue that I think deserves mentioning is that, for years, these questionable loans were falsely advertised as AAA loans to the foriegn markets. They will be seriously damaged if this bailout didn't occur. In a sense, I can rationalize the bailout in order to honor our agreements with them. However, I would only endorse this with the caveat that the private sector be given control of the mortgage market and the federal government be banned from stepping in again. Of course, in today's climate, such a request borders on lunacy.

This bailout is not a solution, it's a bandaid. It's probably the most expensive bandaid ever at $200 billion (and possibly more). And while the wound matestasizes, another, bigger bandaid may be looming over the heads of our grand-kids.

Then again, what do I know?

-Beasley

9/5/08, Pensions > Mutual Funds? »»

7/28/08, I've got gas... »»

7/28/08, Anti-preneures »»

7/23/08, Another "Expert" »»

7/17/08, Retirement risks... »»

7/16/08, Monetary Conspiracies »»

9/24/07, California "Investors" in Austin »»

9/21/07, Austin; Market Snap-shot »»

Alrighty then, this is the first blog of what I expect to be a long list of blogs detailing the Austin market and how we investors can make the best of it. So, I think it's wise to start off briefly describing what I affectionately dub, "The Capital A."

A few years ago, as we all remember, the stock market took a nice hit and caused a wave of panic throughout the U.S. Those who felt this sting more than most were "investors" who had put thier money into the market at retail prices and were hoping for continued growth. Personally, I don't consider them investors as much as I consider them people with money in the stock market. Anybody can put money in the market, but one's strategy for doing so really determines if they are, indeed, investors.

Nonetheless...

As a knee-jerk reaction, money was pulled from the market and then placed in more "secure" investments; real estate. While I do consider real estate to be a more sound investment, the strategy of buying retail and hoping for continued growth is, again, not the move of an investor. The same problem they had in the market followed them into real estate...but not before prices started to skyrocket.

And, on the coasts, especially in California, where appreciation went soaring, a lot of people made a nice chunk of cash. This was helped by low interest rates that made selling homes much easier. Of course, when one starts to sell and bank, it's usually followed by others and the California market peaked and then began to decline.

After they made thier tiny fortune, they started looking elsewhere to invest, and, for some reason, Austin was thier number 1 choice.

But California and Austin are not the same market...

But who cares! Californian's started dumping millions here looking at Austin real estate saying to themselves, "It's so cheap!!!" Yeah, of course it is...compared to California. So, they started using real estate as a giant safty deposit box, putting thousands, if not hundreds of thousands, down on a property in order to get it to cashflow.

Statisitical data like cash on cash return or return on investments were never even considered. We Austinites went with the flow and like clockwork, the multi-family market started to get waaaaay overpriced. And it still is. The multi-family market in Austin is about 20-40% too high. Those crazy Californians...

Adding to situation is the mortgage market...

The mortgage industry played fast and loose with cash a few years ago, especially with ARMs and now, foreclosers are starting to become headlining news. But, not so much in Austin. The coasts are down around 30% due to these foreclosers, but, because of all of the money coming into Austin, our foreclosers are being purchased and are not significantly effecting our retail market.

In fact, too a large degree, Austin is still a seller's market. Most of the FSBOs I run into get plenty of foot-traffic with just a sign and, in many cases, have no problem selling thier house.

But, things are on the cusp of changing.

The tightening of money in the mortgage industry is turning what would normally be qualified buyers into non-qualifying buyers. This is starting to create a demand for creative financing measures whether through owner-financing or private lending.

This is even made more prevalent due to the increase of jobs as more companies start to settle here.

So, that's it; a snap-shot of the Austin market. More will come as I fill the details in. Feel free to add your impression of the market if you like.

-Beasley

Real Estate Center at Texas A&M University

5/10/13, Summerwind Apartments Blow into Baytown »»

5/10/13, ConocoPhillips Adding Office Space »»

5/10/13, TA Associates Crossing Bridgepoint »»

5/10/13, Texas Tech Establishes New Wind Institute »»

5/10/13, April Good Month for DFW Home Sales »»

5/10/13, Lakeway Town Center Planned »»

5/10/13, Travis County to Hold Court Downtown »»

Inman News

4/29/13, 3 game-changing reasons for getting started with Google Analytics [Infographic] »»

For most people, analytics is one of those subjects that other people pay attention to. There are a number of reasons why this is the case: there?s not enough time, it doesn?t seem important, or maybe it seems way too complicated. For years I was in the same boat, relying on a webmaster or someone from my marketing team to interpret all those bits of information into something that they thought I would find interesting or useful. Those were always wholly unsatisfying meetings, sitting with my marketing manager, asking questions like, ?Why aren?t our visitors buying?? or, ?We made some great content, why isn?t anyone reading it?? All I wanted was a straight answer. Looking back, I understand now that I wasted so much time relying on others to help me discover the answers locked inside all that information.

As an entrepreneur and marketer, I know there is so much value in creative inspiration and intuition that I would never discount, but the power of understanding the actions of you customers and the effectiveness of your efforts comes from analytics. If someone had told me that I could see what people were viewing on my website in real time, exactly what content they read, how long they read it, where they came from, what device they used, and whether or not they had been to my site before, I would have been much more excited about understanding analytics. A lot has changed in the last decade. For one, I love analytics! It?s no longer like reading Latin, which for the record would always put me to sleep. Granted, the tools have come a long way to make it easier for me to experience this love: they?re better, cheaper, and easier to set up. If only I had known then what I know now, I would have taken control of my analytics from the start. This guide is about getting you started quickly and easily with Google analytics so you don?t have to rely on others to tell you what?s happening with your website.

?Analytics is simply a way for you to track the activity on your website. The number of visits it receives, where people come from, how long they stay, and what they’re looking at while they’re on your site.? – Jeff Bernheisel, 1000watt

So let?s start with why analytics are so important. It used to be that understanding potential customers? intent was limited to three things: Did they contact you? Did they fill out a form on your website? Or did they visit an open house? Since we know that more homebuyers are making up their minds about properties they?re interested in online way before moving the conversation offline, it?s crucial to know more about the customer life cycle and their activities on and off your website.

Google Analytics, sometimes abbreviated as ?GA,? is the best free service available for generating detailed statistics about how visitors are getting to your website and what they are doing once they?re there.

There are dozens of reports and hundreds of ways to view them, below are some of the most popular metrics to start with. You will also be able to use a date comparison on any of these reports to see month over month progress.

Google Analytics is able to make all of its measurements via a ?page tag? (called the Google Analytics Tracking Code), which is a snippet of code that lives on all of the pages of your website. The page tag collects visitor data and sends it to Google Analytics, where it is then organized into charts, graphs, and lists. Unlike earlier analytics tools, which were geared toward technologists and webmasters, Google Analytics was created for marketers: you don?t have to be a developer to get started. Getting started is really simple – just follow the outline below.

CLICK HERE TO DOWNLOAD THE FULL INFOGRAPHIC

Getting a handle on your analytics is the only way to gauge the ROI of your blogging and content marketing efforts. At work, I measure the lead and customer generation my company gets from all the channels: Google Adwords, Facebook, Twitter, Slideshare, Linkedin, and organic search results to name a few. We use a combination of Google Analytics, MixPanel and Infusionsoft to help us validate any time and effort we spend on content and inbound marketing.

?Being data informed is critical for any business. Google Analytics is a powerful tool that offers many benefits. The application enables you to measure conversion, user engagement, technology trends and more. Best of all, it?s free.? ? Tom Flanagan, VP of Marketing & Technology at Residential Properties

I hope this is sinking in. It?s game changing and it?s available to every business that is serious about marketing online. By including analytics in your marketing conversation you can start having actionable discussions about content and social media ROI as a real, measurable number, and not some mythical figure that no one knows.

Your Questions:

What questions do you have about measuring the ROI of your blogging and social media efforts? What tools are you using to get your stats? Finally, if you?re willing to share, tell us a little about the effect your blogging has had on ROI.

4/10/13, Calculated Risk: Housing inventory won?t bottom until 2014 [VIDEO] »»

4/1/13, New ad campaign highlights California Realtors? role in state economy »»

4/1/13, National Association of Realtors to release national MLS »»

Industry players breathe sigh of relief

A national multiple listing service run by the National Association of Realtors should be ready by late summer, the large trade association announced today.

NAR has been working for the last decade to put all of the nation’s agent-represented homes for sale into one database, consolidating the 800-plus multiple listing services in the U.S. in the process.

"Everybody has been on board with the national MLS idea for a long time and we’ve been working on it for the last decade," the trade group said in a press release.

Brian Boero, co-founder of real estate marketing and design firm 1000watt, who predicted NAR’s national MLS move in one of his "Friday Flash" blog posts five years ago, said, "It’s a great move by NAR. I wonder what took them so long."

"It’s about damn time," said Matt Cohen, chief technology officer of real estate consulting firm Clareity Consulting.

"In some cities there were five or more MLSs!" Cohen said. "How and why did that even happen?"

Many third-party MLS vendors, such as Greg Robertson, co-founder of W&R Studios, are ecstatic. "Now we won’t have to make multiple versions of one product to work with each MLS. We can just make one!"

Some brokers, who have been concerned about the businesses third-party listing portals like Zillow, Trulia and realtor.com have built using listing data, are expressing relief.

"Hallelujah," said the spokesman of a large Minneapolis-based brokerage that pulled all of its listings from the big three portals last year.

However, the brokerage will not send its listings to the national MLS because the firm wants to continue focusing on generating leads from its own website, the spokesman said.

Zillow, Trulia and realtor.com, which had been battling for consumer eyeballs as de-facto nationwide MLSs in recent years, are working to carve out a new niche.

"We’ll still be a leader on mobile," one Zillow exec said.

Editor’s note: For further context on this report, please check this story’s date. And note that all or portions of this article may be based entirely on anonymous and/or fictitious sources and erroneous and/or facetious information.

For similar stories posted today, click here.

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4/1/13, April Fools? Day real estate roundup »»

Among today's stories: NAR shutters RPR, 'March Madness'-style home bidding system, real estate pro dating site

On the first day of April each year, communities, businesses and news outlets come up with stories intended to fool, amuse, and, sometimes, satirize. Here’s a roundup of the posts Inman News came across in the residential real estate space today.

National Association of Realtors shutters Realtors Property Resource: If you’re a member of the National Association of Realtors, as of today, you no longer have access to, or are paying for, the funds-draining national property database Realtors Property Resource, according to Greg Robertson on his blog at Vendor Alley.

"Our long national nightmare is over," said NAR CEO Dale Stinton, via a "quote" in a purported NAR press release shown on the blog.

Never fear, Realtors, the post says that NAR has decided to invest in another industry important to agents — cars. "Today’s cars aren’t designed for the average Realtor, so we thought we needed to do something about it," said NAR President Gary Thomas in a "statement."

Seattle broker launches homebuying tournament platform for listings: For those home sellers in Seattle who know that a playoff system is the best way to determine a winner (see college football), Seattle brokerage Findwell has launched a new "March Madness"-like bracket system that will help them find the best buyers.

Eight buyers ?- six chosen based solely on ranking of initial offer price and two at-large bids — will be pitted against each other in three single-elimination rounds, Findwell explained in a blog post.

The two homebuyers that make it to the championship round will try to woo the neighbors at a soiree at the home to win the tournament and the home.

New dating site for real estate pros, "On the Market": Real estate professionals are busy, "generating leads ? showing homes, and filing paperwork," said real estate software and marketing firm Market Leader. So the firm has developed a dating site exclusive to real estate pros.

No news on whether the firm has a customer relationship management platform to handle leads from the new dating site. Sign up here.

Redfin adopts new shark species as mascot: Seattle-based brokerage Redfin announced that it has adopted a new shark species discovered by a Redfin employee while fishing from his kayak in Puget Sound near Seattle as its mascot.

Photo of the new Redfin Shark species.

The new shark species has an actual red dorsal fin and biologists have given it the name "Redfin Shark," a blog post on Redfin that announced the discovery noted.

Redfin is launching an advertising campaign around the fish, which will include three days of sponsorship on the Discovery Channel’s Shark Week program in 2013.

Other news

Google introduced Gmail Blue, a result of "moonshot" thinking. The popular email platform now offers a "blue that was reminiscent of nature but better than what nature created."

Virgin Airlines announced it now has developed the technology to produce glass-bottomed planes. "I am incredibly proud of yet another aviation breakthrough which has been years in the making," wrote Richard Branson, founder of the Virgin Group, in a blog post.

Artist’s rendition of Virgin Airlines’ glass-bottomed plane.

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4/1/13, NAR Tech Edge to launch this month »»

Conference tour sheds light on real estate technology trends in locations across the country

The National Association of Realtors will launch its tech-conference tour this month, the trade group announced today. The first event of the tour will be held on April 12 in Fairfax, Va., and others will follow in different locations throughout the summer and fall.

Launched for the first time last year, "NAR Tech Edge" conferences aim to shed light on emerging technological trends in the real estate industry. The announcement of the tour came shortly after NAR revealed the inaugural members of its new startup accelerator, REach. The program will provide mentoring and, potentially, funding to the participating companies.

"Technology continues to change the way that Realtors and the real estate business operate," said NAR President Gary Thomas in a statement. "NAR Tech Edge is a great opportunity for Realtors to further expand and build upon the techniques and tools they’ve already successfully incorporated into their business."

Technology tools are integral to Realtors’ business dealings, according to the 2012 NAR Member Profile. The survey found that nearly all member respondents used their email on a daily basis, and that eight out of 10 used smartphones with Internet capability on a daily basis. In addition, more than half of respondents reported having their own websites and regularly using social media.

Speakers for the one-day events will include CEO of the Social Media Marketing Institute and Century 21 Advantage Gold Bill Lublin; NAR Director of Digital Engagement Nobu Hata; and Vice President of Platform Development at Better Homes and Gardens Real Estate Amy Chorew.

NAR Tech Edge will take place in Fairfax, Va., on April 12; Bullhead City, Ariz., on April 19; San Francisco on July 24; Boca Raton, Fla., on August 7; Columbus, Ohio on September 7; Parsippany, N.J., on September 23; Chicago on October 9; and Springfield, Mass., on October 18. The events are open to Realtors and non-Realtors alike.

To learn more or register for the conference, visit www.epronar.com/nar_tech_edge.cfm.

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4/1/13, More millennials see homeownership as a good investment »»

4/1/13, Study: Neighborhood zoning helped cause crisis »»

4/1/13, Protect yourself against loan lock scams »»

If market price changes, lock should be based on 'twin sibling rule'

A price quote means nothing until it is properly locked with the lender. A rate lock, as it is commonly called, is the lender’s commitment that it will make the specified loan at the specified price within a specified future period.

The price includes not only the interest rate but also points, which are upfront charges expressed as a percent of the loan; fixed-dollar charges; and (if the loan is adjustable-rate) the margin and maximum rate.

Locking has become more difficult: Before the financial crisis, if you started early enough in the day, it was relatively easy to contact a lender and lock the price the same day. Today, it is extremely difficult, if not impossible.

Delays are more frequent today than before the financial crisis, and the delay periods are longer. Before the crisis, income and asset documentation as well as appraisal requirements were often waived, facilitating the locking process. There are few, if any, waivers today.

Determining the property value, which has a major bearing on the terms of a loan, is particularly problematic. Before the crisis, lenders would lock based on the borrower’s or broker’s estimate of value if it was a refinance, or based on the sale price if it was a purchase, confident that in the great majority of cases the appraisal would confirm the value. Appraisals in buoyant markets generally did.

Today, lenders cannot have this confidence because appraisals have become conservative, and they also take longer. So lenders do one of two things: Either they require an appraisal before they lock, or they lock without it but require that the appraisal, when it materializes, show a value above some level for the lock to remain valid.

Lock delays carry risk to borrowers: Because market prices are highly volatile, lenders reset them every morning, and often during the day as well. This makes it very likely that the price on the lock day will not be the same as the price quoted to the borrower earlier, on which the borrower’s decision to proceed was based. While prices may change in either direction, the risks to the borrower are not symmetrical. Borrowers waiting to lock will always pay more if the price has risen, but they won’t necessarily pay less if the price has declined.

Lock scamming is all too easy: A lender who locks at the current price when that price is higher than the one quoted to the borrower earlier should do the same when the current price is lower. However, few borrowers are likely to object if they are locked at the price they were quoted previously, and my soundings suggest that this is a common occurrence. The irony is that the borrowers who consider themselves victimized are the ones who pay a higher price following an increase in the market price, whereas the real victims are those who pay the same price following a market decline.

The good faith estimate (GFE) doesn’t help: The GFE is a federally required disclosure of rates, fees and other loan characteristics that must be provided to the borrower within three business days of the submission of a loan application. It is designed to protect borrowers against a variety of hazards, but it does not protect them against lock scamming.

If the loan has been locked at the time the GFE is issued, any scamming has already occurred. If the loan is not locked when the GFE is issued, the rates and fees shown on the GFE are pre-lock quotes similar to those quoted to the borrower orally, but many borrowers don’t understand this. The GFE states that "the interest rate for this GFE is available through [date]," and if the loan has not been locked, the lender enters a day that has already expired. This is a horribly roundabout and confusing way to tell the borrower that the loan is not locked.

Protecting yourself against lock scamming: When the market price changes between the time the lender quotes a price to the borrower and the time the loan is locked, the lock price should be based on the "twin sibling rule": That rule states that the price locked will be the price the lender would quote on the same day on the identical transaction to the borrower’s twin requesting a price quote. If the new market price is below the price quoted to the borrower earlier, the lender will lock the lower price. If the new market price is higher than the price quoted earlier, the lender should not lock until explicitly authorized to do so by the borrower.

How does a borrower verify that the lender has followed this rule? One way is to monitor market changes on a day-to-day basis. The best tool for this purpose is my daily series on wholesale mortgage prices.

Even better is to deal with lenders who provide access to their pricing systems through third-party multi-lender websites, where borrowers can check their price on the system when they lock. Three sites that provide this facility are mortgagemarvel.com, zillow.com and mtgprofessor.com, which is mine.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

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4/1/13, 8 tips for buying in a tight market »»

Don't let disappointment immobilize you

It’s always hard to predict how long it will take to find a home to buy. Given the current low-inventory environment, it may take you longer than it would in a balanced market that has enough homes for sale to satisfy the current buyer demand.

Patience needs to be a key component of your home search mentality. Even if a home you like a lot comes along quickly in your search, other buyers may have the same idea. You could end up in competition. If you aren’t the winning bidder, don’t let disappointment immobilize you.

To prepare yourself to buy in this market, plan to look at every new listing that comes close to satisfying your wish list. Accept that you won’t find everything on your wish list. Successful buyers make sacrifices. Just make sure to make intelligent compromises.

For example, don’t get so overwhelmed by the urge to buy now that you overlook that a home you like won’t work for you for long. Buying and selling is expensive; you don’t want to do it often. Make sure that a home you buy will suit your needs for years to come.

There are benefits to seeing a new listing that’s a possibility for you in person rather than looking at it only online or having your agent describe it to you. In a low-inventory market, it’s vitally important to become an expert on local pricing. Follow up with your agent on every listing you liked and find out how much it sold for and how many offers were made.

This way you will know when a listing is underpriced, priced close to market value, or overpriced for the neighborhood. The lower-priced properties tend to attract more buyers. If you’ve educated yourself about local market pricing, you can distinguish between a listing that is underpriced and one that is fairly priced.

HOUSE HUNTING TIP: You can save yourself a lot of time and disappointment if you don’t make offers on underpriced listings that attract five or more offers, particularly if you can’t go much higher than the list price. In one instance, a Piedmont, Calif., buyer was recently enthralled with a listing priced at $895,000. When 10 offers came in, she decided not to jump into the fray because she couldn’t pay more than $1 million. The listing sold for $1.4 million.

Some real estate agents encourage their buyers to make an offer even if they haven’t a chance because they feel it gives buyers a chance to get their feet wet. The problem with this approach is that after slogging through the mud and losing out four or five times, you may feel burned out and drop out of the house hunting search altogether.

Make sure your real estate agent is in touch with the listing agent of a listing you covet so that you have a sense of how much competition there might be. Then based on your pricing expertise, your financial capabilities and how close the house matches what you want, you can make an educated decision about whether to make an offer.

Find out how much work a listing will need. Ask for a disclosure package of seller disclosures and reports, if they are available. Factor this information into the affordability equation. A listing priced at $700,000 that requires $200,000 of repairs isn’t affordable if you can pay only $750,000 at the most.

Have your agent watch for listings that aren’t well-marketed. Out-of-area agents often don’t know how local agents generate activity on their listings. The strategy used on the Piedmont house above was to price low and have more than one open house before hearing offers.

THE CLOSING: An undermarketed listing can be a buying opportunity in today’s market.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

4/1/13, ?Inman Incubator? program aims to accelerate innovation »»

Up to 25 companies will get mentoring, advice and promotion

Inman News announced today that applications for Inman Incubator, a real estate startup accelerator program, are now open.

The Inman Incubator program is a yearlong mentorship, advisory and promotional program to help up to 25 new companies in the real estate industry succeed. The program is open to technology startups, brokerages, agents, service providers, and others in the real estate industry with new, innovative products and business models.

Inman News founder and Publisher Brad Inman explains the Inman Incubator program.

The program is a launchpad for companies that will define innovation in the real estate industry in the next decade, by providing mentorship, promotion, access to specialized resources, business-building connections and ongoing support.

"We are in the unique position of being able to do more than just talk about change. Inman News can champion innovation in a way that no other organization can," said Inman News Publisher Brad Inman. "With our mentors, connections and resources, Inman Incubator will support game-changing companies that will define innovation in the real estate industry for the coming decade."

Participating startups will receive mentoring by the top minds in the real estate and technology space; $100,000 in promotional consideration from Inman News; referrals to specialized startup accountants, banks, lawyers, technical groups and other service providers; a business plan review; ongoing support; and two founder meetups per year in San Francisco and New York City.

Inman Incubator mentors include leaders who have built their own businesses from the ground up: Lockhart Steele, founder, Curbed; Pete Flint, CEO, Trulia; Spencer Rascoff, CEO, Zillow; Teresa Boardman, Realtor and Inman News columnist; Austin Allison, founder, dotloop; Sherry Chris, CEO, Better Homes and Gardens Real Estate; and Michele Serro, founder, Doorsteps. More mentors will be announced soon.

Applications will be accepted April 1st through May 15th. More information and answers to frequently asked questions are available at www.inman.com/incubator. Selected startups will be announced at the Real Estate Connect conference, July 10-12, in San Francisco.

Questions about sponsorship opportunities for Inman Incubator? Email incubator@inman.com.

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4/1/13, How to jump on the video bandwagon »»

Boost the marketing power of your emails, newsletters and blogs

Are you still stuck in "E" rather than moving forward into "V"?

If so, it’s time to shift from email, e-cards, email newsletters, blogs, and auto-responders to the next generation of communication: vmail, vcards, vresponders, viewsletters, and vlogs.

I recently spoke with Roger Noujeim of ListedBy.com about his take on the latest trends. He noted that ListedBy clients who use video to promote their listings generate significantly more traffic than those who don’t.

He also noted that there are 700 videos posted on Twitter every minute. Noujeim described this trend as going from "E" to "V." In fact, Cisco projects that 90 percent of all Web traffic in 2014 will be devoted to video. If you haven’t jumped on the video bandwagon, here’s how to get started.

From email to vmail

People retain 10 percent of what they hear and 15 percent of what they see. The average person spends about eight seconds viewing a text message. In contrast, video email is viewed on average to 85 percent completion. Consequently, to get better results from your email communication, shift from regular email and text messaging to vmails.

Vmails garner greater attention because they are more personally compelling. For example, instead of sending past clients postcards, send them a video message wishing them a happy birthday, update your current sellers with buyer feedback about their home, or review next week’s marketing plan.

An easy way to begin is with the free service from Eyejot.com. Eyejot allows you to connect in a "self-contained, spam-free environment." It works on any platform, including mobile devices.

With Eyejot, there is no software to download or install. Just log in to your account, record or upload your video, and send. The recipient gets a friendly email message telling them they have a new video message, and they can watch it with a single click. You can use Eyejot to send "vcards" rather than a traditional business card as well.

Vresponders and viewsletters

Once upon a time, auto-responders seemed like a good idea. Most people today, however, feel they are canned and impersonal. Furthermore, auto-responders are a great way for spammers to discover whether your email address is valid.

In contrast, a video response, even if it is canned, seems more personal. Instead of telling people in text that you are out of the office, you can use your vresponder to create a more personalized message thanking them for contacting you and informing them that you are eager to be back in contact with them as soon as possible.

There are two solutions that provide a glimpse of where real estate video communication is heading in the future. Iwowwe.com and Talk Fusion have very slick applications that allow you to send vmails, conduct video-conferencing, as well as use video-autoresponders. Like Eyejot, Iwowwe provides a free video email service.

Both Iwowwe and Talk Fusion provide a suite of video communication and marketing products. (Iwowwe is $20.00 per month and TalkFusion, which offers a larger suite of products, is $35.00 per month plus a set-up fee.)

What I found particularly intriguing is the notion of having a "viewsletter." This is a very attractive newsletter format that has at least one, and sometimes two, windows where you can upload video. The video plays within the viewsletter in a format that is reminiscent of the "Daily Prophet" in the Harry Potter movies. Imagine how much more powerful it would be to offer a "viewsletter" to the people you meet as opposed to an email or traditional print newsletter.

There are hundreds of ways agents can use this tool to market their businesses. For example, you could use the video to update your community in terms of the prices, market conditions, or anything else that has to do with the real estate market.

You could also use it to share the local lifestyle or special events in your area. Interview the basketball coach about the upcoming game, capture images from the blizzard that buried everything in white, or record fun things that make living in your area great.

Vlogs

How long does it take you to write 160 words? Did you know that you can create a 160 word vlog (video blog) in just one short minute? Blogging has always been a chore, even when you’re a good writer. "Writer’s block" is a real issue for professional writers and even more so for agents.

In contrast, most agents are good at talking. You can now create a "vlog" simply by posting to your own blog site, or if you don’t want to deal with the hassle, set up a Facebook business page where you post your videos. A vlog can be an alternative to a video newsletter or a supplement to it as well.

The smart move is to start looking at ways to employ video in your business. We know Google loves video (it owns YouTube) and ranks sites that have video more highly. The real estate business is definitely heading in this direction. The sooner you begin using video in your business, the greater your advantage over other agents will be.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of the National Association of Realtors’ No. 1 best-seller, "Real Estate Dough: Your Recipe for Real Estate Success." Hear Bernice’s five-minute daily real estate show, just named "new and notable" by iTunes, at www.RealEstateCoachRadio.com. You can contact her at Bernice@RealEstateCoach.com or @BRoss on Twitter.

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3/29/13, Good times are back for ranch land brokers »»

Although sales are getting back on track, prices still firming

Author’s note: Early in the year, I traveled to Missoula, Montana, for a winter vacation, but a contact put me in touch with a few people in the real estate industry and much to my surprise I came away with a couple of interesting stories. This column is the first of two.

For a while it seemed that anyone with a lot of money, from Hollywood stars to business moguls, wanted a piece — make that a very large piece of — America, and they came west looking to buy their own ranches. Many, following the lead of flamboyant media entrepreneur, Ted Turner, looked to acquire in Montana.

During the bubble years, investors couldn’t acquire Montana ranches fast enough.

William McDavid, who opened the Missoula office of Hall and Hall in 1996, remembers those years fondly.

"Before the recession, people were standing in line to buy," McDavid says. "There were bidding wars for multimillion-dollar properties."

Hall and Hall does a lot of different things as a real estate company, but to this day it is known as the premier brokerage for ranch lands with offices mostly throughout the west.

It must have been mighty tough to be so specialized, because all that desire for western dirt dried up like grasslands during a drought as the country pushed into the Great Recession. During the heart of the economic downturn, ranch land transaction volume in key states such as Montana dropped 80 to 90 percent.

As any real rancher knows, you get good cattle and crop years and you get bad years (not a concern for the wealthy dilettante!). The same holds true for real estate, but bad years don’t last forever, and then the markets change.

Five years after the beginning of the recession, good times are back for ranch land brokers.

"We always talk about how great the market for ranches was before 2008, yet 2012 was the second year in a row that was the best ever for Hall and Hall," says McDavid. "Our gross sales, largely based on pure ranch properties, were better than ever and that would include during the red-hot dot.com days at the end of the 1990s."

He adds, "buyers today are the same ones we saw before the recession: CEOs, movie stars, and private, wealthy people. The only difference now is that we are seeing more energy money."

The N Bar Ranch, which consists of more than 60,000 acres in the foothills of the Snowy Mountains, recently went for $45 million. Dana Ranch, also nearly 60,000 acres, but with only modest improvements (buildings), also sold for $45 million.

Still up for sale in the $25 million range are the Grizzly Creek Ranch near the town of Gardiner and OW Ranch near a place called Quietus.

These are really the extreme end of ranch land properties. Most ranches are much, much smaller and sell closer to $2 million.

Keith Lenard, who works with McDavid, gave me a quick rundown of ranch types. There are legacy ranches of tens of thousands of acres, "with fly-fishing streams, private elk herds and extraordinary levels of privacy, seclusion and natural beauty," he says. Then there are "boutique ranches, often with high-end improvements (residences) on small acreage. Both legacy and boutique properties are further graded as A, B or C. There are legacy ranches that are just holding the earth together and boutique ranches that are just not that nice."

In 2012, Lenard sold six ranch properties. In his best deal, he represented the seller in a $15.5 million transaction in the Missouri Breaks area of Montana. The ranch totaled 100,000 acres. The listing price was $18 million.

McDavid sold five properties last year. His biggest deal was in California, where he represented the seller on 25,000-acre ranch near Los Molinos that was listed at $29.5 million. Without being specific, McDavid said the ranch sold for below asking price.

Lenard had a good year in 2012, but it took awhile to get there. He joined Hall and Hall in 2008, just in time to see the bottom fall out of the ranch market. It didn’t come back again until mid-2010.

"What happened was, the very best properties held value and continued to trade, albeit at a slower pace," he says. "Everything else declined in value anywhere from 20 percent to 50 percent."

Even with a couple of busy years in ranch sales, prices have not returned to pre-recession levels, still off an average of 20 to 30 percent — although some firming up is occurring.

"In 2010, the disparity between asking price and selling price was 18 percent and that improved to 8 percent in 2011," says McDavid. "We haven’t yet run the numbers for 2012. My guess is the disparity will be around 7 percent to 8 percent."

As with any type of real estate, better numbers depends on location. Montana’s Bitterroot Valley, which was a prairie fire of activity before the recession, hasn’t experienced recovery as yet. The Bitterroot was mostly a boutique ranch region and prices were over-inflated, says Lenard. "Prices dropped 35 percent to 40 percent and have not recovered."

There are a number of quirks in the ranch market. For one thing, there have been few foreclosures because many deals are done with cash. Secondly, it is one of the few real estate sectors where quality of residence is of minor importance. Indeed, high quality property that is priced right and is unimproved (few structures) has slightly broader desirability than an improved property.

In the bubble years, a lot of ranch buyers succumbed to ego-developments and built grandiose lodgings. These have not proved to be very good investments, although there are a number of buyers who like to have a good manse right there at time of purchase, so they can move in right away and not have to deal with building a brand new home on the range where the deer and the antelope play.

Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "The Death of Johnny Ace," is now available for sale on Amazon.

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3/29/13, Glenn Kelman on Redfin?s site redesign [VIDEO] »»

3/29/13, Companies team up to offer small lenders REO asset management »»

Carrington and LendingXpress to roll out services for community banks and credit unions

Carrington Property Services has joined forces with financial services company LendingXpress to offer small lenders Carrington’s asset management services to handle their inventory of bank-owned homes.

San Antonio, Texas-based LendingXpress, a Southwest Business Corp. (SWBC) company, will market the services to the credit unions and community banks in its customer base, offering them a new approach to managing REO (real estate-owned) inventories based on best practices of major lenders, the companies said in an announcement.

Santa Ana, Calif.-based Carrington Property Services, which specializes in REO asset management, is an indirect subsidiary of Carrington Holding Co., the parent company of the Carrington family of companies.

As part of the agreement, Carrington and LendingXpress plan to roll out REO asset management services catering to credit unions and community banks in the second quarter.

"While credit unions and community banks have traditionally held smaller inventories of REO properties than major national banks, the complexities associated with the day-to-day management and servicing of those assets can be just as challenging," the companies said.

Carrington’s REO asset management services include a property assessment to help lenders determine whether to rent or sell the property and if repairs are needed; occupant resolution; property repairs; and either rental management or the marketing and disposition of REO properties, the announcement said. Asset management is handled by the company’s national network of real estate and property management professionals through a platform that functions as a central point of contact.

LendingXpress will incorporate these services within its existing offering of third-party products and services, the companies said.

"This strategic relationship with LendingXpress and SWBC will enable Carrington to expand its reach and extend its full continuum of services to the credit union and community banking market," said Steve Ozonian, chief real estate officer for Carrington Holding Company LLC, in a statement.

"Blending Carrington’s detailed knowledge of end-to-end REO workflow with SWBC’s intimate understanding of what these financial institutions need will enable us to produce a solution specifically designed to maximize returns and minimize costs in a highly regulated environment for our business partners."

Carrington and LendingXpress are not the only companies interested in helping smaller lenders work like bigger ones. Los Angeles-based customer relationship management software company Leads360 earlier this month began offering a new CRM platform, Leads360 Express, specifically designed to help small business owners, including small mortgage companies and loan officers, compete effectively with larger rivals.

Such products may be of particular interest to mortgage companies or real estate brokerages with in-house or affiliated mortgage businesses.

In November, Carrington Property Services launched a national network to help real estate brokerage firms work with institutional investors interested in distressed properties.

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3/29/13, NYC brokerage gets behind same-sex marriage »»

3/29/13, Time to take the measure of the recovery »»

Commentary: Many global indicators are at inflection points

Long-term rates fell this week to the lows of 2013, mortgages stickier than 10-year T-notes. Although long Treasurys made it to 1.85 percent, mortgages are still 3.75 percent or so — the mortgage market frightened to death that any loan it buys today will live until its 360th payment.

Trading everywhere has ceased for Passover, Good Friday, and Easter, but next week brings a flood of brand-new information for March, capped on Friday by employment data. Thus a good time to reflect.

I do not recall a moment in which so many economic elements at the same time have been at points of inflection. In the old days (five years ago) nothing much mattered except U.S. data. In global markets the world is more important than the U.S.

1. Rates are down because of Europe. Period. Euro elites are secure looking down their noses: “Cyprus is unique, the euro-zone will be fine, just a little austerity and economic reform ahead.” Au contraire… bank funding costs in March everywhere except Germany rose by 25 percent (who wants a haircut at shoulder-level?); French and Spanish 10-year yields are opening versus German; nobody is making fiscal progress, the combination of austerity and euro-shackles making recovery impossible. Yet everyone who has cried euro-failure “Wolf!” has been premature. Or wrong: maybe there is no wolf at all. Or, if the wolf finally does arrive, the bigger the shock.

2. The stock market set a new high yesterday, greeted by no exuberance. Usually a technical “breakout” like this is followed by a big run. Not. This new high is a half-inch above the same top in 1999 and 2007. Whee. And yet … stocks could really run and bring back the wealth effect.

3. That wealth effect may already be here. This morning’s news: personal incomes jumped 1.1 percent in February and spending with them, up 0.6 percent.

4. More. Home prices are rising in every desirable market nationwide. Discounting the 25 percent drop in fewer distressed sales, which is making prices appear to rise faster than they are, the national move is between 5 percent and 10 percent annualized. The most attractive markets are now in auction conditions, multiple offers the rule. Still, ordinary markets are flat.

5. The absence of housing inventory is weird. Even big production builders are having a hard time with credit, impeding construction. Maybe inventory is low because people have no place to move to. But, maybe, household conditions are weaker than we think, beyond the underwaters, and we’re enjoying a spurt from the fraction of households making it through the Great Recession unscathed.

6. Remember the Fiscal Cliff, tax increases, the sequester? Are we suddenly so healthy that none of that mattered?

7. Japan. Gross national debt is now 245 percent of GDP. Excluding the portion held by the Bank of Japan, 145 percent. 10-year Japanese government bonds pay 0.55 percent, that yield down by half in one year. The Bank of Japan will within weeks begin to buy Japanese government bonds (and a lot else) with the intention of reversing 1 percent deflation into 2 percent inflation. This is the ultimate extreme of the central-banking project: ignite Japan’s economy and generate tax revenue (today adequate to fund less than half of government spending; more than half of that interest alone), or suffer the most spectacular default in history.

8. Perfesser Bernanke is going to retire at year-end. Vice Chair Janet Yellen is in the lead to replace him, and this week New York Fed prez Bill Dudley began his campaign. Both are very able, both deep believers in a strong-intervention Fed. Whoever gets the Presidential nod at about Labor Day will then face confirmation hearings in the Senate, and the most ignorant and undignified philosophical combat since dinosaurs were placed in a museum beside Adam and Eve. Markets will be a tad uneasy.

We have all wished to escape the mire of the last five years. This way?

Do enjoy the long weekend. Stuff in the fan at dawn Monday.

What to you call an anesthetized rabbit? The ether bunny. What to you call a row of rabbits jumping backward? A receding hare line.

Source: Bloomberg

The yen weakening faster than ever before, the Bank of Japan printing Weimar-style, and 10-year Japanese government bonds headed for 0 percent yield. Go figure.

Source: Census Bureau via dshort.com.

After debt, the biggest questions of our time: Why has the top 20 percent succeeded so much more than the bottom 60 percent? How much (more) to take from the top 20 percent? How to help the 60 percent succeed? Until we figure out some answers and get moving on them, recovery will be distorted and in question.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@pmglending.com.

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3/29/13, Uninsured losses on property theft and fraud are tax deductible »»

Real Estate Tax Talk

Fraud by building contractors is a distressingly common occurrence.

How’s this for a nightmare scenario: You agree to pay a contractor $400,000 to tear down part of your house and put in an addition. While the work is going on, you, your spouse, and five children stay with the wife’s parents. The contractor tells you that the work is progressing according to schedule and you make multiple payments.

Suddenly, the contractor dies. He was only 30 years old. It turns out he was a drug addict. You discover that the contractor failed to do much of the work he said had been done. Moreover, considerable damage was done to the house during construction because the contractor failed to protect it from the weather.

Naturally, you sue everybody you can. The only entity that has any money you can collect from is the deceased contractor’s insurer. Unfortunately, it turns out that the insurance policy lapsed because the premiums weren’t paid. In the end, you settle with the insurer for $10,000.

All this happened to James and Gaetana Urtis. They figured that at least they could deduct some of their losses from their income taxes. They claimed a $188,070 theft loss deduction — the amount they paid the contractor that they determined he had pocketed instead of doing the promised work.

But — you guessed it — the IRS denied the deduction.

However, this story has a somewhat happy ending. The Urtis’s appealed their case to the U.S. Tax Court and won. The court rejected the IRS’s claim that the Urtis’s were not entitled to a theft loss deduction because the contractor’s actions did not constitute theft under state law. The contractor had committed criminal fraud when he knowingly induced the Urtis’s to enter into a contract which he had no intention of carrying out. Thus, the Urtis’s were entitled to a $188,070 theft loss deduction. (Urtis v. Comm’r, T.C. Memo. 2013-66.)

Uninsured losses of property due to theft are tax deductible. In the case of personal property, however, a theft loss deduction is a personal itemized deduction claimed on Schedule A. Such losses are deductible only if, and to the extent, they exceed 10 percent of the taxpayer’s adjusted gross income. Moreover, the first $100 of such losses are not deductible.

For tax purposes, theft includes far more than a mugging or burglary. It includes "any criminal appropriation of another’s property by swindling, false pretenses, and any other form of guile." Thus, you can be entitled to theft loss where you can show that a contractor deliberately lied and deceived you to get your money.

However, you don’t have a theft loss where a contractor does the promised work, but you don’t like the quality. Poor workmanship is not fraud and thus does not result in a theft loss. At most, it is negligence and/or breach of contract. For this reason, the Urtis’s could not claim a theft loss for the damage done to their home due to the contractor’s negligence in failing to protect it from the weather during contraction.

Stephen Fishman is a tax expert, attorney and author who has published 18 books, including "Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants," "Deduct It," "Working as an Independent Contractor," and "Working with Independent Contractors." He welcomes your questions for this weekly column.