Certified Deed Scam

The Tucson Multiple Listing Service sent this email to all its agents:

"Be aware that a national company is mailing out letters to homeowners (many will probably be your clients) making it seem imperative that they acquire and retain in their household records a certified copy of the deed to their house which the company will happily provide for a total cost of $89.95. As you know, the homeowner may obtain a copy of their deed from the Pima County Recorder for $1.00 per page plus an additional charge of $3.00 to have the deed certified should they believe certification is important."

The Fossils are In!

Two years ago I went to the Tucson Gem and Mineral Show on a mission. I had decided that I would set ammonites in my back splash at Desert's Edge, the house I am renovating in the Tucson Mountains. I went nuts and bought 40 pounds of these gorgeous 110 million year old fossils from Madagascar. They look like nautilus shells, cut open to expose the chambers, which can be filled with gold, peach, rust or lavender minerals. Some of the chambers have quartz crystals in them, and some of the septa between the chambers have been replaced with pyrite (fool's gold). I am completely enchanted with my ammonites, and have been admiring them on the buffet for two years, but no more! Now they are set among the four-inch travertine tile above the astoundingly gorgeous granite counters.










I hired Jack Langley with Southwest Design, who hired Kevin who hired Juan, who figured out how to do this. I had talked to a few tilers about what I wanted to do, and everyone but Jack had said it would be impossible to set these fossils, which taper from 1/4" to 3/4" deep, among the tile. I hate it when people tell me something's impossible. Anyway, Jack was game, but it was Juan who figured that instead of punching holes in the drywall to make the fossils lie flat, he could saw off the backs in his whetsaw. I watched him hold the first fossil in his hands against the spinning saw and told him to forget it, I didn't need these fossils in my back splash as much as he needed his fingers. It looked really scary, and Desert's Edge already has enough bad karma without adding the blood of a tiler. But Juan assured me he could to this without cutting his fingers off. The results exceeded my expectations by 110 million years.

December Residential Sales Statistics

The Tucson Association of Realtors has released the Residential Sales Statistics for December 2007. Fortunately for owners and buyers of Tucson real estate, they show the same ol' same ol'. Not much change in average and median sale prices. Active listings are at their lowest level since December 2006, which means the balancing act between supply (listings) and demand (sales) is becoming more stable. Only 682 properties sold in December, but I'm not too worried about that. In my own business, I am starting to get more calls from buyers, who are realizing the sky most likely is not going to fall.

On January 9, 2008, the chief economist of the the National Association of Realtors spoke to the Tucson Association of Realtors. He had some very encouraging news about Tucson's unique qualities that will enable us the weather the economic storms better than other parts of the country will. Tucson Association of Realtors president Judy Lowe summarizes his remarks on the first page of the Residential Sales Statistics for December 2007.

The Rogue Theatre: Fear No Art

Fear No Art. That's the message on the tee shirt worn by male lead actor Joe McGrath when he and the cast of "The Goat, or Who is Sylvia?" sat down facing the audience for the after-play discussion. The female lead is Cindy Meier, who co-founded The Rogue Theatre with Joe. As always, their performances were jaw-dropping. These two theater professionals have worked together so long, their stage interactions are perfectly in sync.

I can't say this play is entertaining, but it is by far the best I have seen in the three year history of The Rogue Theatre. Joe plays Martin, a successful architect at the pinnacle of his career. He enjoys loving relationships with his wife Stevie, and his gay eighteen-year-old son, Billy (Matt Bowdren). I am so proud of our friend Cindy, who is amazing as Stevie, a smart, self-assured, witty woman. Martin shatters the family's perfect life when he announces he is in love with a goat. The play is shocking, horrifying, violent, vulgar and intensely thought-provoking. Because of the last quality, the performance is a work of art, albeit very disturbing.

Joe said The Rogue Theatre does not want to do plays that reinforce the audience's preconceived notions. The troupe wants to challenge the audience to question their values and assumptions, and "The Goat" effectively does exactly that. Why do certain behaviors disgust us? Where does aberration end and mental illness begin? Where is the line between moral and immoral? Why do these lines shift with time, circumstances and communities?

Cindy's real-life husband Tom Wentzel is very involved with the theater group. Web site designer is one of the many hats he wears, and The Rogue Theatre web site is one of the most beautiful I've seen.

Tom warned us not to sit in the front row of this play's intimate venue, the magical Cabaret Theater, located upstairs from the Temple of Music and Art. He said it would be too intense. He was right. The people in the front row fled as soon as the actors took their bows. Most of the rest of us remained in our seats, wide-eyed and stunned. Tom said we looked like that guy in the stereo speaker ad, gripping his chair with his hair blown back, and that is just how I felt.

I recommend you go on one of the nights when the post-play discussion will be held, so the actors can help you start the process of evaluating the complex issues presented in the play. I know I will be thinking about this play for a long time.

"The Goat, or Who is Sylvia?" will play through January 20. Post-performance discussions on January 10, 13 and 17. Call 551-2053 for reservations and information.

Artistry in Glass

Two years ago I bought a small house in the Tucson Mountains. The back yard faces 63 acres of protected wildlife preserve. I didn't need another house, but the setting is stunning, and I couldn't resist. I figured I could use it as a vacation and party house, and maybe rent it short term to snow birds.

I spent six months renovating Desert's Edge, making it my dream home. By summer 2006, I still had plenty left to do, but I was so discouraged by the problems I had with the various contractors, I couldn't stand to work on it anymore.

Finally, last month, I felt could deal with the last three phases of the project -- install the floor tile and granite counter tops, and buy some furniture. The end is in sight, and I hope Desert's Edge will be ready for its housewarming by February.

I have bored my friends and myself to tears talking about what has gone wrong with this project. I want to use this blog to express my thanks to the people who made things go right.

I decided I wanted to have something like petroglyphs etched into some of the floor tiles. This is about the eighth property Jack Langley with Southwest Design has tiled for me. Jack suggested I talk to his neighbor, John Wakefield, at Artistry in Glass, to see whether he could get the effect I wanted. I did, and he could. John does all sorts of work in stained, leaded and beveled glass, including etching. He readily agreed to acid-etch patterns onto my floor tiles.

I traced Steve's hand and mine, added spirals in the palms, and took the drawings to John along with drawings of the sun and the Man in the Maze (only in this case, she's the Woman in the Maze).

John is from outside London, so just listening to him talk is a delight, but we learned that we had something in common. He's a former exploration geologist and I'm a former hydrologist. We both decided there had to be a better way to make a living than working for The Man, so we started our own businesses.

John runs his business the way I run mine. We try to keep the customer satisfied, even when it's not convenient. I wanted a change in the tiles on the Saturday afternoon before Christmas (he's only open by appointment on Saturday) and he cheerfully agreed to make the change that day so they could be installed on schedule. I am very happy with the results. You can see Steve's hand print in the photo above.

Builder Incentives Distort Home Prices

The Wall Street Journal recently reported that some well-known home builders and lenders have offered home buyers incentives that make it difficult for consumers, Realtors, appraisers and lenders to know how much some home buyers actually paid for their houses.

If home builders are selling houses for less than they used to, it's not in their best interests to make this public knowledge. Public disclosure of reduced sale prices could anger buyers who recently paid higher prices, and it could also make it more difficult for the builder to unload his housing inventory. So while the recorded sale price may be the same as it would have been six months earlier, some builders may have offered incentives like cars, free upgrades and cash back to the buyer. These incentives conceal the fact that the cost to the buyer and the net to the seller were actually less than the sale price.

The article said giving cash back to buyers isn't illegal as long as it's disclosed to the lenders and any investors who may buy the mortgage. This was news to me, as I had always thought that cash rebates were just not allowed by lenders. It's obvious why the lender wouldn't approve a cash rebate or other kick backs to the buyer. If the lender loans $200,000 for a house, but the buyer wouldn't have bought the house without the free Mustang convertible or $30,000 cash rebate from the builder, the house is worth less than $200,000, and the lender is going to have trouble selling it if the buyer defaults.

This article also described a ruse that wasn't on my radar screen. A home builder may hire a company to find a buyer for its house. In the example given, KB Homes in Parker, Colorado sold a house for $196,000. That was the sale price recorded with the county clerk. However, KB paid a third party $27,600 for locating the buyer. Some of that payment to the third party may have been passed on the buyer. At any rate, the net to KB was $168,400. This is the actual value of the house, without the rebates. The buyer obtained two loans totaling $176,400, which is 5% more than the net to KB. So the buyer was already "upside down", owing more than the house was worth.

I don't know whether this sort of hocus pocus occurred in Tucson, and I don't know whether it's still going on anywhere. The sales described in the article occurred before the mortgage industry melt down in August 2007. Many of the lenders who made these Wild West maneuvers have gone out of business. But the damage is done. Buyers need to look very carefully at comparable sales when deciding how much to offer for a house, because the recorded sale price may not show all the terms of the sale. If there were hidden rebates and incentives, the actual value of the comparable sales is lower.

Occasionally, appraisers will call me to ask about the terms and conditions on a house I sold. Perhaps they are trying to find out whether there were any hidden rebates or incentives that aren't recorded in the public record. This Journal article stated that Realtors and builders are not required to disclose the terms of past sales to appraisers, so appraisers may not be able to determine the actual value of the houses they use as comparable sales.

Loan Fraud

I have seen some strange property listings in the past year. They follow the pattern of a Central Tucson house that is currently in escrow. Here's the home's sale history:

March 2006, sold for $201,000.
May 2006, sold for $350,000.
August 2006, sold for $375,000.

In November 2007, the lender from the May 2006 sale purchased the house for $319,000. All these transaction occurred outside the Multiple Listing Service. Now it's listed for sale at $230,000.

What's going on? I went to see this house, expecting that it had been over-improved by some ill-advised investor, but that wasn't the case. Original kitchen, windowless dining room in the center of the house, mish mash of floor coverings, no landscaping. The carport was hastily enclosed with small windows and wall AC, and it still has the unfinished, sloping, concrete floor, but the carport enclosure is brazenly called a bedroom. Your typical Central Tucson do-it-to-yourself project.

I asked the listing agent why it was listed at $145,000 below last year's sale price, and she said she thought $230,000 was about what it was worth. She didn't know why someone paid $375,000 for a house that has such a bad floor plan and no upgrades. Her client (the current owner) is the lender who acquired it from the $375,000 purchaser. She thought loan fraud may have something to do with it.

That seems like a good guess to me, too. Before the lender bought it, the buyer who paid $375,000 received 100% financing, in the form of two loans, one for $300,000 and one for $75,000. There's no way a legitimate appraiser could say this house was ever worth $375,000.

The problem with these high jinks is they distort the comparable sale data that we Realtors use to evaluate property values. Any real estate agent familiar with Central Tucson would look at the $375,000 sale price and know something is fishy. Unfortunately, agents who are new to this business might not hear alarms, because they may not realize they should look at the sale history of any house they are selling.

Inflated sale prices may also skew the automated programs like Zillow.com, as well as the program that calculates our property taxes. Bogus sales give sellers unrealistic expectations of their home equity, and may cause unwary buyers to over pay for comparable houses.