Real Estate Blog

It all started when a client called after closing on a condominium unit with “just a few questions”. It is always a major bummer when the story gives the sinking feeling that it will only get worse as it progresses.

Managers are everywhere. They are at work, at the kids’ school, the town, at the store and at times even in the home. No problem when they are effective, kind and helpful, even when a situation arises that cannot be solved to your favor.

This story is not like that. The buyers buy. During the inspection process all the documentation for the condominium, a large complex, was made available for review during the inspection process. All the tenets in the documentation were acceptable to the buyers. Their attorney made review, their lender made review, both finding no objection.

When approaching the onsite manager’s office after the closing the now owner was looking for some simple information about window replacement part numbers or if they knew of any contractors that did that sort of thing at the complex.

What to do when a manager is obstructive, mean, a weirdo and a liar? That situation is not fun at all. It turns out that this manager was all of the above and more. According to the buyer wife, “a greasy, fat pig with his fly down” said that the owners were not allowed to change the windows, or flooring, or cabinets or any other thing without his permission. Egad!

Having run into a fair amount of ‘unhelpful’ souls the advice was to recheck the documentation and write a letter to the management company cc’d to the trustees of the condominium project asking for resolution. No such luck. The onsite manager only became an even bigger jerk.

Many might fold under that pressure. Thankfully the new owners having done their inspections, including all the condominium documentation, budget, financial statements and annual report were able to use their rights in ownership to remain steadfast in their understanding of what they could or could not do in the unit.

The replacement windows were the least of their problems. The brilliant manager/weirdo/whatever told the owners after seeing a contractors truck in front of the building that if they installed any new hard-surface flooring in an upstairs unit the he would have the right to enter the unit and have any installation removed (this contrary to all the documentation provided prior to purchase). He even went so far as to demand a new key to the unit so he might “check to see what is going on”.

Tenacious personalities can be rewarded when working methodically through a process with careful thought, documentation, planning and a good attitude. Additional letters had to be written to put the manager/weirdo/whatever on notice by way of the condominium trustees, the management company and the buyer’s attorney.

Thankfully there were no fireworks at the monthly trustee’s meeting where the buyers, strong evidence in hand were easily able to gain ‘official’ approval for any and all work to be done in their new unit, idiot be damned. The work was completed. The reports are it all looks beautiful.

So, what is the moral of the story? First, if at all possible avoid rectal pores, as they will always try to wreck a good day. Second, know what all that paperwork is about, it exists for a reason, and that reason is to protect the owners of the units. Third, knowledge is power. The power to decide, act (or not) is comforting when confronted by the imbecilic. Forth, management companies work for the condominium. They are contracted to serve the community to their best ability as specified within the charter. Hopefully the jerk was fired.

Opinions differ when canvasing owners of condominium units as to the satisfaction in ownership. There are all kinds of complexes, each having personality, each being run well or not. Time also can change the flavor in an association, with politics, ideas and the economy of the association challenged by outside influences.

Before buying into a communal form of ownership be sure that the community itself is solid. There are beautiful units everywhere, but it only takes one jerk (that you might have to see daily) to ruin the story.

Compromise may be a necessary day to day reality with your children, between your children or your with your spouse, but is it really a good idea in real estate? If the ‘perfect property’ is found directly next to an interstate, is that compromise okay? For some, yes, and others, no. So is it really a compromise at all?

Compromise usually is found in the settlement of disputes (which most likely should have been avoided in the first place). Those disputes being resolved by each side making concessions. But, is the acceptance of lower standards really worth it? What if an arbitrator announced that everyone today would be a looser?

Many people are skilled at listening to two sides of a dispute, and devising a compromise acceptable to both, but that is not real negotiation. It is a “we compromised” situation. When the story is later told, the sound of “bummer” is in the air.

“I’ll just throw myself off this cliff if I don’t get everything I want!” might be a thought process that needs to inject some ‘compromise’ in order to survive at least and be a little happier at best.

But, when it comes to a negotiating strategy compromise is nothing more than capitulation, failure and foolishness when the original terms were thoughtfully assembled and good objective thinking was applied.

Why in the world would the various parties in a transaction all choose to loose? A much better strategy would be to continue the search for the right property or the right buyer.

In residential real estate often there is a dance around the offer where the buyer will come in low, the seller counters higher and they meet in the middle somewhere and call it a day. Was that compromise or just the expected moves in what can be perceived as a typical transaction?

Upon closer examination the methodology of testing the waters (on both sides) can be sound advice when one party or the other is looking for advantage. This should not be confused with compromise.

A seller back in ‘the crash’ may have had a number or other terms (such as a time schedule) to meet, and looking to move on, would willingly accept a lower number from a ‘paper high’ which was still an overall gain from the original acquisition. Did the seller loose? Still walked away with cash in the pocket…

A buyer with a great rate lock of 3.85% finds a property and is will to ‘pay-up’ a bit to get that home with everything one could imagine, understanding that in the next weeks interest rates are forecast to rise. If the numbers were run with care the long-term savings would far out weigh ‘the compromise’.

The commercial world of real estate functions without the emotional factors seen in the residential market place. The numbers speak above all. A range is defined well before acquisition or sale. The deal does not get done when it does not fall within the pre determined criteria. No compromises are made, just deals that are passed on or walked away from regardless of transaction side.

Yes, everyone is looking for position, advantage or gain, but not with compromise as their negotiating tool. More often these negotiations will find the players offering terms to make the transaction a good deal for all, finding solutions to objections allowing the deal to move forward.

A concession may be made, but on the other side of that concession may be the term that is just what a party is looking for realizing a big ‘win’. “Beauty is in the eye of the beholder” and so are the private perceptions of the parties and their negotiated terms in a deal.

Some might say this is nothing more than semantics, but negotiation is not a semantic exercise. Clear criteria, goals, objectivity and position coupled with the attitude brought in to any negotiation will define whether or not there is strategy or just chance and compromise.

Success is more easily achieved when one side can understand what the other is looking for or what is needed to complete the deal. There is nothing better than when everybody walks away a ‘winner’, and that is not compromise!

If you are familiar with the closing process, September will be the last days of ‘the old ways’. Get ready for some big changes on the horizon. Big Banking has been lusting for control over the real estate closing process for a long time and Big Government has now made it so. Purported to help the consumer ‘fairly’ decide which loan or institution might ‘give them’ a better deal real really does little to do so.

Created by the Frank-Dodd Act, the consumer now has a new champion in this arena called the Consumer Financial Protection Bureau. Oh yes, as with all modern government mandates there are plenty of newly ‘lettered’ agencies, regulations and documents to wade through ‘for the protection of the consumer’.

The Transfer Act, Alternative Mortgage Transaction Parity Act, Consumer Leasing Act of 1976, Electronic Fund Equal Credit Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act, Home Owners Protection Act of 1998, Fair Debt Collection Practices Act, Federal Deposit Insurance Act, Gramm-Leach-Bliley Act, Home Mortgage Disclosure Act of 1975, Home Ownership and Equity Protection Act, Real Estate Settlement Procedures Act, S.A.F.E. Mortgage Licensing Act or 2008, Truth in Lending Act, Truth in Savings Act, Omnibus Appropriations Act of 2009, Interstate Land Sales Full Disclosure Act, Mortgage Reform and Anti-Predatory Lending Act are all fully or partially transferred to the CFPB. Bored?

Experience says that the average consumer has not studied these regulations and will ‘fail’ when ‘tested’ about the magical designations of Title 12, Chapter X, Regulation C, Regulation X and Regulation Z. Penalty. These really are the legal titles.

It would be too easy to continue on with the named terminology that everyone is familiar with, when ’helping’ the consumer what is needed is more magic! A “closing” will be “consummation” (sounds like soup). A “borrower” will be a “Debtor (that doesn’t sound very nice). A “Lender” will become the “Creditor”. “TIL” & “GFE” will become “LE” (what)? “TIL” & “HUD-1” will be “CD” (enough)!

The reality of all this technical jargon is a cascade unintended consequences for the retail residential real estate market. Gone will be the ability for those involved at the closing table to resolve issues (regarding money), that now can trigger a ‘new round’ of required disclosures from the lenders due to the changes from the original ‘good faith estimate’. If by default there is any effect on the mortgage process, the closing will stop until the round of disclosures (including day count for review) has passed, enabling the process to resume.

Not anything worth worrying about by itself, unless the borrower’s rate lock is going to expire… then what? Back to the mortgage drawing board! New disclosures and additional day count for review. Call the attorneys to reschedule the closing.

By way of planning, it might be a good idea to extend the time line by at minimum a few weeks to complete a typical residential transaction with lender financing allowing for any unforeseen problems that would easily be resolved today at the table.

Sellers will not be free from additional burden either. For example, many areas still have unimproved roads that are recorded at a registry of deeds having scheduled fees for maintenance or other upkeep. That alone is not a problem. What might become a problem is no one actually knows what those fees are assigned for or if anyone pays them. Lenders are going to want to know as they are bound under these new regulations to comply to the letter of the law.

No information will mean delay. New information at closing may require a rework of the loan package. If your buyer’s lender is in Omaha and your transaction is on Cape Cod, the prospects of a speedy resolve is limited.

City sellers beware when financing is involved as you too will need to provide through your agents and legal representatives information about, for instance, those “no condo fee” units, that have a common area, that cousin Billy has been talking care of, for the parking space that he uses during the day, where there is no parking, that no one knows about… in Omaha. Good luck!

Items that have typically been presented at closing such as, municipal certificates, septic system compliance certificates, pro-rated water, sewer, taxes, dues, utilities or any other imaginable items will need to be provided at minimum 14 days prior to consummation (closing) in order to have the lender be in compliance.

Thankfully there are no rule changes for cash deals. Sign the papers and all is done. Home equity lines of credit, reverse mortgages, commercial purpose loans, mobile home transactions will fall under the ‘no change’ category. “Lenders” making 5 loans or less per year (like a seller taking back paper) will also be free from these new rules.

Let’s see what happens next…

Showings can be one of the most interesting, scary, exciting, boring, challenging, hopeful or disappointing events in real estate. Unfortunately many showings are just a big waste of time even before they start.

Stakes are high, but not everyone is always vested in the process. The other day arriving a few minutes early to a buyer showing the ‘scary signs’ of wasting time were in plain sight. It was a real bummer when opening the lockbox to see a blood-draw vile lying in the mulch under a bush. This was not a confidence builder for new parents looking to buy their first home.

On opening the door the actual wasting of time really began. Nothing worse than a stifling hot house in mid July stinking of cat pee and adolescent body odor. Trash spilling out on to the floor and the mounds of dirt laundry made matters worse. Is continuing even an option at that point?

Just when you think you’ve seen it all, your client discovers a homeowner person taking a showing. Yikes! How do these things happen? After being in hundreds of properties over the years there is a certain routine that when followed can minimize the likelihood of ‘surprise’.

When reading the listing sheet, best to ask the listing agent exactly when those “refinished floors” were refinished. Those polyurethane fumes in a closed house can actually be dangerous. Pesticide applications, carbon monoxide, gas leaks… A new term could be coined: “dying to see that house”.

Not everybody plays by the same rules and certainly not all parties care as much to make a showing really worthwhile. Ever arrive at a showing where the person answers the door hostile? Occasionally, someone loosing their home to the bank, getting a divorce or not wanting to give up ‘their’ rental unit “goes around the bend”. Best just to walk away understanding that again a small portion of your life was wasted.

“He’s really a very friendly python” is another good one as the reptile is coiling himself around and around a frantic seller trying to avoid being supper. Yes, yes, yes, it can all be true. The things you can see at a showing can always amaze!

One favorite, is the ‘additional family room’ which is actually a garage converted years ago by the brother-in-law and his friends without permits, insulation, fire-stop or cleaning the old car oil off the floor before laying the discount carpet. A full basement on the listing sheet might actually be a foundation bigger than a crawl space, but not deep enough for a 5’2” person to stand without hitting their head.

The mysteries never cease. “Why are those downspouts so far out on to the lawn?” a buyer might ask. A good guess is that wet basement which was reported to only be damp once during the ‘thousand year storm’ is the reason.

Yep, showing a junk house is showing a junk house, because no matter how the listing has been ‘puffed’ or “freshly painted” it is still a piece of junk. When there is not enough time to preview a property for the client there are no better words than “I’m done” in the first few minutes minimizing the ‘waste of time’ factor in showing property.

The “Felix Unger” is a great property to show. This class of property can be found in all price ranges. The organization in these homes is always amazing. Foodstuffs placed neatly in rows according to height, can style and date. Batteries lined up D, C, AA, AAA and 9 volt. Recent dishes neatly arranged to dry on the rack. Clean neat and ready to go. These showings are always ‘hopeful’, as no matter the age or attributes of the property they are generally well cared for.

The ingenuity found at many properties can be interesting piquing the imagination. “I would have never thought of doing it like that” when looking at an addition or other renovation. Use of space and style is seemingly as limitless as the variety of listings to look at.

Often in a market place showings can be just plain boring. Large condominium complexes where all the units are the same painted light-off-white with limited views and a carport. Large developments where there are only 4 different models to choose from or those same models in a reversed elevation can be so similar that it is hard to remember which one has been seen.

It is always exciting in the field when the right home is paired with the right buyers and sellers. Everyone jumps up to clear the path for a mutuality beneficial transaction anticipating the new events and life experiences to come. Those moments are a blast and all move on making ‘new friends’. Without those deals the business of real estate can be taxing.

There are almost always challenging events, problematic items, poor execution and uncooperative individuals whom would rather wreck the soup before it hits the table, but with a keen eye on the prize all involve can keep the wasted time to a minimum and find what they are looking for. Good luck on those showing appointments!

Is That Right?

While out in the field with some buyer clients a glaring example of ignorance or misinformation was repeated, in a public setting, again. Before jumping on the soapbox, a reminder, buyers beware! No, not of the wild, barking and snappy dogs at the showings, but of the silent unseen more dangerous ‘things’ that everyone should concerned with or at a minimum aware of in properties of all types. The ‘monster’ in the basement (although there are some pretty creepy basements out there) might not be the worry, but the sometimes-invisible hazards that can be found at many properties should be.

Case in point, “Nobody tests for lead anymore.” An outrageous statement minimizing a real danger not just to children, but to everyone. If you are buying, selling or living in a property built before 1978 you should be concerned about lead poisoning. Poisoning! Yikes! Isn’t that word a bit strong? No, not when you look at the statistics available.

One of the oldest housing stocks in the United States is in Rhode Island where close to 20% of all children have been affected by lead-paint. Yes, almost 1 in every 5 children has been poisoned. There is no recovery for the poisoned and aside from the human tragedy in those numbers the cost associated with those instances is staggering.

The following are symptomatic of lead poisoning in children:

• brain and nervous system damage
• behavioral problems
• learning problems
• slowed growth
• hearing problems
• headaches

and for adults:

• reproductive problems in men and women
• pregnancy difficulties
• high blood pressure
• digestive problems
• nerve disorders
• memory and concentration problems
• muscle and joint pain

Many of the unsuspecting would rather be concerned with other things from monthly payments to global warming. But, this information (about lead) has been available for many years and is a required part of all residential transactions when the unit was built prior to 1978 by way of the Childhood Lead Poisoning Prevention Program (CLPPP).

Know your rights and use those rights! Take the time to understand what potential hazards might be at any property. There are many ‘shoulds’ that turn in to unfortunate ‘could haves’.

Sellers are not required to test or pay for any lead hazard test at a property. They should provide any report available if they did a risk assessment on the way in or were given reports by others at the time of their purchase. Unfortunately not everyone believes in transparency.

Regardless, the seller must disclose the potential for lead-based paint in the home when built before 1978 and if you are a buyer, your real estate agent should also provide you with a pamphlet that explains the hazards of lead-based paint. There are standard forms certifying the disclosure.

There is also a 10-day period for buyers to have a property inspection for lead hazards before a contract can be binding. Many sellers’ agents will try to speed up that inspection contingency or minimized the idea of the hazard with a silly statement like, “I grew up in a home with lead-paint and I’m okay”. Waiving the right to inspect is not recommended! The knowledge gained by a good inspection is a great protection whether the risk is major or minor.

Buying a bank owned home? Crazy as it may seem, banks get a pass when selling REO. The law requiring disclosure of lead-based paint does not apply to foreclosures so again, buyers beware!

Often at the closing table disclosure documents are presented for signature naming all kinds of environmental hazards. Lead, asbestos and underground oil tanks. Contamination by petroleum products, industrial sites and illegal drug manufacture. Water quality, mold and radon. Electromagnetic fields nuclear sources and disposal sites. Manufacturing, transportation and agriculture.

The list could go on, but the idea is to be prepared up front. Know your risk tolerance and follow best business practice. Make good choices by being well informed. The few dollars you will pay to investigate a property by inspection before purchase will bring you a thousand-fold in piece-of-mind later.

If at sometime in the future you decide to move again (or pass the property to your heirs), you will be able to report to any potential buyer in good faith all that you have learned during your stewardship at the property.

Watching a frenzied emotional run up in any given market is always an interesting study. Sellers think they are “making out” when their property goes off the market on the same day it was listed and buyers don’t have a chance to really take the necessary time to do their due diligence to make an informed decision. Additionally many licensees throw fuel on the fire with panic on both sides of the transaction.

A great case study would be a client from last week, well prepared with bank approval in hand and as they say in the business ‘ready, willing and able’ to buy. What could go wrong? The buyers had studied the local inventory and were sufficiently exercised to throw good paper to achieve the intended goal. Units in this spot market were quick to go ‘under agreement’; the advice was to “bring a deposit check”.

First showing was at the open house and on arrival the circus atmosphere was in full swing. Cars pulling up to the curb with people almost running to the front door. This would be quite comical if not for the seriousness of the job at hand.

Well the property was nice. Not perfect. Average really in comparison to some of the other homes in the development. Most of the windows had lost their seal and were fogged. The carpets that had not been replace were dingy. The handrail to the basement was not to code. And the yard space was less than usable (save for a small BBQ area).

Regardless, the buyers were ready to buy and thankfully to the good prior advice had a pre-printed offer in-hand only needing a signature and the presentation. With this property effectively only on the market for 1 hour, the offer was presented and further requested documents sent to the listing agent by a prompt email. Okay, place your bets! What happened? Stay tuned…

If logic were to be applied to this scenario it is unlikely the sellers would have thought that they made out. An up-side blowout does not support price. Did the listing agent do the job at hand? Was the highest price attained? Or, was it just “I got $10,000 more that my neighbor next door” and see you later? A bunch of very good questions.

Would these buyers have paid a higher price if given the opportunity to test a true support level? Only by multiple counters in a short inventory condition can the real terms to purchase be found. In the rush, many aspects of a prudent market are lost and unfortunately one of the first things to go is judgement.

The conscience of the market place also takes a beating. Faith in the process does need to be preserved to better serve all sides in a transaction. Is shortening the inspection window or telegraphing a no inspection environment beneficial to anyone? Sounds like a good road map to the courthouse to me.

Any radical movement in a market is unhealthy. Evidently the last crash did not teach very much. While the media drumbeat keeps saying that ‘we have recovered to the pre crash era’ no one seems to ask if that is a good thing? The pre crash market was as unhealthy as a market can get. Run ups without some kind of underlying economic support are nothing more than ‘musical chairs’. Some people just call it what it is, gambling. Did anyone notice that the annual GDP numbers just released last week were down?

Slow steady growth with benign corrections make an ideal environment for the purchase and sale of real estate. Predictability allows for a comfort level in making choices. But, when statistics show a 25% annual price inflation rate for residential housing anywhere you know something is a miss.

Well, no individual controls the market place and the client’s offer was rejected at full price with favorable terms. In review (as a practitioner) an opportunity to receive a counter may have better served both the buyer and the seller if time was to allow the vetting of the process. There may have been wishes or circumstances pushing the buyer forward and time for the seller to realize a higher negociated price. No one will every really know for sure other than the players in that transaction when it closes.

The obvious forces of supply and demand have the same affect in real estate as with any other commodity and when in balance there is stability to the underlying psyche of the collective market place. When this psyche is affected by irrational fear or unreasonable mania errors in judgement usually follow. Right now many spot markets have both of those factors.

‘They say’ you should never talk about politics when conducting business. Why exactly is that? Many ‘experts’ will say that real estate practitioners and other agents in an effort to ‘not offend’ the client should remain neutral in commentary.

Well, commentary is commentary, and probably better suited to a discussion time outside of the business day. However politics has, does and will affect the dealings of the market place.

Ever go in front of the local Planning Board for a building permit? Politics. Conservation Commission, Coastal Commission, EPA? Politics. Historic Commission, Zoning Board, ZBA? All Politics. Even the local condominium has an association full with ‘politics’.

The exchange of ideas is an important tool is in any venue. To hold back an opinion would be foolish. Sure there can be limitations on actual knowledge as every situation is unique to the outcome, but after enough laps around the sun a sense of what needs more investigation presents regularly.

National politics have changed the real estate landscape in profound ways many times in recent decades. Whether it be the savings and load crisis of 1986, the 1999 (GLBA) repeal of the Glass-Steagall Act, the no down payment mortgages widely accepted (and guaranteed by government) used until the ‘crash’, the 2008 TARP bailout or the 2010 Dodd-Frank law, all have had a major impact on the industry.

It can be tough to listen to the fallout of all those political movements when taking the events out of academic discussion and sitting face to face with real people trying to figure out ‘what next’. Quite a discussion can be had when speaking to someone still holding an upside-down note on their property.

Just last week during a client meeting the question was rhetorically asked “Why can a new purchase loan be offered at 4.25%, but I can’t refinance for less than 5.5%?” TARP, HARP, HARP 2, HARP 2.5, ZARP, CARP, what does it matter when you are looking for an exit strategy after 10 years of struggling?

Investment conversion might be a solution. Ah, a whole new set of political rules to learn… The business of an investor or landlord is not immune from any part of this discussion.

A good example of this might be the way in which the income from an investment property is treated. Not too many years back the 13-month rule was the ‘only’ solution. Convert the primary residence to a rental and 13 month later 75% of that income could be added to the gross annual income on a schedule E as part of the pre qualifying process.

Today there are lending institutions looking at that “exit property” as an investment from day one (as long as there is an arms length executory lease with deposits in hand). Point being that politics moved that benchmark. Those benchmarks can and do change with regularity.

One favorite real estate story to illustrate the direct affect that politics can have on a business venture is that of a mill owner in Massachusetts. The mill is no longer used for the original purpose, but the dam and surrounding infrastructure is all still in place to generate electricity.

The owner made a strong effort in time and money to gain permits allowing for the turbines to be reopened only to find that a total of 70 agencies would have to sanction the proposal, and even at that, the final governing agency would only issue a permit on an annual basis. Needless to say the project was not pursued.

It would seem that the political opposition to that project would be minimal. The dam is there. The river is there. The water flowing over the dam is still flowing. No new construction would change the waterway. Just open the pipe and let the water do the work to generate clean renewable energy. All of those agencies are part of the political structure.

How about that reserve fund the condo association has been talking about? Is the new roof for building 3 really needed? Have you been to those meetings? Those arguments have the potential to create a million hit youtube video when the right of personalities clash.

Politics are not as frequently defined by the professional media and are often most important at the local government level. Your property tax bill will be the direct result of the work done at your local city or town hall. The market place will judge the local school system, parks and flavor of neighborhoods to the upside or down.

Take care of where you live. Engage the process. Opinions have value.

While driving back from a meeting, some talking heads on a radio show proclaimed that the biggest investment anyone will ever make is the purchase of their primary residence.

“Here we go again!” This thought process really gained steam in the run-up prior to the last bust. Who are these people? The biggest expense you will ever have apart from feeding your children and paying for your education is the cost of where you live.

Your primary residence is… where you live; and where you live could be anything from a hotel room night to night or a multi-generation family estate on endless of acres of land. Neither of those two examples or any other classification of primary residence in between is an investment. It is an expense.

The concept behind real estate investment is generally to provide a return either by appreciation or income. Primary residences are an expected expense usually paid over a period of time, monthly, annually or in some other well-defined term.

Sure, at the end of a mortgage you have gained an asset fully paid for and ready for whatever comes next, but the idea that it was an investment implies a business thought process of numbers, risk and reward.

Choosing a primary residence does have all of the numbers, risks and rewards as part of the process, but with additional criterion of emotion, passion, excitement and retreat that are not measured in dollar terms. How can a family gathering, the birthday celebration or caring for the ill at home be measured in investment terms?

Any of the following thoughts can bring contentment to homeowners (as well as renters) while having no bearing on the thinking of the investor class: My neighbors are really nice. The kids love to plant flowers here at the front door. This deck has great views. Nothing better than sitting here on Sunday morning having a cup of coffee. Should we clean out the garage?

The satisfaction coming from a where you live can be measured, but dollar value is certainly not the be all and end all of that measurement. The ‘investment’ of time and community is something that memories will give value to in reflection as well as daily emotional well being. These concepts are the drivers for those looking to be ‘happy’ in their living arrangements.

Living under the stress of aggressive mortgage payments that ‘keep you poor’ is no fun, neither is the worry of wondering when the landlord wants to up the rent or ask you to leave. What is the purpose of living in an “investment” condominium downtown, if you always wanted to live at the beach? Will your ‘investment’ bring you happiness?

20 minutes of solid number crunching will give any well-versed investor the answer to whether the property under consideration is worth the effort to pursue. Advantageous locations with supporting social amenities, acquisition cost and return on investment (ROI) are the focus. No “wow, I love this place”. No “I wonder if the neighbors kids will play well with mine”. And no coffee on the deck, just the numbers.

The number game is not lost to the homeowner with many solid economic advantages such as, Government subsidy on mortgage interest, Schedule A tax deductions and favorable capital gains treatment on the sale of a primary residence. However, the focus on ‘investment’ is ludicrous and rarely sincere once diving deeper in to the history.

It is not hard to find in causal conversation people who have owned their primary residence during the past number of economic cycles, up and down. No ‘paper’ gain or loss was realized when no sale was made. There was no investment strategy identified or fulfilled. Some were lucky enough to refinance their loan taking advantage of the low rates while others lost ground in the down turn finding themselves unable to refinance or worse losing their home. The events hidden behind most of these stories are usually ‘reactionary’.

What was the investment program of the couple when they bough their first house 35 years ago? That was before their children arrived, before the job changes, before the other homes were built on the street, before the boom and bust of the past decade. Improbable they were planning an exit strategy and more likely they were wondering how they were going to make their payments.

Individual homeowners and investors remain two distinct classes. When looking to provide stability and comfort, it is ‘good business’ to take a strong clinical look prior the purchase of a primary residence. Investing in real estate is a business not a place to live.

There is good news, just not much on the television at 6 o’clock. If the view of all real estate transactions were filtered through that TV lens, everyone would apparently be a criminal, victim, winner, fraud or loser. This is not anywhere near truth when looking at the average real estate deal even with the amazing differences of the people involved.

Sure the courts are full of discontents suing for this or that, but the vast majority of closed transactions are beneficial to both sides fulfilling the needs and wishes of all concerned. The vast majority.

A classic example of this might be the couple retiring to a warmer climate selling their home to a younger family looking for more space. Without a buyer the sellers are going nowhere and without a seller the buyers have no choices to make. Neither can move without the other.

When change presents itself some action is usually to follow. An opportunity to take new, better, higher paying job in a different location can be great news, but there might be some choices to make. Do you really want to move out of area? Is moving family friendly? Is there any family to take into consideration at all? Does the new economy make sense?

Vibrant city life can be appealing with all the hustle and bustle, but maybe the quiet of a rural setting is what is needed to regenerate the soul. A suburban lifestyle can be perfect when it fits your needs, but can the commute be survived?

Nothing stated above is ‘good’ or ‘bad’ news, just choices. So why set up a real estate transaction with a negative twist once the choices have been made? Who needs all that drama and wasted energy? That negativity can lasts long after a business deal is completed coloring what otherwise might be measured as a brilliant effort with a dark cloud.

It is true when entering in to any transaction that preparation is a must regardless of side and a strong drink of reality is recommended. Buyer beware, Seller take care. An honest group of parameters should be in place well before listing or going out shopping for property. If applying only emotion to the equation, the friend or foe syndrome will always be just around the corner ready to make a good clean transaction in to a battle of wills.

“Who do they think they are?” “I’m not going to let them tell me what I can and can’t do.” “That asking (or offering) price is ridiculous!” Shortly there after the deal is usually missed, dead or headed for hell. There are no beneficiaries in that game and everybody seems to become the enemy.

Commercial real estate can be a great teacher for those in the residential market place. Function, numbers, limits and the absence of emotion rule. If a deal doesn’t make any sense, move on. No name calling, no wasted time or energy. No friend or foe, just business.

The fact is residential real estate is not commercial and strong emotional energy is needed to make a house a home. That energy should remain focused in that arena kept in check by the built-in coach of set ‘parameters’. Additional most people are not buying or selling their property with any regularity allowing for only one chance to get it right.

When the major elements such as pricing or timeline have been well defined the foundation for a friendly transaction can support other pieces of the negotiation and curb friction. There is no need to ‘explode’ a contract before it is even penned or as the contingencies are removed when working toward closing.

When a problem arises the likelihood of a work-around is far great when the team is working together. “Winning” is not synonymous with abuse. The real winners in a transaction are those who can walk away with the success of a satisfying closing or knowing that the best effort was made in relation to that goal.

Our past addresses may or may not hold fond memories, but they are factual accountings of the changes that do happen. Why not make friends when those changes happen? Let the whim of subjectivity guide the heart, but then remember to apply the limits of objectivity to the deal. Make friends not enemies.