when real estate agents go over the line to gain edge

Luxury Real EstateAlthough not listed in this year’s Careercast’s annual Top 10 Most Stressful Jobs, “real estate agent” has been included in previous years’ lists. Supposedly, real estate is one of those industries where “frequent or difficult interactions with the public or clients” along with high levels of stress may also be responsible for high levels of depression, as described by Wulsin, Alterman, Bushnell, Li, & Shen in their 2014 study (Prevalence rates for depression by industry: A claims database analysis. Soc Psychiatry Psychiatric Epidemiology, 49,1805-1821). Results suggested that the real estate industry has the second highest rate of depression, second only to bus drivers and transit workers. Certainly to be included in such lists is not an achievement. However, it may explain the erratic behavior of the few agents who are willing to go over the line to gain an edge over their competitors; such as in this recent account…

In their November 2nd Miami Herald article (Secret tapes, blackmail threat: Luxe real-estate rivalry turns nasty in Miami; miamiherald.com), David Ovalle and Nicholas Nehamas gives us insight to the highly competitive Miami uber-luxury real estate market. What seems to be the plot of a TV crime drama is the real life story that will soon conclude in a court room. Having pleaded not guilty, a middle aged real estate agent is now awaiting trial for “felony extortion, resisting arrest with violence and attempting to deprive an officer of his weapon.”

The story’s main characters are the agent duo known as “the Jills” and Kevin Tomlinson. The Jills have been recognized as being a top producing team in Miami’s luxury real estate market for some time. Tomlinson is no slouch either. He has also been recognized as a top Miami luxury agent, and in the past served on the board for the Miami Association of Realtors®. And although Ovalle and Nehamas’ report suggested that the Jills garnered jealousy from other agents; others have also questioned their business practices.

At the heart of the matter was the allegation that the Jills hid expired listings so the properties would not be solicited from their competition. The allegation is that MLS listing data (such as address, city, and neighborhood) were changed to “hide” expired listings. In an attempt to end the practice, Tomlinson filed a complaint of listing manipulation in April of this year. And that’s when things got interesting.

Rather than waiting for the ethics complaint to process through the system, Tomlinson allegedly asked the Jills on several occasions for large sums of money (up to $800,000), to rescind the complaint. Tomlinson supposedly also threatened to go public if they didn’t pay up.

The combination of high end real estate, allegations of unethical behavior, extortion claims, a police sting operation, may already be the basis for a night’s entertainment. However, the ending sounds like a “take down” scene from Hawaii Five-0: no one expected that Tomlinson would be also charged for going for a policeman’s gun while charged for resisting arrest.

Although the public details may seem incriminating, it appears that there’s more to the story; and maybe each is a “villain protagonist.” Many in the Miami real estate community have rallied around Tomlinson, and some “have petitioned the Miami Association of Realtors® to take ‘disciplinary action of the highest severity’ against the Jills.” For the thrilling account details, please read Ovalle and Nehamas’ story at (miamiherald.com/news/local/community/miami-dade/miami-beach/article42178872.html).

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Drone use takes off to sell homes

Real Estate Aerial pictures and video may seem cutting edge, but you should consider a number of issues before agreeing to have a drone flying over your home and neighborhood.

The Bulletin of Photography Volume 15 (published in 1914) includes an article about Des Moines, Iowa real estate agents contemplating a “scheme” of photographing homes. The photographs were to make touring homes easier for busy clients; agents were to have four photographs per home in their exclusive portfolios. Real estate photography has come a long way since 1914. Today, home sellers expect dozens of high resolution pictures and even video to market their homes. In addition to the typical media array, some agents promote aerial photography to capture different perspectives of large estates, farms, and acreage.

Aerial photography has been around almost as long as commercial photography. According to the Professional Aerial Photographers Association (professionalaerialphotographers.com), the idea of aerial photography was patented in 1855; however, the first known aerial photograph wasn’t taken until 1858. No one knows for sure when aerial photography was first used for real estate sales, but you can bet it that it probably coincided with the broad acceptance of real estate photography. Although aerial photography has been accomplished by helicopter, balloons, and even very tall poles, it is increasingly becoming the domain of drones (also known as “unmanned aircraft systems”).

Many tout the drone’s potential and value. However, as commercial and hobby drone use skyrocketed, many also began to see the threat to personal privacy and safety. There has been a dramatic increase in pilot reported close calls; compare the 238 sightings during 2014 to the 650+ sightings during 2015 – through August 9th (FAA.gov). Federal and local agencies have sought to regulate drone use by implementing rules for safe and ethical use. You may have read Rebecca Guterman’s article investigating this issue earlier this year in the Montgomery County Sentinel  (State explores new drone rules; February 25, 2015).

On February 15th, the FAA published proposed rules for unmanned aerial systems as a step forward to integrating drones in our skies. Jenna Portman and Josh Hicks reported in a June 30th Washington Post piece (New laws in Va., Md. and D.C. regulate drones, Uber, social media) that Maryland will propose drone use rules by 2018; and in the interim has prohibited counties and municipalities from legislating drones, giving “exclusive jurisdiction” to federal and state agencies.

Commercial drone use has soared, especially in real estate applications; such that Dronelife.com estimated that real estate drone use could generate $10 million by 2016. The National Association of Realtors® has been at the front of this issue, promoting and educating safe and ethical drone use to members. NAR President Chris Polychron stated in his testimony to the U.S. House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet: “Realtors® have shown a consistent interest in the safe, responsible use of drones in the business of real estate… (realtor.org).

It may seem cutting edge to integrate aerial pictures and video into your marketing plan, however there are some issues you might consider before agreeing to have a drone flying over your home and neighborhood. You should ensure that the operator is experienced and authorized to operate the vehicle. Make sure the drone operator is insured, as accidents and property damage can occur. Finally, confirm that any aerial pictures and video publicized are worthwhile; poorly executed aerial photography could detract from your marketing efforts, and interfere with a buyer’s appreciation of your home’s qualities and charm. For more information, visit Know Before You Fly (knowbeforeyoufly.org).

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Luxury home sales outpace mid-low tier sales

Luxury Real EstateWhat seemed like the breakout year in real estate may turn into a hard act to follow. Although the National Association of Realtors® May 22nd news release made headline news by skillfully pointing out that April existing home sales increased 1.3% from March; April’s sales data were 6.8% lower than last April. Much like the assertion to “Keep Calm and Carry On,” the spin on data may bean attempt to motivate home buyers and sellers.

The Greater Capital Association of Realtors® home sale statistics were consistent with NAR’s, such that Montgomery County MD single family home sales decreased about 8.2% in April compared to the same time in 2013. Looking deeper, the numbers reveal a similar scenario that played out in 2011 when a bifurcated market emerged between upper bracket and middle to low bracket homes. Sales of upper bracket homes are doing very well this year, while moderate to lower bracket homes sales are decreasing compared to last year. And much like 2011 when luxury home sales hit record prices (when DC’s Evermay and Halcyon House sold); 2014 is also a year of record luxury home sales (LA’s Fleur-de-Lys sold for $102M, CT’s Copper Beech Farm sold for $120M, and a NY mansion sold for $147M; each sale successively breaking the record for most expensive residential US home during a 5 week duration!). Consistent with this theme: cash sales are increasing this year, while first time home buyers are decreasing.

While the housing market may be shaping up to be similar to that of 2011, the reasons for a similar profile are different. We were looking for the market bottom during 2011, as well as assimilating an unprecedented number of distressed properties. However, even though distressed sales are rapidly decreasing; 2014 was supposed to be an extension of last year’s increased sales activity.

What we may be experiencing is the flip side to the housing crisis, as described by Daren Blomquist, RealtyTrac Vice President in his May 19thblog post (Nearly One-Third of Americans Live in Counties Where One in Five Homeowners is Underwater: Heat Map; RealtyTrac.com). Blomquist characterized the lack of participation in today’s market as being from the unusually high number of home owners with high loan balances on their home, including the many whose mortgages are underwater. This lack of participation is much like the many homes taken out of the market because of the foreclosure crisis during the downturn. He stated that the “normal flow [of move-up buyers] is being disrupted by homeowners with negative equity who are holding back from becoming move-up buyers, which in turn is impacting the availability of inventory downstream for first-time homebuyers.” According to RealtyTrac, those who are “seriously underwater” (125% or higher of loan balance to home value) account for 11% of Montgomery County MD home owners, while the county average loan balance to home value is about 79%.

The idea of the inactive move-up buyer is not new. In fact it seems to be that move-up buyers were lacking after other deep recessions; the August 17, 1985 article published in the Chicago Tribune titled, “Move-up Buyer Provides The Base For A Recovering Housing Market” is a testimony for such behavior. The timing for the move-up buyer is likely correlated to the time necessary to either recover lost equity; or reach a comfort level for the net amount gained in their home sale.

Dan Krell ©
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of May 26, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

Squatters and real estate – a reality in today’s economy

HouseAlthough some squatters move into vacant homes to live rent free, others do so to take advantage of adverse possession laws. The squatter movement has grown, not just in the U.S. but significantly in Europe as a means of social change. Activists advocate squatting as a response to Europe’s high unemployment, austerity, decreased public housing and declining living standards. Currently touted as “alternative housing,” squatting in the U.S. increased during the time when foreclosures and vacant homes skyrocketed after the financial crisis.

A recent story, about squatters taking over the Florida home of an active duty soldier who is stationed in Hawaii, highlights a recent trend. According to Florida’s WFLA Channel 8, the home owner claimed people broke into his home and changed the locks; however, the squatters who moved into the soldier’s home claimed to have a verbal agreement with the home’s caretaker to live in the home while making repairs. When the Afghanistan veteran planned to moved back to Florida, he was caught off guard when he was told removing the squatter was a civil matter and had to go through the eviction process to rid the home of the invaders. As the story gained national attention, veteran groups hired an attorney to begin eviction. However, it appears that the combined pressure has facilitated the squatters’ departure; but not without making a statement of their own by leaving the home in disarray and their dogs to roam freely.

Two local cases of squatting were reported last year, where defendants claimed “sovereign rights.” A vacant, bank owned Waldorf home was reported to be occupied by seven individuals who claimed to have the right to occupy the home because they are “sovereign citizens.”

A March 18, 2013 Washington Post article (Moorish American national’ charged with trying to take mansion) highlighted the other case, where an individual also claiming sovereign rights moved into a vacant $6 million Bethesda home listed for sale. The squatter allegedly attempted to change the tax records to indicate he was the owner by appearing at the Montgomery County court house and presenting “historical” documents and maps. But the county clerk turned him away saying that a “proper deed” was needed for such a change. The squatter reportedly went as far as emailing the listing agent cryptically claiming ownership. According to news reports, the squatters in both local cases were charged by police.

The Bethesda case emphasizes that bank owned foreclosures are not the only homes occupied by squatters, vacant homes listed for sale are also targets. Nationwide reports about squatters in upper bracket luxury homes increased last year, as well as the attention to “squatter’s rights” and adverse possession laws.

Last July, Sheree R. Curry of AOL Real Estate (Squatters Beware: States Are Revising Adverse Possession Laws) highlighted the case of a squatter who moved into a Boca Raton, FL mansion listed for sale. The squatter was eventually “locked out” of the home, but the events moved the community in an effort to change Florida’s Adverse Possession laws. And although adverse possession laws vary throughout the country, Curry reported that some states are revising these laws to protect home owners. New York and Washington had already changed adverse possession laws when Florida changed theirs to prohibit “acquiring title to real property by possession”; which went effect July 1st 2013.

by Dan Krell ©
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of April 28, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

Luxury real estate reaches new highs

Luxury Real EstateSome of the most significant real estate sales of the year occurred in the last two weeks. The first is the home known as Fleur de Lys; Realtor.com reported on April 4th that the Los Angeles mansion-estate that was described as “unsellable” – sold for LA record $102 Million. The home’s former owner was Suzanne Saperstein, socialite and philanthropist who’s seemingly public divorce from billionaire ex-husband David Saperstein appeared to capture the attention of the country when papers were filed in 2005.

Styled after Versailles, the 100 room mansion was originally listed in 2007 for a then record of $125 Million. However, the on and off again listing made some experts believe that the home would not fetch the asking price. But in the end, a bidding war ensued between several buyers, with the winner purchasing the home for the area record amount.

Although the sale of Fleur de Lys was news when it sold, it now takes a back seat to the highest priced publicly listed sale of a single family home in the country. Realtor.com reported on April 14th that the Connecticut estate, Copper Beech Farm, sold for a record $120 Million. The home was the former residence of one of the founders of what would become U.S. Steel, and originally listed for $190 Million. The 15,000sf waterfront property is situated on 50 acres; and boasts luxury features such as: hand carved fireplaces; soaring ceilings (with intricate artwork); the dining room features columns, oak paneling, and a tracery ceiling; the solarium is lined in detailed glass.

Although the high priced home is touted for its record sale price, a July 2013 NY Times article (Burdened Estate Bears Monumental Price Tag, and Many Mortgages) reported that the most expensive home ever publicly listed for sale was also “one of the most heavily mortgaged homes in American history;” however, the article stated that the amounts owed were not of public record, and additional properties were reportedly sold to repay the loans.

This significant listing isn’t a pyramid, nor is it a house of cards. You might not even know that the former owner of this “butter-colored stucco house with the slate roof and second-story balustrades” was the infamous man for whom the financial scheme was named. Yes, Charles Ponzi’s home is listed for sale. Maybe the sale would have been significant on a number of levels if the home were listed 4-5 years ago; however, the stately colonial’s listing is still significant nonetheless.

The Boston Globe reported on April 4th (Charles Ponzi’s former home up for Sale) that the Lexington MA home only changed owners three times since it was built in 1913; prior to the current listing, each sale was private. What makes this sale significant is that it is the first time the home’s sale is being listed publicly. Although the home was to be a symbol of Ponzi’s achievements and status; ironically, Ponzi’s ownership was only a six week stretch prior to his arrest in 1920. Maybe the new owner might be someone who is interested in the home’s history; however, the home is described as a “Colonial Revival mansion with 16 rooms and a charming 4 room carriage house…restored,” and of course hyped as the former residence of Charles Ponzi.

by Dan Krell ©
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of April 14, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.