Monday, October 12, 2009

Distressed Mansions


It seems that foreclosed and distressed properties so prevalent in our news today are nothing new. A recent, and delightful trip, to Newport, Rhode Island revealed even the multi-millionaires of the gilded age experienced declining values. Huge mansions meant to impress the European royalty were built on the rocky shores of Rhode Island during the early 1900's.

Millions of dollars spent in constructing mansions that took hundreds of craftsmen 2-4 years to complete, went on display to the worlds rich elite. These mansions were the owners summer "cottages" where it was all about the social scene. Most mansions employed 30 - 40 staff members (servants) to handle their busy social calenders and events hosted through out the summer. The who's who of America's mover and shakers maintain summer residence in Newport. The opulence of those years ended rather abruptly with the govenment instituted income tax and the following generation not having the desire of the finances to keep such money pits going. Many mansions fell into disrepair from neglect and abandonment. The Rosecliff Mansion is one such cottage. After the stock market crash and depression, the home changed ownership a number of times and at one time during the 1940's was sold as a distressed home for about $24,000. Just a fraction of the millions it took to build it. (see photo). The home, now lovingly restored and donated to an historic preservation society, is a beautiful piece of architecture displaying some of the days finest craftsmen and available to tour for a modest fee. I will say, Newport Rhode Island seems to have weathered the economic recession pretty well. Exquisite shops, cool harbor side restaurants and pubs bustling with people, marinas packed with yachts, even in mid September. It's a very interesting place to visit and recall a very different time in our countries history.

Wednesday, June 24, 2009

Today's foreclosures, not for all first time buyers.

We are, no question, in a real estate market that unless you are over 80 years old, you have never experienced. Sixteen percent of our local listings make up eighty percent of our units sold. That 16% represent bank involved properties, that being foreclosures and short sales. When we look at real estate, we need to look with a completely different lens. If you are a buyer, you are in the zone. Particularly if you have the time and know how to rescue or fix up what can be a terrific purchase. Some homes are selling at 70-80% discount of their purchase price just 4 years ago! Often these homes are not the condition that they were 4 years ago, but with some know how, gumption, and ambition, these can be great buys. The problem I see with many buyers is a mentality of a $20,000 home that needs no work. Forget it. It's not there. Or a $50,000 home that has acreage, remodeled kitchen with stainless appliances and new baths and pole barn. Forget about it. When I show young men foreclosure homes that have terrific potential and incredible value, I am surprised that so few of them actually know very basic home repair. Even painting, which is the lowest level of home repair projects, is foreign to them.
It has occurred to me that we have been raising our young men with a mentality of hiring it done. Our young men have been brought up soft. Even when we have a flat tire, we have a service we call to have it changed. As young boys, they see their dad calling roadside service to change a flat tire and they figure "so that's how it's done." We get our oil changed at Jiffy Lube, not in the garage in the evening. When an organization of young boys has a sub sale, the boys don't actually make the subs, they just order them from someplace and resell them. In fact, they don't even sell them. Their parents bring in the sub sale sign up sheets and post them in their workplace breakrooms. This is how we begin to train our young boys and girls, and it is making a impression. My point is that calling roadside service is not a bad thing, or going to Jiffy Lube is a not bad thing. It's just that many boys have never been exposed to actually doing these things. The option of doing it themselves doesn't even occur to them. The lack of any substantive home repair/remodel knowledge hits hard when these young boys become young adults and enter the home buying market. The "hire it out" mentality might work OK in good economic times, but in these challenging times, more and more inept young men find themselves completely clueless when the necessity of circumstances eliminate the "hire it out" option. What often floors me is the lack of gumption to even try. Obviously there are other social conditions that put some young boys at a disadvantage to learn. Absentee dads, single parent households, divorce, have left these young boys without a example. Now, as young adults wanting to capitalize on a incredible real estate purchase value, it's not for them. Not that a solid real estate deal is not within there grasp. A 20% discount is still a 20% discount, it just that it's not 70%. Foreclosures can be a terrific deal- but not for everybody.

Tuesday, March 17, 2009

Chinese Drywall - Causing Big Stink!

First in was asbestos, then radon, then mold, now there is a new home owners problem: Chinese drywall. Just recently, in the last couple of months, some homeowners have been faced with a whole new set of problems. After hurricane Katrina that ravaged New Orleans and other areas of the south, drywall became in short supply. Some primarily large corporate builders purchased drywall manufactured by Chinese companies by the barge load. This Chinese drywall seemed fine when installed and with painting and finishing, who would know or suspect a problem. Indeed there was not a problem until recently. Occupants of home built with Chinese drywall 3-5 years ago, recently started to experience health problems. Flu like symptoms. Toxicologists have found Chinese drywall is emitting sulfur containing gases that is corroding copper fixtures, air conditioning coils, electrical wiring, and home electronics. Imagine what it is doing to the insides of a human body. Home owners have noticed unusual problems recently with there 3 and 4 year old homes like leaking air conditioners, drains that become pitted, and mirrors that have turned black. Home owners themselves have complained of headaches, post-nasal drip, and burning eyes, couphing up blook, and just feeling lousy. And the smell, like burned matches or rotten eggs, will overpower the senses.
The remedy? Tear out the drywall completely and start over. Lawsuits are being filed, but in some cases, the contractor is out of business, a victim of our sluggish economy. Not sure how the insurance companies are treating this, it is all so new. There may be as many as 300,000 plus properties affected with this bad drywall. In Florida, many real estate companies are requiring disclosure forms relating to Chinese Drywall. Although initial reports are coming primarily in the south (Florida, Mississippi, Georgia, Louisiana) environmental watchdogs have found links to 41 states and expects to see it in all 50 states.
So whats to do? First, the problem seems to be in newer homes built within the last 5 years, although some reports go back to homes built in 2001. Check for unusual corroding of electrical wires and copper plumbing. Check for stamping identification on the back side of drywall, most often visible from an attic space. When building a home, I would recommend a statement from the contractor/builder that Chinese drywall would not be used in the construction of the home.
This can be a huge problem for a home owner and it begs the question. Are the Chinese companies that have manufactured the drywall taking any responsibility in the problem? Do our US companies have responsibility to shoulder in subcontracting out to Chinese manufactures, knowing their lack of quality and environmental standards. As for the consumer, are we driven by economies of price that we overlook our local supplier and inadvertently take on risks.
As we become more and more global in our economy, and as we re-evaluate ourselves when going through our current economic downturn, I can't help but think that our smaller and family owned businesses will be looked on with favor once again. Bruce Cornell, 3-17-09

Monday, February 2, 2009

Free fire, carbon monoxide detectors

Many area homes lack adequate number of detectors to create a safe environment in the home. The Rockford Fire Department of Kent County, Michigan hopes to remedy that situation in the coming weeks. Aided by a grant through the Kent County Health Department, the city's fire department, along with the fire departments of Algoma, Plainfield, and Solon townships, are distributing free smoke and carbon monoxide detectors to qualifing homes. To qualify, the homes must be occupied by a child under 14 or a senior resident. The detectors will be installed by fire fighter personnel at no cost to the home owner. For more information call the fire department at (616) 866-1553.