Showing posts with label second-home. Show all posts
Showing posts with label second-home. Show all posts

Monday, April 04, 2016

THE PROBLEM WITH RESIDENTIAL HEATING OIL STORAGE TANKS

If you live on Martha’s Vineyard the most common fuel sources are Propane and Oil, oil having been the most commonly used for decades not to mention the most efficient (BTU) heating source. 

Before I discuss the problem I want to explain that Martha’s Vineyard Island is a very fragile ecosystem relying on a common aquifer for its drinking water. Once that aquifer has been compromised to the point that it is no longer potable – suitable for drinking, life will change.  I am not saying we are doomed, but our quality of life will suffer significantly.  Right now, today, we are still in good shape and I know my drinking (well) water is delicious.

We have done a lot to protect the ground water with the implementation and regulation of engineered Title 5 waste water systems and limited expansion of the sewer system networks, but that is topic for another conversation.

First of all, residential “consumptive” use fuel oil storage tanks are not regulated by the Federal Government.  The Fed focuses on the commercial sector because the fuel containers are huge (e.g. gas stations, etc.) and the consequences of a breach would be catastrophic.  Normally, for residential consumption, whether the oil storage tank is above or below ground the capacity is between 275 and 288 gallons.

In my two and half decades in the real estate business on Martha’s Vineyard I have witnessed some very unfortunate costly mishaps concerning fuel oil storage tanks.  For example, two 275 gallon single wall storage tanks above ground connected in series; one tank begins to leak and siphons the second tank’s contents out and into the earth below.  Why did no one notice what was happening? Because the owners were absentee seasonal occupants like so many other property owners on Martha’s Vineyard. The area had to be excavated and all – I mean ALL, of the contaminated soil had to be removed, and then it had to be carted off-Island to an approved disposal center for HAZARDOUS WASTE materials.  Would you like to guess how much that cost?  In another situation a tank leaked in a basement in a heavily populated area. The basement had to be excavated as did a portion of the exterior beyond the foundation. Soil samples had to be taken not only at the subject property but for the properties abutting the area of the fuel oil spill.  Also, the contaminated earth had to be packed into dozens of large storage drums for transfer off Island. Would you like to guess how much that cost?


Single wall steel fuel oil storage tanks have been used since before I was born, but they don’t last forever and like everything else it seems, the quality has diminished.  Normally, the wall thickness of a 275 gallon single wall tank is 12 gauge but when “off shore” tanks were introduced into this country, quality control suffered.  



Thus, the introduction of the ROTH stainless steel “double wall” fuel oil storage tank. However, they are not cheap. You can buy a single wall 275 gallon tank for about $1000.00, whereas a ROTH tank will cost you triple that amount – but you will have it forever, if there is such a thing.







Is there an alternative or “band aide” if you don’t have $3500?  There is a company, Boston Environmental that has been administering the TankSure Program inspection services for a number of years.  I recently observed a demonstration and I have to admit, even though this is a serious matter, it made me chuckle. Why? Because it reminded me of a pregnancy ultrasound. First they smear some clear jell on the transducer probe that is used to send and receive sound waves, then they move the probe around, usually to 10-12 locations along the lower tank wall while reading the measurements on a digital display.  
Through analysis the condition of the tank is rated.  The generally accepted minimum wall thickness measurement to pass a tank is 0.100”.  If the average is significantly less than that the tank will fail the inspection. 

Some companies offer incentives and a limited warranty, but in my opinion there are no guarantees even though the tank passes the test.  If the test results are marginal you may be advised to have the tank replaced or at the very least tested every year. Some fuel oil companies may even refuse to fill a tank that is below the accepted range.  What do I tell my Buyer Clients? REPLACE THE TANK with a ROTH tank.


So, if you are as concerned about contamination to our aquifer as I am and you heat your home with fuel oil but cannot afford to replace your single wall tank right now, what should you do?  You can start by being proactive and contract with a fuel oil company that is also proactive.  Currently the first service provider on Martha’s Vineyard to offer the TankSure Program for oil tank & equipment inspection services is Island Energy, Inc (www.islandfuelinc.com).  Give them a call.  Jay McMann is the President and he can be reached at (508) 696-5959.

For more information, Mass.Gov has a great section under Energy and Environmental Affairs:  RemovingYour Underground Heating Oil Tank - A Homeowner's Guide

Saturday, March 15, 2014

BUYER BEWARE is one thing, but in this case – OWNER BEWARE too.

An Epiphany
I had an epiphany today and my guess is that very few real estate professionals, or for that matter anyone else knows about this.  Unless you are directly involved in what I will call the electrical power supply business, the details of how you get the electricity to maintain your home or who maintains the service rarely crosses your mind.  You spend less time thinking about that than you do the water you drink or the air you breathe. But it is very important.  I am going to talk about who owns your electrical power supply equipment – the lines, transformers and poles.

My Frame of Reference
I have lived in a so-called exclusive West Tisbury community populated by more than 45 families for over 40 years.  There has always been a ROW utility easement across the property and through the woods for the utility company to supply electricity to the abutting properties.  In my experience it has been the utility company that has always maintained proper clearance by trimming the trees along the ROW.  The utility company has always maintained the power lines, transformers and poles along the private roads network within the community.  It makes perfect sense to me that if I pay for the ‘service’, part of that service should be maintaining continuity and consistent service.  Right!

It ain’t necessarily so
I learned today, this is not the necessarily the norm on Martha’s Vineyard and only a few communities have service networks providing electricity to homes that are owned and serviced by the utility company, presently known as NStar.  In most cases NStar supplies and maintains an electrical service system to a point and beyond that, the system is the responsibility of the property owners along their private roads.

So, what is the big deal? 
It’s not a big deal until the trees along the service path are overgrown and threatening the service continuity, or until the infrastructure of that service has been fully depreciated and compromised.  What I mean by ‘fully depreciated is, when the electrical wires are old, brittle and leaking, transformers are failing due to corrosion and wooden utility poles are rotten and no longer able to carry their load.  The big deal is the cost of replacing all those components that provide the infrastructure keeping your lights on.  Actually, it’s not a big deal, it will be a huge deal and will cost you dearly – unless you choose to live ‘off the grid’ and even then you may be in for a fight with your neighbors.

Take down those utility poles Mister NStar
We can all agree that above ground utility poles and wires are ugly, and my vote would be to bury all utilities.  Spring Point in Chilmark is replacing their entire service and from what I have been told they are going underground all the way.  I love Spring Point.  Did I mention that they are one of the other rare Island community cases where NStar owns the service system and has to maintain it?  It is estimated that the service replacement is going to cost well over a million dollars.

What should you do? 
For one, if you are a Buyer considering a purchase in a ‘community’ with private roads, find out who owns the utility system.  My guess is that you will not find that information in the Association Rules and Regulations. If it is privately owned and there is a home owner association, do they have a reserve to set aside to earmark funds to maintain the electrical system (tree trimming and equipment replacement)?   If you are already an owner in a private community, find out what provisions have been made to support the maintenance of the electrical system. 

Brinksmanship can cost you dearly
Do not wait for a failure or a threat from NStar that they will turn off the electrical supply service to the community until certain maintenance issues have been corrected – like trimming trees around utility lines.  This all can happen during a storm and I am sure you can imagine the difficulty factor when trying to get personal emergency help during a storm.  You are just one more name on a list of hundreds.  This is just another good reason to own a back-up generator.

Sue me, Sue you Blues
I have been told on a regular basis there are any number of litigative actions arising out of disputes between home owners as to who owns what and what the fair share of each property owner should be when a utility problem occurs. The court costs alone can exceed any amount that would be paid for being responsible and setting up preventive measure rules and funds ahead of time.

Wouldn’t it be nice?
I think it would really be a considerate ‘public service’ disclosure for NStar to notify those customers affected that maintenance and safety of their service system is the responsibility of the home owners in their community. For all I know they may be doing that but if not wouldn’t it be nice. I hate surprises – don’t you?

Friday, April 22, 2011

Benefits of Purchasing a Vacation Home Rental



I'll admit that this is a silly lightweight video but it still emphasizes the value of owning a vacation 'income' property that could be partially or totally carrying itself and one day transition into your retirement home.

Is your dream to live on Martha's Vineyard, and were you hoping to get here sooner rather than later? If the economy has rearranged your plans extending your timetable, but has not sapped all of your financial resources, maybe now is the time to put those resources into real estate on Martha's Vineyard. Market prices have not been better in decades and interest rates while still historically low are beginning to inch up.

A recent survey by the Pew Research Center reveals that even five years after the real estate bubble burst, it has not shaken the confidence of the American public in the investment value of home ownership.

Saturday, September 19, 2009

Happy Days Are Here Again, but For Whom?

I take my responsibility as an EXCLUSIVE buyer’s advocate very seriously. I have been saying for many months, now is the time to get into the market, but very few people listened.

The recover in the housing market, not only in Massachusetts, in many parts of the country has occurred faster than we thought it would. My concern is that the market does not understand the new dynamic and that will create discontent and an unreasoned lack of agreement between buyers and sellers.

Now that the summer season has officially ended we are seeing a deluge of properties coming onto the market For those sellers who wanted to spend one more season in their Island homes before they put them on the market, the time has come and that is why we are seeing the appearance of some really nice properties.

And for some who have been suffering the discomfort of their evaporated portfolios, their hope for the kind of seasonal rental income that would support their vacation homes until next summer, that income may not have materialized due to the soft summer rental market, so those properties are now for sale.

For property owners who were smart enough to refrain from cluttering the inventory until the market showed signs of recovery because they were not distressed and did not have to sell; they are being induced to test the waters again. Their reemergence is fueled by a pervasive attitude that the economy appears to be improving, along with statistics to support the fact that the bottom has generally come and gone.

“The percentage of listings with price reductions declined slightly from July to August, and when sellers did slash their asking price they made smaller reductions”, according to a national study by Zip Realty.

In another study done by Zillow.com comparing listing prices to selling prices during July, “U.S. homebuyers paid 3.3 percent less than list price on average, down from 3.5 percent in June and 4.6 percent in January”.

Although we are seeing an apparent rush to market on both sides, the fact is buyers can no longer assume owners with properties for sale are highly motivated, In fact, we have been at the bottom of the market for a while now and the horizon is clearly brighter for sellers than it has been in the last 5 years. I received this email from a local bank the other day:

“Our mortgage staff reports that there are a lot of inquiries, a lot of requests for prequalifications, and applications have begun to pick up…all of this is certainly a good sign that the market is a "happening" place. People are obviously past the point where they are just perusing the real estate guide and trying to figure out just how low they can convince a seller to go…..this rate reduction should be a further spur to deals being made. We all wish you the best of luck this fall…to paraphrase my favorite Irish saying, ‘May the wind always be at your backs from now on!!’"

Here is positive spin demonstrating that the region shows signs of rebound.

The real estate market cannot be rated as a good or a bad market because what is good for one can be bad for another. For the last 3 years it has been considered bad for sellers because no one was buying, yet if a buyer decided to make a purchase, the market was good for them. I think we can all agree the recession has bottomed out and with interest rates still historically low --- under 5%, and with no immediate signs of inflation; this is still an excellent time for buyers to take advantage of once in a lifetime opportunities. But it is also good for sellers. Sellers are no longer feeling as though they are being thrown to the wolves. The market is starting to balance out and sellers are feeling more hopeful and empowered.

In order for you as a buyer to be successful you need to adjust your thinking a little bit and keep your eye on the prize --- a home on Martha’s Vineyard.

1) You are no longer in total control so your expectations of ‘take no prisoners’ will no longer work.

2) You will no longer be able to present a litany of demands to sellers and expect them to acquiesce. You need to be reasonable and willing to leave something on the table --- choose your fights.

3) You have to look at your investment opportunity from the standpoint that the market has gone down anywhere from 10 to as much as 30 percent in some areas and in some price lines. So no matter what, you have to realize you are making a much better purchase than you would have within the last 4-5 years.

4) You have to be willing to negotiate, be patient, be flexible and in the end remember that Martha’s Vineyard is a lifestyle, an emotional decision as well as one of the better long term investments you will make. This Island is a finite commodity and it is not growing any larger.

For buyers today what is most important is to have good representation by a skilled negotiator. Someone who is knowledgeable about the entire market, someone who will thoroughly investigate all details of the property you select so you are fully informed and not surprised later on by things you did not know about. You want someone who will represent you 100% throughout the process and be there for you afterward. You want an exclusive buyer agent. You want SplitRock Real Estate, LLC.

Entering into the home buying process is like wandering through a corn maze, you can make a lot of wrong turns if you are without a knowledgeable guide who knows the way.


Friday, February 20, 2009

Everything is Coming Up Roses, Or Are They Tea Bags?

Rick Santelli was reporting from the pit at the Chicago stock exchange the other day and got everyone stirred up with his suggestion of a Chicago Tea Party . I thought it was marvelous and right on.

Here we are now with a $787 billion stimulus package that includes anemic elements like an $8000.00 tax credit for taxpayers buying a primary residence between Jan. 1 and Dec. 1, 2009. Single taxpayers making less than $75,000 are eligible. That tax credit doubles for married couples. Think about it, an 8k credit is just a drop in the bucket for a buyer in areas like Martha’s Vineyard, and no not everyone who lives here is rich. It’s just not enough. And what about the $75 billion mortgage relief plan the President announced. It’s not right. The Wall Street Journal says, "By investing in failure, the Administration will also prolong the housing downturn and make financing a home purchase more difficult for future borrowers." The New York Times says it is "a good start, but given the dire state of the economy, we fear it still may not be enough."

But what is enough and actually too much is the idea that people who did nothing wrong, the 92 percentile, are being asked to help the 8% that either had no business getting a loan in the first place or defrauded the banks intentionally out of sheer avarice. It’s the hard working people who are continuing to pay their bills even though they are suffering like everyone else today; they are really going to suffer.

Here’s a quick story I heard yesterday from a broker in Florida about one of those people you will be suffering for. This ‘investor’ accumulated no less than 20 properties through no-money down financing during the high time of the market. They did not and have not paid one cent toward an equity share on those properties; they had every intention of not owning the properties long term. The lenders began the foreclosure process about three years ago, but it takes time. In the meantime, this person is consistently making about $20,000 a month in rental income. There are hundreds of scenarios like this one. Why should we suffer for this kind of behavior? They should lose everything and go to jail. But if they go to jail, shouldn’t the enablers go with them? Yes, and that is why nothing will happen to them.

If you are wondering why the foreclosure machine is moving so slowly, let me give you a brief idea by way of another true story. This person is a first time home buyer who will most likely lose their home when their Alt-A loan resets. Mind you this is also in one of the areas where values have dropped by 50%. This person went through foreclosure prevention counseling and as instructed began the bureaucratic procedure with the lender for a loan modification. They spoke to a loss mitigation representative and complied with the instructions they were given. They supplied all the necessary documentation, both on line and via certified mail. They had the person’s name and extension number, but when they called to get a progress report after about two weeks, that person did not exist and both their cyber and paper trail no longer existed. They tried again filling out all the same information, etc. Again after a couple of weeks they contacted the LM department and that person did not exist. However, somehow they were finally able to track down the person that helped them. The representative told them, “You can jump up and down, get nasty and impatient but it will not do you any good. I have over 100 case files on my desk and you are just one of them in the pile. You’ll hear from us when we get to your case.” End of discussion. That’s just one person who has to deal with this enormous mess the government wants everyone to be responsible for.

Bringing it back home to the Cape and Martha’s Vineyard, here in Massachusetts the Warren Group reported the number of homes on Cape Cod that were actually foreclosed on last month was down 8.9 percent. This number is compared to January 2008. In exact numbers, there were 41 foreclosure deeds filed in January 2009 compared to 45 last year. In Dukes County, which is Martha’s Vineyard, the number of foreclosure deeds filed fell to 9 last month compared to 13 in January 2008. That is a difference of 30.8 percent. The experts are not sure what is causing this reduction in foreclosures, but it is a good sign as are the more realistic price reductions posted by the Martha’s Vineyard Information Network database. There are 467 single family homes currently on the market with a total inventory of 680 properties in all classifications. There are 72 single family homes that have been removed from the market since the first of the year. I can assure you everything is for sale, so if you want one of those properties just ask.

Monday, January 05, 2009

Dear Islander, I Envy You

2008 was a very tough year. I think we all felt, or should have felt the pain by now. My business is real estate. Much of the focus nationally as well as locally has been on what has happened to the real estate market. Most of the talk is negative as are immediate future predictions. Negative thinking is easy.

In my latest SplitRock Real Estate e-Newsletter, I directed my readers to an article that appeared in the MV Times, “The Reality of the Martha’s Vineyard Real Estate Market”. My clients and readers know that I have been giving them the same information for quite some time now, but it is nice to hear it from another real estate professional and to look at it in terms of bar graphs. More importantly, it is important to be reminded that this is merely a cycle we must go through, as we have done many times before. As the author said, real estate markets go through regular cycles of (3)5 years down and (7)10 years up. Even the stock market goes through cycles, and theirs are usually 20 to 25 years. I’ll admit we are in a real pickle right now because it is not just the United States that is suffering; this is a global meltdown and the ripple effect is affecting everyone which will result in a prolonged overall recovery. What I found most interesting about the MV Times article was one of the reader comments. Here are some excerpts of that reader’s rather harsh perspective:

“As tragic as this downturn is for the local economy, and as much as it may usher in a different era ahead, I feel a bit glad and relieved about it all.
“I have come to believe that economic progress is actually opposite of quality of life.
“I am someone who first feel in love with the Vineyard in the 1960's. It has not improved since then. In fact, as we get richer by material standards. It actually gets poorer. Material progress has simply been ruining the place. We just adjust to the incremental changes and are, therfore, less likely to notice.
“It is barely distinguishable from the places we came here to escape.
“The growth has diminished the Vineyard's most precious jewels....what we get for free. We have simply over-exploited it.
“Economic ruination would be the Island's salvation, in non-material terms. Now, there's an alien concept, indeed.
“Ruin is rebirth.
“It's of little matter to me, though. I have already moved off-island to another place that reminds me of the love I had for the Vineyard so long ago. I come back to visit now and again, and am, frankly, quite happy to leave.”

I remember when I first came to the Vineyard in the ‘60’s with my parents; they no longer enjoyed summering in ‘the Hamptons’. Martha’s Vineyard was a very quiet place and not too many people knew about it. The ‘Natives’ were typical New Englanders, and not very forthcoming or welcoming, but once they accepted you they were the best. I think one of the circumstances hindering population growth on the Vineyard was transportation, and that factor more than anything isolated the Vineyard from America, but that is irrelevant at this point.

I find it curious that the MV Times reader moved away from the Vineyard, but yet he still follows Island news. His acrid comment above reminded me of a developer who ran through the Vineyard in the ‘80’s like a swarm of locust, and then abruptly left for greener pastures. He was asked by a news reporter in his new location why he left. He said, ‘The Vineyard is like an old lady who has lost her charm’. Sure the Vineyard has become more crowded and sure we have once again seen carpetbaggers come and go. But the Vineyard has really not changed that much --- honest! I know people who have lived all over the world and in crowded urban areas who swear this is where their soul is at home, and this is where they will come to recharge themselves, bond with family and loved ones, and where they will live out their days when they retire --- or before.

The Martha’s Vineyard Gazette published a wonderful commentary in their print paper, but unfortunately they did not put it on-line. The article was written by the late CBS correspondent, Don Hollenbeck, who sadly committed suicide in 1954, possibly caused by the effects of Malaria. It is not clear when he wrote his article, but it was most likely at least 50 years ago. I think the article demonstrates the colorful fabric that those who really know and understand the Vineyard realize is still very much in tact. The title of the Gazette commentary was taken from the last line of Hollenbeck’s article, ‘there are no Islands anymore’, and that line was actually the title of a poem by Edna St. Vincent Millay, written in 1940. Keeping in mind the time line of these writings, I want to preface Hollenbeck’s reflection with a couple of paragraphs extracted from Millay’s work:

Dear Islander, I envy you:
I'm very fond of islands, too;
And few the pleasures I have known
Which equalled being left alone.
Yet matters from without intrude
At times upon my solitude:
A forest fire, a dog run mad,
A neighbour stripped of all he had
By swindlers, or the shrieking plea
For help, of stabbed Democracy.

We live upon a shrinking sphere—
Like it or not, our home is here;
Brave heart, uncompromising brain
Could make it seem like home again.

(There are no islands any more.
The tide that mounts our drowsy shore
Is boats and men,—there is no place
For waves in such a crowded space.)

I hope you enjoy the warm spots in Hollenbeck’s article as much as I did. Please rest assured, what was great about this Island 50 years ago still exists, you just have to slow down and look a little harder.

There are No Islands Anymore, Only a Certain State of Mind
Editor's Note: Don Hollenbeck was a CBS correspondent and journalist who produced a radio show in the late 1940s during the Edward R. Murrow era, titled CBS Views the Press. He was also a summer visitor to the Vineyard and was interviewed in the Gazette in 1949. Mr. Hollenbeck, who committed suicide in 1954, is the subject of a recently published biography authored by Loren Ghiglione (CBS's Don Hollenbeck, Columbia University Press). A distinguished journalist in his own right and professor at Northwestern University's Medill School of Journalism, Mr. Ghiglione is also a longtime Vineyard visitor. In researching his book, Mr. Ghiglione came across this undated piece about the Vineyard which was written by Mr. Hollenbeck. It is published here with permission.

By Don Hollenbeck, date unknown

"This is out of the world, but this is America: This is our country. Picture an Island of triangular shape, a hundred miles in area, lying seven miles off the southeast coast of Massachusetts; an Island which is all things to men. This Martha’s Vineyard described as a place of old towns, new cottages, high cliffs, white sails, green fairway, salt water, wildfowl, and the steady pull of an ocean breeze.

"This is a land of contrasts: from the brazen honky-tonks of the town known as Oak Bluffs, with its jukeboxes, its gaudy post cards, its bus drivers hawking for business and its revival season, to the well-bred quiet of Edgartown, with a social air twice as rarefied-as that of Newport, to the view from Indian Hill, 260 feet high.

"There one stands and views the prospect: to south and east stretches a level plain of dwarf forest top without a sign of civilization. To the west, there are rocky outcrops and tree-filled ravines, and to the north, the cerulean blue of Vineyard Sound. Of this world and yet out of it might apply of all places to Martha's Vineyard; it meets perfectly the need so often felt for a retreat; for a quiet time of contemplation, when, as in this springtime, one may leave the noise of the jukeboxes at Oak Bluffs, and listen only to the sound of the frogs the Islanders know as pinkletinks.

"This is the land Leif Ericson may have visited in the eleventh century - on a tiny island eight miles off-shore - and island called Noman's Land, you may view a boulder, and on if, if your imagination is cooperative, you may see dimly scratched the numbers 1004.That date is accepted by some devout Islanders as good enough evidence that this is the land Leif Ericson found and named Vinland; indeed, the wild grapes grow in profusion on the Island, which in area only may be compared to Manhattan island, 150 miles away, and which is, in a different sense, all things to all men . . ..But the contemplative man finds on Martha's Vineyard other things to think about than he does on Manhattan island, now that spring is coming.

"A pink and white mayflower is blooming h the office of Miss Mary Nunes, the Oak Bluffs tax collector; a weather-wise Islander has reported the arrival of the first red-winged blackbird. Islanders know that the red-winged blackbird has advance and inside information about the weather; spring cannot be very far behind.

"We live with the sea here on Martha's Vineyard; the sea is our fortunes and our fate: what the sea gives us is our livelihood. We See signs of spring on the sea, too, in a fishing boat. Now the wind breezes from the south'ard; the sea which can be cold and hostile through the winter seems more friendly now - it is blue under the warmer sun instead of icy-gray: and in" the beach pools, there are flocks of ducks and coots squawking.

"The sparrows, too, seem to have inside information on the springtimes, and are busy picking up straws for their nests. It is impossible for a man to get too downcast when the sun shines on the blue water around Martha's Vineyard at this time of year when the wind has veered to the south'ard: light airs they are indeed, fragrant with the promise of the season.

"Soon it will be the time when a man can go out and get enough sassafras bark to brew a pungent cup of tea: this is the decoction which in New England seems to clear away the miasma of winter, and which gives one the proper feeling of springtime.

"There seems to be a sort of greenish mist around the bare branches of the trees now; at any time, the lilac hedges will burst into aromatic color, complementing perfectly the silvery, weather-worn look of the shingles and the wood in the sea-salt laden air of this Island so close to, and yet so far from, the rest of the world.

"Soon the chestnut tree over the smithy in Edgartown will be showing signs of transfiguration, and Orin Norton, the blacksmith, can open doors of his forge, and beat up the sparks to the admiration of the children - they would never think Longfellow's poem over-sentimental or shopworn: the village blacksmith is a real person to the children of Edgartown. Now, in the fire-lit gloom of the forge, Orin Norton talks to you about the six-hundred pound anchor which he has just completed. He says, "it's such a darned good one that I figure I ought to charge a little less for it than usual." "Now why in the world why?" you ask in real astonishment at this paradox. "Well," Orin says,"it's like this. I think the man who ordered it will be perfectly satisfied. In that case, he won't be coming around here finding fault, and taking up my valuable time, so I’ll be the gainer if I knock 'something off."

"This is the-spirit you find repeated again and again on Martha's Vineyard where the tempo of the world seems to have slowed down in the winds that veers from the mainland to the sea and back again. You find it in the case of Carl Reid, who runs the general store in the town of Menemsha -this is the fishing town where the air is almost always full of the aroma of lobster bait, drying in the sun. You may ask Mr. Reid for fish hooks, only to be told that he isn't carrying them this season. "People bothered me too much about 'em -had to fuss too much," Mr. Reid says. It would please him if there were only one brand of everything, from cigarettes to molasses, and the people couldn't pester him, fretting about labels, and so on.. . .When you come to Martha's Vineyard, you must note expect the usual standards to apply, to repeat, it is of this world, and yet out of it. It has its own standards of conduct and department, and off-Islanders, as the permanent population calls the summer vacationers, sometimes have difficulty in understanding this.

"The steady population of Martha's Vineyard is about six hundred; in the summer, it is nearly seven times that figure. You may go there year after year, and become friendly to a point with the regular inhabitants, but if you are an off-Islander, you are never quite accepted . . . Oscar Flanders, who drives a truck, may call you by your first name, but it may be two years or more before you feel sufficiently at ease to call him by his first name, and then you are self-conscious about it: there is a delicate point of etiquette involved here which you must understand instinctively and emotionally, rather than logically . . . . Not long ago, a general of our Army was spending a holiday on the Vineyard, relaxing thoroughly in civilian clothes. He was well known to the steady population; he had been a summer person for several seasons.

"Almost anywhere in the world, a general of an Army, even in mufti, seems to get special consideration; he is usually exempt from small trials and tribulations which beset the rest of us. Our age-old awe of, and respect for, the soldier, force us into a deference which may be difficult to rationalize, but which nevertheless exists.

"One day the general, perhaps preoccupied with a matter of logistics concerning the purchase of a pack of cigarettes, drove his automobile through a stop light in Edgartown – a flagrant violation of a traffic ordinance. Almost anywhere else, the traffic officer recognizing him would probably have let him off with a courteous and deferential reminder, but not on Martha's Vineyard.

"The general got a ticket, and as the policeman said, he considered the general entitled to special consideration only when he - the general - was on duty. And he wasn't on duty on Martha's Vineyard . . . .

"But there have been soldiers on duty on Martha's Vineyard in recent years, and their presence simply emphasized the far-away-and-long-ago quality of the Island. Although these soldiers were only seven miles over the Sound from the Commonwealth of Massachusetts, they were considered to be on duty outside the continental limits of the United States; they drew correspondingly bigger pay, and they were entitled to wear the Atlantic ribbon . . . .

"But nowhere could one find more vividly exemplified the spirit of Martha's Vineyard than in another reference to the Flanders family - the truck driver whom you hesitate to call by his first name. The Flanders have a son, and some years ago, before the world was set afire, young Flanders as a public school student, was assigned the task of writing an essay on Mussolini. At that time, the late dictator was arousing a certain amount of admiration for making the trains in Italy run on time. But young Flanders saw him in a rather different light: his essay began with these words: "Mussolini is an off-Islander . . . ."

"But there have been changes in the world, and again, the case of young Flanders shows what they have done to Martha's Vineyard. Mussolini became something other than an efficient administrator and train operator; others of his sort came to power, and young Flanders growing up, found himself a member of the United States Army Air Force in the Pacific.

"He was off-Island at last, and he gave a good account of himself: he won the Distinguished Flying Cross. And as he moved from island to island in the Pacific - islands like and yet unlike his own home, he must have come to the realization that many others of his generation have come to in the past few years: there are no islands anymore, not even Martha's Vineyard. "

Well, that's it. Now I ask you, what's your state of mind?

Saturday, March 08, 2008

1031 Exchanges and Vacation Homes actual text for IRS Rev. Proc. 2008-16

IRS Rev. Proc. 2008-16 on Safe Harbor for Like-Kind Exchange of Dwelling Unit

IRC Section 1031 IRC - Section 280A Document Date: February 15, 2008

This revenue procedure is scheduled to be published in Internal Revenue Bulletin 2008-10, dated March 10, 2008.

Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability.

(Also Part 1, §§280A , 1031).

Rev. Proc. 2008-16

SECTION 1. PURPOSE
This revenue procedure provides a safe harbor under which the Internal Revenue Service (the "Service") will not challenge whether a dwelling unit qualifies as property held for productive use in a trade or business or for investment for purposes of § 1031 of the Internal Revenue Code.

SECTION 2. BACKGROUND
.01 Section 1031(a) provides that no gain or loss is recognized on the exchange of property held for productive use in a trade or business or for investment (relinquished property) if the property is exchanged solely for property of like kind that is to be held either for productive use in a trade or business or for investment (replacement property). Under § 1.1031(a)-(1)(a)(1) of the Income Tax Regulations, property held for productive use in a trade or business may be exchanged for property held for investment, and property held for investment may be exchanged for property held for productive use in a trade or business.

.02 Rev. Rul. 59-229, 1959-2 C.B. 180, concludes that gain or loss from an exchange of personal residences may not be deferred under § 1031 because the residences are not property held for productive use in a trade or business or for investment.

.03 Section 2.05 of Rev. Proc. 2005-14, 2005-1 C.B. 528, states that § 1031 does not apply to property that is used solely as a personal residence.

.04 In Moore v. Commissioner, T.C. Memo. 2007-134, the taxpayers exchanged one lakeside vacation home for another. Neither home was ever rented. Both were used by the taxpayers only for personal purposes. The taxpayers claimed that the exchange of the homes was a like-kind exchange under § 1031 because the properties were expected to appreciate in value and thus were held for investment. The Tax Court held, however, that the properties were held for personal use and that the "mere hope or expectation that property may be sold at a gain cannot establish an investment intent if the taxpayer uses the property as a residence."

.05 In Starker v. United States, 602 F.2d 1341, 1350 (9th Cir. 1979), the Ninth Circuit held that a personal residence of a taxpayer was not eligible for exchange under § 1031, explaining that "[it] has long been the rule that use of property solely as a personal residence is antithetical to its being held for investment."

.06 The Service recognizes that many taxpayers hold dwelling units primarily for the production of current rental income, but also use the properties occasionally for personal purposes. In the interest of sound tax administration, this revenue procedure provides taxpayers with a safe harbor under which a dwelling unit will qualify as property held for productive use in a trade or business or for investment under § 1031 even though a taxpayer occasionally uses the dwelling unit for personal purposes.

SECTION 3. SCOPE
.01 In general. This revenue procedure applies to a dwelling unit, as defined in section 3.02 of this revenue procedure, that meets the qualifying use standards in section 4.02 of this revenue procedure.

.02 Dwelling unit. For purposes of this revenue procedure, a dwelling unit is real property improved with a house, apartment, condominium, or similar improvement that provides basic living accommodations including sleeping space, bathroom and cooking facilities.

SECTION 4. APPLICATION
.01 In general. The Service will not challenge whether a dwelling unit as defined in section 3.02 of this revenue procedure qualifies under § 1031 as property held for productive use in a trade or business or for investment if the qualifying use standards in section 4.02 of this revenue procedure are met for the dwelling unit.

.02 Qualifying use standards.

(1) Relinquished property. A dwelling unit that a taxpayer intends to be relinquished property in a §1031 exchange qualifies as property held for productive use in a trade or business or for investment if:
(a) The dwelling unit is owned by the taxpayer for at least 24 months immediately before the exchange (the "qualifying use period"); and

(b) Within the qualifying use period, in each of the two 12-month periods immediately preceding the exchange,

(i) The taxpayer rents the dwelling unit to another person or persons at a fair rental for 14 days or more, and

(ii) The period of the taxpayer's personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12-month period that the dwelling unit is rented at a fair rental.

For this purpose, the first 12-month period immediately preceding the exchange ends on the day before the exchange takes place (and begins 12 months prior to that day) and the second 12-month period ends on the day before the first 12-month period begins (and begins 12 months prior to that day).

(2) Replacement property. A dwelling unit that a taxpayer intends to be replacement property in a §1031 exchange qualifies as property held for productive use in a trade or business or for investment if:

(a) The dwelling unit is owned by the taxpayer for at least 24 months immediately after the exchange (the "qualifying use period"); and

(b) Within the qualifying use period, in each of the two 12-month periods immediately after the exchange,

(i) The taxpayer rents the dwelling unit to another person or persons at a fair rental for 14 days or more, and

(ii) The period of the taxpayer's personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12-month period that the dwelling unit is rented at a fair rental.

For this purpose, the first 12-month period immediately after the exchange begins on the day after the exchange takes place and the second 12-month period begins on the day after the first 12-month period ends.

.03 Personal use. For purposes of this revenue procedure, personal use of a dwelling unit occurs on any day on which a taxpayer is deemed to have used the dwelling unit for personal purposes under § 280A(d)(2) (taking into account § 280A(d)(3) but not § 280A(d)(4)).

.04 Fair rental. For purposes of this revenue procedure, whether a dwelling unit is rented at a fair rental is determined based on all of the facts and circumstances that exist when the rental agreement is entered into. All rights and obligations of the parties to the rental agreement are taken into account.

.05 Special rule for replacement property. If a taxpayer files a federal income tax return and reports a transaction as an exchange under § 1031, based on the expectation that a dwelling unit will meet the qualifying use standards in section 4.02(2) of this revenue procedure for replacement property, and subsequently determines that the dwelling unit does not meet the qualifying use standards, the taxpayer, if necessary, should file an amended return and not report the transaction as an exchange under § 1031.

.06 Limited application of safe harbor. The safe harbor provided in this revenue procedure applies only to the determination of whether a dwelling unit qualifies as property held for productive use in a trade or business or for investment under § 1031. A taxpayer utilizing the safe harbor in this revenue procedure also must satisfy all other requirements for a like-kind exchange under § 1031 and the regulations thereunder.

SECTION 5 . EFFECTIVE DATE
This revenue procedure is effective for exchanges of dwelling units occurring on or after March 10, 2008. No inference is intended with respect to the federal income tax treatment of exchanges of dwelling units occurring prior to the effective date of this revenue procedure.

SECTION 6 . DRAFTING INFORMATION
The principal author of this revenue procedure is J. Peter Baumgarten of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure contact Mr. Baumgarten at (202) 622-4920 (not a toll free call).

Sunday, February 03, 2008

Martha’s Vineyard Real Estate – Should You Be In The Market Now?

There are too many people who should not be in the real estate market right now, both buyers and sellers. They’re not serious, they are time wasters, and to me real estate is not a game.

If I were a seller’s agent, and I am not, and a home owner came to me asking me to list his property at a certain price that was out of line with my market research, and saying “let’s just try it for a while at this price”, I would say no thank you. Perhaps that seller is unable to sell his property at fair market value because he owes too much, and is upside down --- loan vs. current market. Perhaps that seller does not have to sell, but is just testing the waters or derives some pleasure at seeing his property advertised at a big number. It is sellers like this and the resulting skewed values and distorted inventory that create the negative public opinion and add to buyer’s misperceived impression of the market.

If a buyer came to me, and they do, saying they want to “steal a property”, I say no thank you. Pricing property is analogous to water seeking its own level. If you price a property too high, it will languish on the market until the price comes in line with the market. Across the country, 36% of all properties sold for list price or higher. Only 12% of all properties nationally sold for 90% or less than asking price. What this means is buyers continue to wait until properties are priced correctly. If you recognize that a property is priced correctly, you need to bid accordingly because properties that are priced correctly will normally sell quickly to a savvy buyer, and there may be more than one savvy buyer making a run on a property at the same time. Buyers must realize right now prices are good, interest rates are excellent and anyone with cash or excellent credit has power if they use it wisely in their negotiation. I’ve seen this too many times. Buyers who are eager and ready to get into the market, but continue to sit on the sidelines waiting for the ‘go signal’ from on high that prices have bottomed out are destined to join the ‘would have … should have’ club. You know who I am talking about, those people who painfully recount that they could have bought that property for ….

In the investment game, if you think you are at the bottom, or at the top, it is too late --- you are already on the other side. Right now is a great time to approach the market because the fruit on the tree is abundant and ripe. I don’t blame anyone for having doubts and fears; after all, the news these days is mostly negative and full of fear. I love what Louis Rukeyser once said about investing, no matter what you do, it is going to be wrong so do something, because the worst thing is to do nothing.

We need to remember real estate is cyclical and this too shall pass. Historically, the down-markets normally last two to three years and the up-markets last from seven to ten years. I believe we are walking in the valley right now, but we just don’t know it. It is going to be a long slow trek through the valley and we may not reach the mountain until the end of 2008, or the beginning of 2009, but we are on the march. One thing is for sure, real estate values overall continue to go up. Real estate is the one sure investment that always appreciates over time.

Thursday, January 10, 2008

New Regulations Impose the Nation's Toughest Restrictions on the Mortgage Industry

In an effort to encourage mortgage lenders in Massachusetts to continue doing business here, on January 2, 2008 the Attorney General’s office imposed restrictions that require increased income documentation and a “reasonable belief” that a borrower can afford the loan they are applying for.
Follow this link to learn more > New Mortgage Rules in Massachusetts

Wednesday, January 09, 2008

Narragansett Bay Insurance undercuts Fair Plan

In the past few years virtually all residents of Cape Cod and the Islands have been caught in the mass exodus of insurance companies from the region. Policies have been abruptly cancelled with the only option being the government Fair Plan insurance with its higher rates and deductibles. Now a company in Rhode Island is attempting to offer insurance plans that will be more affordable than Fair Plan insurance.
Follow this link to read more > Narragansett Bay Insurance

Saturday, December 01, 2007

Catastrophe Fund Backed To Insure Coastal Homes While Deductibles Skyrocket

As a homeowner on Martha's Vineyard Island, living on the water, I can tell you I have felt the bite of insurance companies backing away from so-called high risk locations. Before I was forced into the Massachusetts Fair Plan, a representative from my home owners insurance provider came to my house and subsequently I received a terse letter saying if I did not remove and cut back all the trees that were close to me house, the insurance provider, Vesta would cancel my insurance. I was bewildered and called my local insurance agent. I was surprised when my agent told me to ignore it because --- Vesta was going to cancel me anyway. They filed for protection with the US Bankrupcy Court, and became another casualty of the disastrous hurricane season in 2005.

According to an editorial in the Boston Globe reported by Bruce Mohl, "A special legislative commission called for the creation of a state-run catastrophic event fund to help reduce the cost of home insurance in Massachusetts. Few details were provided in the report, but the fund would be set up to sell reinsurance to companies at below-market rates. Industry officials participating on the commission dissented from the majority view, saying the fund would drive up insurer costs. Consumer groups also dissented, saying they wanted caps on the increases being sought by the Massachusetts Fair Plan, the home insurer of last resort. Insurers have been canceling policies or raising premiums along the coast on fears of a major hurricane. The Fair Plan provides coverage for about 40 percent of homes on the Cape and islands."

In the meantime, as of December 15, 2007 many residents of Martha's Vineyard insured under the Massachusetts Fair Plan will have the highest windstorm and hail deductibles in the country, up from a minimum of two to five percent. The increase will affect homes valued up to $500,000.
Follow this link to read > Bills Grow Larger For Home Insurance

Thursday, November 29, 2007

What is it going to take to get the Martha’s Vineyard real estate market rolling again?

There is one thing for sure, wishful thinking is not working. Neither is the constant stream of anemic price reductions week after week. How about those incentives and broker bonuses? You know what I'm talking about; the three-year old Range Rover in the driveway, the 24' sailboat, a 60" LCD TV, seller paid closing costs, seller paid Land Bank fee, first payment in six months, a vacation in the Bahamas or $50,000 to the agent that brings the buyer. None of that is working, and any additional compensation offered to an agent that brings the buyer should be considered a conflict of interest and bribery.

So what is working, and how is it working? Home "Staging" is working to some degree, but once buyers wise up to the fact that this kind of eye candy emotional sizzle is costing them thousands of dollars more in the price for the home, they will stop falling for it and start backing away from homes that look just too pretty. They will wonder what lies beneath the dining room table that is set for a 5-course formal dinner party seating twelve.

In an article written for Bloomberg News, John F. Wasik says, "Buyers just want price," he quotes one real-estate attorney/broker/consultant based in Stuart, Fla., as saying. "Buyers have become more educated and they can easily cut through the fluffy incentives". Hmmm. I don't think we're there yet. Everyone loves romance and people shopping for a home on Martha's Vineyard want to fall in love. This market is like going to Las Vegas for the first time and getting lost in one of the Casinos. Know the feeling?

What is the first question buyers ask? "How long has the house been on the market?" This has almost become a joke among real estate professionals, but buyers ask the question because it is commonly assumed that the longer a property has been on the market the weaker the seller's resolve to hold firm on price. You see, overpriced listings that languish on the market reduce the seller's negotiating ability as time diminishes their power. Once a listing has gone unsold, even if they take it off the market for a while or remove it and relist it with another agency, the information is in the public domain. There are definitely exceptions; EG: the seller doesn't have to sell, or the seller just likes to see their property advertized at some inflated price.

I think it is obvious that if a seller is serious --- I am NOT talking about desperate; homes priced to sell will sell. That means being ahead of the market instead of chasing the market. A good deal starts to get noticed if it is at least 10% below its competition. But when you see a good deal, do you think you are the only one who sees that good deal? Heck no, and usually you end up competing with other consumers who want what you want. What that can do is create a bidding war, and that is exactly what the seller wants --- or should want. A bidding war is probably the best and truest way to establish market value. I hate bidding wars, and right now I don't have to worry about it because sellers on Martha's Vineyard are following the same bloodletting technique; they all price high and week after week pull a few thousand dollars out of their last price. My clients feel like they are standing around the markdown sale table at Macy's waiting for the 70% off sign to go up.

There is a lot of misleading statistical information out there right now. Many agents talk about price-to-price ratio. In the recent 2007 NAR Report on Buyers and Sellers it states that "sellers sold their homes for 97% of list price." Does this mean 97% of the original listing price or 97% of the current listing price? The property could have been on the market for a year and transitioned through a half-dozen price reductions before it finally sold.

To sellers my advice is to listen to your listing broker when they give you an 'honest' price recommendation. In this market, if you interview several brokers, hire the broker who gives you the lowest price recommendation because they are probably the one telling you the truth. Many times a broker will agree to a listing contract with a seller because they are thinking, "If I don't take it, my competitor will and I will lose it." They know full well the property will never sell at the listing price. They are banking on the seller eventually coming to their senses and seeing the light. The conversation goes like this. "Mr. Seller, it has been three weeks since we listed your property and we have had no interest, so it is time to reduce the price." By then it is too late and that conversation will most certainly be had again --- and again.

To my buyer clients I always say if you like a property, pay little attention to the asking price and don't be afraid to make a "Bold Offer". By this I mean make an intelligent well thought-out and thoroughly researched offer. I make it perfectly clear on my website > ATTENTION SELLERS: A Low Offer Today, May be a High Offer in 60 Days .

Wednesday, October 31, 2007

Federal Funds Rate Down Again

Today the Federal Reserve once again in less than two months lowered its target rate for the federal funds rate by a modest 25-basis-points to 4.5 percent and the discount rate to 5 percent.

In a statement announcing the Fed’s decision today, members of the Federal Reserve's Open Market Committee said that "after this action, the upside risks to inflation roughly balance the downside risks to growth."

Some analysts concerned that the housing downturn will lead to a recession were hoping for another 50-basis-point reduction in the federal funds rate, but the Fed has to weigh consequences such as further weakening of the dollar and inflation.

However, on Martha’s Vineyard, the mortgage market has little effect on our high-end market, because most real estate transactions are all cash.

Monday, September 17, 2007

GREENSPAN SPEAK(S)

If you watched the most recent interviews with Alan Greenspan you may or may not be pleased with what you heard. As for the housing bubble, Greenspan says it is a global problem and we still have some distance to travel before the market levels off. He said, “We, unlike the rest of the world, are showing some modest price declines.” When asked if a recession was on the horizon, his answer was, “The evidence so far, is not yet. The economy at this stage, despite this fiscal problem, despite the financial problem, is still holding up.”

In hopes of slowing the downturn in the housing market and lessening the credit crunch the Fed is expected to lower federal funds rates to at least 5.0 percent; it is now at 5.25%. However, Greenspan still sees a great deal of pain ahead for those who overextended during the boom. “I think we're going to have to go through this adjustment, as indeed all the other countries are in the process of going through it. There are going to be a lot of people who will have very tragic stories," said Greenspan.

It appears Greenspan is less optimistic about the economy than he was while writing his memoir, The Age of Turbulence, and estimates the probability of a recession at just above one-third. One of the problems, according to an interview published in the WSJ is the “very large” inventory of newly built and unsold homes resulting in increased pressure on builders to sell them quickly.

Martha's Vineyard for the most part is a high-end resort and second-home market where many expensive properties are sold without need for mortgage financing. However, in order to stave off inflation in the future, Greenspan said the Fed would most likely have to raise interest rates to double-digit levels for the first time since the 80’s, but that increase period would be short lived. If you are contemplating a real estate investment on Martha’s Vineyard and need financing, I think that prediction alone is a good reason to get into the market while the rates are low.

Saturday, August 18, 2007

Is The Real Estate Market on Martha’s Vineyard Finally A "Buyer's Market"?

In my opinion we are finally entering into an honest to goodness buyer’s market on Martha’s Vineyard. However, due to the fragile and mercurial climate in the loan market, this will be a buyer’s market with few buyers capable of performing.

The national fallout began last year in the sub-prime or what is called the predatory lending market. Dozens of lenders closed their doors, but now national lenders are also feeling the effects.

First Magnus Financial Corp. of Tucson, one of New England's biggest loan brokers, said it would stop lending altogether. Then American Home Mortgage Investment Corp., a publicly traded real estate investment trust that grew rapidly during the housing boom to become the nation's 10th-biggest residential mortgage lender just filed for Chapter 11 bankruptcy protection. AHM employed about 7500 employees in more than 550 offices in 47 states and the District of Columbia.

The list will continue to grow as companies like First Magnus Financial, American Home Mortgage and National City Home Equity announce they are no longer funding loans. National City Home Equity, like AHM, specializes in so-called Alt-A lending, typically to borrowers with strong credit who, for one of a variety of reasons, may not meet all the requirements for a prime, conforming loan. As the ripple effect of this collapse continues to spread, another large Alt-A lender, Houston-based Aegis Mortgage Corp. has filed for Chapter 11 bankruptcy protection. Aegis also laid off half of its 1,305 employee work force.

The nation’s largest independent mortgage lender with over 60,000 employees, Countrywide Financial Corp. is ‘lying on its side’ as one financial reporter described it. While companies like CFC manipulate billions of dollars in unsecured credit options to stay afloat, those companies still funding loans must devise ways to protect their loan investments.

Facing dwindling funds from jittery mortgage investors, the result is a more stringent qualification criteria required from would-be borrowers. Lenders are tightening requirements, increasing interest rates, demanding larger down payments, and completely withdrawing some mortgage products. However, New England based lenders like Sovereign Bank and Cape Cod Five Cents Savings Bank say they are still having no problem funding loans. Sovereign has instituted a program they call "lock and look" that comes with a full pre-approval and allows the client to lock in a rate while they look for their future home, for either 90 or 120 days.

Borrowers are being told to make at least a 5% down payment, put enough money down to avoid taking out a higher-rate jumbo mortgage, and be prepared to verify your income through tax or other documents. Borrowers may also be required to have assets on reserve equal to six or more monthly payments. Even borrowers with strong credit and fico scores well above 700 can not be certain their loans will be funded.

The following comes from a major U.S. mortgage writer. It is typical of what has been going on in the mortgage business:

“As you are probably aware, the mortgage industry is going through a major disruption. In response to these market conditions and to enable ******* to continue to serve our customers; we have made changes to our loan eligibility, appraisal rates and repricing of loans in the pipeline.
- Rate exceptions by AE's will no longer be allowed
- Only full doc loans allowed
- No Non OO (Owner Occupied) and second homes allowed
- Increased disposable income requirements on D/R's > 50% from $2000 to $3000
- No refinances of Vacant Properties
- No refinances of properties listed for sale in the last 3 months
- Limited ltv's on homes listed for sale > than 3 mos but less than 6mos for cash out refi's
- Loans in the pipeline will be repriced according to the current rate sheet unless they are in '"docs out" status or are Purchase transaction types in "Conditional Approval"
- All loans in the pipeline that are NOT O/O Full Doc must fund by August 17
- Appraisals must be less than 90 days old
- Appraisals must contain 1 comp sale <>
    Okay, so now you want to know, what is the point? What does this have to do with Martha’s Vineyard? I know Martha’s Vineyard is a special place, with a different home buyer profile than hometown USA, but I can tell you the market here is no cake walk. Here is an article that just appeared in our flagship newspaper, the Martha’s Vineyard Gazette. Read it and --- Believe it or Not!

    Click here to read article >Island Real Estate Sales See Second Quarter Gain With Few Mortgage Ills

    Monday, July 23, 2007

    I'm A Real Estate Buyer's Agent, And I Love What I Do.

    I do not post editorials to my Blog unless I am the author, or collaborating with a colleague. However, this account of a personal real estate interaction written by a gentleman I know is so hilarious and poignant, I cannot resist sharing it.

    Steve and his wife, having returned from a Sunday tour of open houses, were reflecting back on the events of the day and here is his impression of the experience.

    A Buyer's Plea for Some Respect

    By Steve Burnett © 2007
    Reprinted by permission

    Just because I don't happen to have my agent with me on this visit, doesn't mean I don't have one. Without an agent with me, we both know that your first question is likely to be, "are you working with somebody?" This really means you're trying to find out if there's any chance you can function as a dual agent and double your percentage. Or, maybe that same question is your way of determining if I'm really a serious buyer or just one of the neighbors from down the block. See those MLS sheets and Google maps in my hand? I'm not a neighbor from down the block. I'm looking to buy something. You'll see that in my eyes once you stop worrying about "establishing a dialog" or "getting to know your buyer" or when you stop asking yourself, "How can I tuck in an extra 2.5 points on this deal?"

    Aside from pointing out something notable or unusual, I really don't need you to announce, "...and this is the hall bathroom..." as we tour the house. I know what bathrooms and bedrooms and kitchens look like already, thank you. Perhaps you're used to dealing in twenty-room mansions where the function or location of each room might have to be explained, but I'm just a regular guy looking for your average 3/2 suburban rancher. It's not likely I'm going to get lost or confused about what a particular room is, so save your chatter until you have something really informative to tell me.

    In fact, hold your chatter, period. Unbeknownst to you, my wife and I have just flipped a coin in the car outside to determine which one of us has to take the chore of talking to you and answering all your questions so the other one of us actually gets to look at the place in a somewhat uninterrupted manner.

    If you think you're going to entice me into making an offer by claiming that you have other offers coming in soon, or telling me how many other folks have seen your open house today, expect me to turn on my heel and exit your open house. Attempting to create the appearance of scarcity is so 2004. There's no point in me getting into a bidding war, real or imagined. If you don't believe that, please revisit the months-of-supply and DOM numbers for your area. Hint: I've seen those numbers!

    I know what new paint looks like, and I know what old paint looks like. It's not super important for you to point out the difference, since $50 bucks at Home Depot, a few beers, and a few hours on a Saturday are all that are required for me to solve any paint issues in a room. I'd rather you let me decide what the value of such "upgrades" are. Hint: You are not going to get a few extra grand in value just because the seller took $50 bucks, a few beers, and an afternoon to slap some trendy color on the walls. Same story applies with crown molding and wainscoting. Forget what you and your sellers have seen on HGTV; you are not going to get a 10X return-on-investment for a few hundred bucks worth of DIY projects. If the basic value of the house in not there due to the number of rooms, location, or dollars per square foot, no amount of superficial "upgrades" are going to change that basic value. Conversely, if the basic value is there, I'm very prone to overlooking lime green walls, chipped tile, and a myriad of cosmetic issues.

    The whole staging thing is getting really old. Does the house you live in have strategically placed bottle of wine with a pair of glasses on the patio table every night of the week? My current house doesn't, I can assure you that the only time there's a big bowl of fresh-cut flowers on the kitchen table is on Valentine's Day, or when I've made my wife mad. Normal people live in homes where the coffee table has a bunch of remotes, chewed-up dog toys and six-month old magazines. A staged house always seems to have a book of Tuscan sunsets, a bowl of teal-colored marbles, and nothing else on that coffee table. Sure, ask the sellers to tidy up a bit. But don't stage the place to the point where it's a cliché, or to a point where it's not even plausible that actual people might live in the house. Really, I'm trying to look through all the fruit bowls, cute soap bars, and other doo-dads you've carefully placed. It insults my intelligence that you think crap like that might make me want a particular property more than what I would have without the staging. In spite of what you have heard, a vacant house with no furnishings whatsoever is fine.

    You know all those apple pie-scented candles in your trunk you've been packing around for each open house you do? Dump them. Put them in your own garage for the next power outage. Give them to some homeless. Do anything but use them to give potential open houses that "home" feeling. Virtually every single one of your competitors is already trying the same idea. Unless your property has dead animals underneath the floor boards, or had the living room used as an indoor kennel, there's really no scent that you can add that is going to want to make me want to buy something I wouldn't otherwise. Back to the intelligence thing: Do you honestly believe that people make large, 30-year financial commitments because they caught a whiff of punkin' pie? Don't even get me started on chocolate chip cookies or popcorn. Yes, I've read the studies about how the rational mind can be strongly influenced by scents. When you try that play, all I really smell is your desperation.

    Basic literacy: FYI, the windows that you're trying to tell me about are spelled: "dual pane", not "duel pain" or duel pane". I only bring this up because I've really seen these spelling variants in many listings. Same issue with !!! $ALL CAPS DESCRIPTION$ !!!! and TXT THT LKS LK A 14YO GRL might be sending me a text message. I expect to see that kind of writing for Beanie Babies on eBay, not on a $500,000 home listing. Again, it's a mistake for you to think I might be dumb enough to give your listing any more than the usual amount of attention due to the number of exclamation points. Fact is, I'm less likely to look at such a listing because your writing skills look like you dropped out of high school and I'm not likely to trust you with such an important purchase.

    It's not 2005 anymore, and buyers like me are getting back to pure fundamentals: Dollars per square foot, and location. Stuff you can't change with new paint or by "spicing up" your listing description. Remember, I'm looking at buying in a down market and maybe having to sit through a few years of little or no appreciation. You can help me by explaining how the fundamentals of your property might work for me. You can save us both some grief if you can help your seller to understand that it's not 2005 and that the next buyer is not likely going to enjoy a 20% per year price appreciation and the price should be set accordingly. Sorry, it's a new market now.

    Wednesday, July 11, 2007

    I've Seen It All On Martha's Vineyard

    For as long as I can remember it has been a mystery to me how some home owners here on Martha's Vineyard decide to sell their family home, hire a seller's agent, agree to pay a fee and put their home on the market but never take the time to clean and fix up their home and property, not even just a little.

    One would think a seller would at least fix that broken staircase to the second floor bedrooms so a prospective buyer would not have to use an outside staircase to get to the second floor living area. One would think the two Rottweilers running loose in the house would be sequestered outside when the seller's agent shows the property.

    A prospective buyer coming into a house and contemplating living there needs to see through the distracting maze of stuff the home owner has accumulated over the last 30 years; they need to see themselves living in that home. They will see nothing if they are trying to dodge the growling dogs, making sure their child doesn't fall through a broken staircase, or navigate around dirty laundry strewn across the living room floor.

    Staging and Feng Shui is all the buzz now, but for the most part we still ignore it on Martha's Vineyard. I guess you might say the pervasive attitude is “We’re Martha's Vineyard and we’re hot so deal with it!”

    I belong to the National Association of Exclusive Buyer Agents (NAEBA) and below is an article being circulated throughout the media in this country. You may get a chuckle out of it, but more importantly, if you are a seller, pay attention and give your agent and my buyer clients a break. Remember, sellers want to sell, buyers want to buy and real estate agents want to make it happen.

    Buyer Beware: Skeletons in the Closet
    (and Aliens in the Basement)
    ARLINGTON, Va., June 22 /PRNewswire-USNewswire/ -- How much do you suppose a pile of crunchy dead bugs on the basement floor will affect the selling price of a $500,000 home? How about a life-size skeleton hanging in the closet, or an open coffin in the basement with a dummy vampire inside? Or an overly-ripe kitty litter box under the kitchen table?

    The National Association of Exclusive Buyer Agents (NAEBA) recently conducted an online survey of their members to rate the items they found most annoying when searching for a new home with buyers. Since these real estate companies are always looking out for the buyer's best interest they don't pull any punches. The results of the survey are revealing, surprising, and sometimes downright weird.

    Here are the top five things exclusive buyer's agents find most annoying when previewing a home:

    1. Broken door locks preventing access to the house.

    2. Pet deposits in the back yard or dirty cat boxes.

    3. Missing light bulbs in the basement.

    4. Sellers that ask you to remove shoes and then have wet carpet or dirty
    floors.

    5. Having loose stairs on a stairway or missing banisters.

    Other reported annoyances include:

    6. Low hanging dining room light fixtures in a vacant home.

    7. Closet doors that fall off or are not adjusted properly.

    8. Going into a vacant home and hearing animals in the walls.

    9. Halloween decorations that are left out.

    10. Dangerous children's toys left out.

    11. Dead cars in the driveway or yard.

    12. Homes on large lots without a survey or description of the lot
    boundaries.

    13. Political signs.

    14. Graffiti on a home for sale.

    15. Dead birds or animals in or around the home.

    It seems that many home sellers are not overly-endowed with common sense. Closet doors falling off? Dead animals in the front yard? The pitter-patter of mousy feet in the walls? Scary Halloween decorations all over the house? These should all be no-brainers. Sending buyers away disgusted or frightened out of their wits is probably not the best of business decisions. Neither is killing or maiming them with dangerous children's toys left as booby traps.

    Jon Boyd, President of NAEBA, relates some of the unbelievable things he's encountered over the years when going through homes for sale. "Once I was previewing a fairly expensive home by myself. I go into the huge basement and I can't find the light switch. As I'm reaching around a corner I catch a light switch and turn it on. About 8 feet in front of me is a life-sized model of the ALIEN MONSTER LOOKING RIGHT AT ME! My heart starts beating again in a few minutes when I figure out what the stupid thing is, but whose idea was it to leave the thing there while the home is on the market?"

    At another house Boyd almost became an unwitting participant in a Chaplinesque silent comedy. "I'm stepping into the basement the first time with buyers right behind me, again without good lighting. My foot hits something and when the light goes on I see I just barely missed stepping off the step onto a roller skate. I'm serious. Can you picture me flipping over onto my back like a cartoon character? If my foot had come down 2 inches to the left..."

    Silliness aside, there is an important lesson here for home sellers. "In all these cases the buyer's attention is diverted from evaluating the home to something mildly disgusting or frustrating," says Boyd. "If sellers have a dead pigeon lying on the deck it will just help our buyers negotiate a better price because of less competition. But let's try to leave the skeletons and coffins for the Halloween party!"

    The National Association of Exclusive Buyer Agents was founded in 1995 to help consumers become educated homebuyers. NAEBA is a nonprofit organization whose purpose is to be the "champions of real estate buyers' rights and representation." It has over 500 members nationwide. Starting in the mid- 1990s, savvy buyers wanted the benefits of a real estate representative working for their interests exclusively. They turned to EBAs, Exclusive Buyer Agents, to do the job. NAEBA is an industry group dedicated to supporting EBAs in serving clients to the best of their ability. NAEBA offers industry standard certifications, ongoing education, client referral service, technology and information sharing. The NAEBA Code of Ethics pledges undivided loyalty to real estate buyers only. More information about NAEBA can be found at http://www.naeba.org.

    Web site: http://www.naeba.org/

    Monday, June 25, 2007

    I Love Martha's Vineyard

    I have lived on Martha’s Vineyard part time and full time for over 40 years, and I have seen a lot of changes --- some good and some bad. For the most part the Vineyard has still maintained its New England charm and tenor.

    When I was a little boy my family summered in the Hampton's on Long Island. It was a magical part of my boyhood, but when I went back a number of years ago everything had changed.

    I love these two lines from an article that appeared in The Record this past Sunday:

    “Overrun? Maybe. Devine? Definitely!”

    And then there was this quote:

    "Southampton, eat your heart out!"

    Follow this link to read about Martha’s Vineyard --- A Great Hideaway from the Rat Race

    Thursday, May 24, 2007

    Is Your Property Eligible for a §1031 Tax Deferred Exchange?

    Since Martha’s Vineyard is a vacation community, many properties are purchased for investment purposes and not as primary residences. Therefore the Section 1031 Tax Deferred Exchange option (also called Starker exchange) is especially intriguing and ideal for many investors.

    Many media articles, dozens of websites and some real estate agents are quick to pontificate offering themselves up as §1031experts, but not giving a clear or complete picture of the §1031 exchange process. It seems many taxpayers believe they can exchange a vacation home at any time and that’s just not the case” says Tom Oldfield, attorney and partner in Olympic Exchange Accommodators based in Washington state.

    I believe the process is too dicey and very complicated. It is constantly changing and has many sensitive factors and critical pitfalls that can make or break a deal. As a real estate broker and exclusive buyer agent, my duty is as a facilitator to my principal; I am not an accountant or tax advisor, attorney or qualified intermediary (QI). I have relationships with several good QI’s and will refer and assist anyone interested in pursuing a §1031 exchange. According to David Greenberger, an attorney and California licensed QI, here are some questions a taxpayer should be asked when contemplating the purchase of an investment property:
    · Are you considering selling or buying any property for investment or business purposes?
    · Are you considering putting any of your equity from one property into another?
    · Are you considering selling any property and buying any other property within 6 months of each other?
    · Can I put you in touch with an accommodator who can give you basic information and guide you through your particular facts and situation?
    · Do you need further advice or information from a tax advisor?
    · Have you got a clear plan for your real estate?
    · Should you be considering new categories of real estate or regions for your replacement properties?
    · Should you start looking for replacement properties now so that you give yourself more time than the prescribed 6 months from close of the relinquished property?
    · Are you aware your deposit for the replacement property may come from the exchange account you set up once you have sold your first property in the exchange?
    · Should I follow up with you once you have closed on your replacement property to track performance and help you decide whether you might want to enter into another exchange on additional properties you may own or to discuss a reverse exchange when new properties become available?

    Friday, March 30, 2007

    Should Second-homes be subjected to a Lodging Tax?

    On February 15th I commented on a proposed Lodging Tax that would affect second-home rentals on Martha's Vineyard and Cape Cod. People who depend upon the rental income of their second homes to partially offset their carrying costs, would have to pass along the tax to their tenants in order to make their numbers work. The rental rates on Martha's Vineyard are already high. We have to ask ourselves, at what point will vacationers start to look elsewhere for better values? For people dreaming of owning a home on Martha's Vineyard and relying upon rental income as part of the purchase equation this tax would deliver a real blow to the process. Here is an update on the debate taken from an editorial at CapeBusiness.net:

    "Should second-home rentals be taxed? Some things to consider as the debate intensifies over whether to tax summer rentals:

    "Yes, it would level the playing field. Latest numbers show a waning occupancy rate for hotels and motels in the summer, surely a result of competition from summer home rentals.

    "But what happens if second-home owners dependent on that income find themselves faced with as much as a 9 percent tax increase? For them, it is seeing their property tax almost double. This on top of rising energy costs, insurance coverage increases and a harder time renting their homes due to an oversupply of rentals. At what point will second-home owners decide to put their home on the market because the economics don’t work – especially since they no longer can expect double-digit price appreciation?

    "And if those houses go on the market, what impact will that have on all house prices, including those owned by primary-home owners?

    "Will municipalities worried about waning occupancy taxes find that scenario better?

    "Now add the fact that second-home owners spend more on average than full-time residents – according to some studies, 1.6 times more. If they bail out in the face of rising overhead costs, what other businesses on the Cape – from furniture stores to restaurants – will suffer?

    "The reality is that the tax issue transcends tourism and municipal budgets. It is very much a complex macroeconomic issue with many moving parts. Look at it one-dimensionally and we are sure to suffer unintended consequences."