Property world

The Nautilus House is a cartoon-like combination of bright vibrant colors and a gigantic shell-shaped design. It's a real house, located in Mexico City and occupied by a young couple and their two small children. Not only does the Nautilus House look like a giant work of art, but because it's built from a mix of chicken wire and concrete (among other things) and takes cues from a Nautilus shell (hence the name) it's also an earthquake-proof and maintenance-free structure. And that's always handy. The inside decor is all about smooth rounded surfaces, rich colors, and greenery all over the place. And although the home is surrounded by Mexico City on 3 sides, the West side has most of the windows and faces out to a beautiful view of the mountains. I really like it, but for anything other than a vacation home it might get old -- living in this house must make a person feel like they're in a tropical version of Whoville.

A recent buyer asked us at signing (a day or two days prior to closing): “I’ve noticed that the fees charged by my loan officer are about $1,600 more than my Good Faith Estimate. I recall only being charged 1% loan origination. Is there any explanation for this?” What are the re-disclosure laws (both state and/or Federal)? Obviously, this buyer was a bit under pressure and did not want to create waves to delay the purchase.

For the next couple of weeks we will be checking out some homes in the most expensive zip codes in the United States. This zip code is in Chevy Chase, Maryland has a median price of $2,020,000 and an appreciation rate of 253% since 1990. This residential Maryland suburb offers easy access to Washington D.C. and is home to a variety of traditional homes. Today's home, Wirelawn was first purchased from the Chevy Chase Land Company in 1905. It's full of political history, Harry Truman's presidential inaugural ball was held here and the home, which is now a private residence, once served as an embassy. The ten-bedoom home has a grand foyer, formal living room, formal dining room, music room (with a beautiful Egyptian-themed mural), family room and ballroom. The first floor is also home to the sunroom, kitchen, butler's pantry and mudroom. The upper levels are home to the bedrooms including the master suite with his and hers baths and dressing area, bedroom suites with sitting rooms, and staff quarters. There is also a temperature-controlled wine cellar and a gentleman's study. The 1.36 acre property includes a covered veranda off the ballroom, large heated pool and spa, three-car garage, gazebo and pool house, tented terrace and deck, a circular drive, motor court and a lawn large enough to accommodate football and soccer games, or a tennis court. This home is listed at $6.9 million.

Louis Kahn only designed 3 major architectural homes in his career and one of them, the Escherick House (named after the woman for whom it was built, Margaret Escherick) is up for auction. Its address is in Philadelphia and according to some it's his best residential creation and has "mature style" and a "warm and human quality" to the interior (and I tend to agree). So the house will be sold, but unlike most houses its price will not only reflect the local regular real estate market but also the art market. Valued at $2 million only about half of that is unbiased structural and land values -- the rest is all artistic and historical sentiment.

For the next couple of weeks we will be checking out some homes in the most expensive zip codes in the United States, up today, 02114. This zip code is in the Beacon Hill area of Boston, Massachusetts has a median price of $2,070,000 and an appreciation rate of 271% since 1990. In this part of Boston, you are paying for history, convenience and also for the picturesque beauty of the area. Today's selection is a townhouse located near Charles Street, Beacon Hill's main drag which is backed with antique stores, small cozy restaurants and small gourmet grocery stores. This four-bedroom home has a bottom floor with a sitting room, kitchen, and a classic shuttered bay windo. The second floor includes a southern-orientated music room with s its own wood burning fireplace. The second floor also features the formal living room with moldings and hardwood floors. The master suite is on the third floor and has a marble vanity, his and her sinks, and a dual shower as well as a separate office/dressing room with built in shelving. The au-pair suite is on the lower level and has a living/kitchen area that could be converted to a media room. This home is listed at $4.25 million.

For the next couple of weeks we will be checking out some homes in the most expensive zip codes in the United States. This zip code in Alpine, New Jersey has a median price of $2,420,000 and an appreciation rate of 318% since 1990. Alpine is consistently on lists of the best places to live in New Jersey. Famous residents of Alpine have included Damon Dash, Patrick Ewing, Jay-Z, Lil Kim, Chris Rock and Sean "Diddy" Combs. Here at Luxist we've covered this area multiple times for houses ranging up to $40 million. Right now the MLS for this zip code reveals a listing for $59 million and one for $40 million, both without pictures unfortunately. Today's home is in the desirable Rio Vista neighborhood. This brick home sits high on a hill and has over 19,000 square feet of space including seven bedrooms. The style is over-the-top lavish and has everything you could possibly need including two lane bowling alley, movie theatre, squash court billiards room. a swimming pool with full service cabana, five car garage and lift for sixth car. With all the marble and chandeliers it's basically Tony Soprano's dream home. This home is listed at $17 million.

The Flushing, Queens area of New York is getting a bunch of high-end condominiums. The Sky View Parc will include three towers so far and the plans of developer Jason Muss call for six towers total with 1,100 homes. The bottom floors will be given over to a mall's worth of retail space which may end up including large chains such as Traget, Home Depot, Staples and Bed, Bath and Beyond. The complex is across from Citi Field, the new home to the Mets as of 2009. The first condos went on sale last month and sell are priced between $395,000 and more than $2 million. The developer reports that of the first 160 apartments, more than 50 have been sold. Move-in is scheduled for July 2009.

King County Residential Sales Active/For Sale - 9,779- UP 148 - median price $525,000- no change In Escrow - 2,712- UP 11 - median price $444,000 - DOWN $4,000 Closed YTD - 2,883 - UP 332 - median price $437,500 - UP $1,500 King Conty Condo Sales Active/For Sale - 3,435 - DOWN 6 - median price $324,950 - no change In Escrow - 902 - UP 5 - median price $299,950 - no change (asking prices) Closed YTD - 958- UP 111- median price $285,000 - no change Allowing for late postings I went back to March 15th to track volume changes YOY. Single family home closings are down 33% and condo closings are down 40%.

I teach a class called “RESPA” which is about the federal Real Estate Settlement and Procedures Act. This act has been around since the mid-1970s and the industry sometimes refers to it as the anti-kickback legislation although RESPA does much more than that. Sections 8 and 9 of RESPA prohibit exchanging something of value for a referral of a federally related loan. The industry went through a wave of federal consumer protection legislation during the 1970s when we received the Truth-in-Lending Act, RESPA, ECOA, and the Fair Credit Reporting Act. It is my opinion that the mortgage lending industry should not be surprised to receive no less than four new federal laws during the next 7 years. In order to truly understand the spirit of RESPA, let’s take a trip in the way-back machine and visit the 1970s. We had an oil embargo, inflation, rising unemployment rates, a recession, and other events I was too little to recall, but I’m sure our readers will help us remember. I DO remember sitting in line at the gas station with my dad. Times were economically tough for American families. Politicians like it when homeownership rates are increasing because homeownership supports the economy in many ways (and boy are we ever going to learn that lesson during the next decade) and economic growth is good for re-electing politicians. I know I’m grossly oversimplifying here but back in the 1970s, it was important to promote homeownership. Since costs were rising for families, this included the cost of buying a home. One of the main reasons we have RESPA is to help keep the cost of buying a home affordable by eliminating “unearned” fees such as kickbacks. Sections 8 and 9 of RESPA say we are not to give or receive an item of value in exchange for a referral of a federally related loan. We = any person that earns a fee on the sale or refinance of a one-to-4 family, owner occupied, federally-related loan. Realtors and mortgage lending workers have tremendous power to influence the direction of business for third-party vendors to companies such as title insurance, escrow, home inspectors, home warranty, hazard insurance, private mortgage insurance, appraisers, attorneys, and so forth. For example, title insurance companies do not chose to spend their advertising dollars on general public promotions because a title company can have a much stronger effect on market share by focusing on the people who are in a direct position to refer lots of business: Mortgage lenders and Realtors. Handing out normal promotional marketing material is considered acceptable under RESPA. What’s not acceptable is to promise something of value in exchange for a transaction. So let’s see, what season is it? Baseball. Here is an easy example: A third party vendor offers opening day box seats to a Realtor or mortgage lender in exchange for a referral of a federally related loan. Just say no. Both the giving and the receiving party would be violating Section 8 of RESPA. HUD asks us to consider who is paying for the box seats. The answer is the consumer pays, in the form of higher fees from your vendors. The true spirit of RESPA is to keep settlement costs down in order to help make homeownership affordable. Title insurance companies in Washington State were given a major public spanking at the end of 2006 and then again in 2007. Title companies were violating a not-well-regulated “Only spend $25 per customer per year” rule. Some of these insurance commissioner cases are still pending. The $25 per year rule is a state Insurance Commissioner rule but it also bumps up against the provisions of RESPA. In their defense, title companies pointed the finger at affiliated business arrangements (AfBAs), legal under RESPA. AfBAs, also known as Controlled Business Arrangements (CBAs) say that a mortgage lender or a real estate broker can open up affiliated businesses in order to continue to grow profits. Examples in WA state are: Windermere Real Estate and Windermere Mortgage. John L Scott Real Estate and Response Mortgage. Along with the affiliated mortgage companies, a group of Windermere broker/owners owns Commonwealth Title and Escrow. John L Scott and Coldwell Banker Bain own Rainier Title and Escrow as part of a joint venture. AfBAs and CBAs exist all over the United States. Affiliated Business Arrangements are perfectly legal under RESPA, provided the companies all follow a long list of requirementsunder scrutiny in several states during the bubble years and title companies nationwide have paid out millions of dollars in fines to settle these suits while “admitting no wrongdoing.”AfBAs/CBAs are under scrutiny in Washington state now because of the title insurance commissioner smack down. The other title companies are trying very hard to help the insurance commissioner understand that it is difficult to compete on a fair and equal playing field when your competition is being handed title and escrow business by real estate offices. Here’s how this goes down. A real estate broker/owner owns a percentage of interest in an affiliated title insurance company. That broker/owner has power over the real estate agents when it comes time to negotiate annual contracts. An agent may be offered a better commission split with his or her broker when that agent refers more business to the broker/owner’s affiliated mortgage, title, or escrow companies. This offer is done behind closed doors, sometimes only verbally. The “better commission split” equates to an “item of value.” Top producing Realtors and Realtors with a set of balls or ovaries call their own shots with their brokers. So this problem mainly affects medium to low end producing real estate agents, which, let’s face it are the bulk of the real estate agents out there. An obvious solution, if I were a title insurance company sales manager, would be to send my sales force out to work with only top producing Realtors. However, this will require that the title insurance company have a very, very high quality title and escrow interal staff. This is easier said than done. Title companies that put their money into recruiting exceptionally top-notch internal staff tend to grow market share slowly and steadily. Yet even these companies have had a difficult time competing with real estate broker owners who strong-arm their agents into directing title, escrow, and mortage business to the real estate broker’s affiliated companies. Many have tried to reform RESPA. Many have failed. That’s where the states have taken over. State Senate Bill 6847 passed the state house and senate and has been delivered to Governor Gregoire for her signature. From the bill:

A real estate licensee or person who has a controlling interest in a real estate business shall not, directly or indirectly, give any fee, kickback, payment, or other thing of value to any other real estate licensee as an inducement, reward for placing title insurance business, referring title insurance business, or causing title insurance business to be given to a title insurance agent in which the real estate licensee or person having a controlling interest in a real estate business also has a financial interest.

Apparently the Deparment of Licensing is going to help the Office of the Insurance Commissioner scrutinize the relationship between the real estate broker/owners and their affiliated title insurance companies. Broker/owners with nothing to fear would surely welcome any increased scrutiny. Consumers reading this blog, a red flag for you to watch for is if a real estate agent or mortgage lender strongly insists on using a specific third party vendor. Ask the following question: “Can you please tell me exactly what you are receiving in exchange for me selecting this vendor?” If the answer is “Nothing,” ask to have that put into writing. Reputable lenders and Realtors select third party vendors because their rates are low and the service is consistently exceptional. Not only does strong-arming raise red flags when it comes to RESPA violations, it’s also a red flag for possible mortgage fraud. I would like to return title insurance to the days where Realtors and lenders selected title and escrow companies because the companies offer great rates, awesome service, and maybe a pen or a notepad. Title companies reading this: That means the money you’re saving by only spending $25 per year per client can be re-allocated towards hiring exceptionally high quality internal staff and less on beautiful hotties to distract the Realtors and lenders from the fact that your internal service is subprime. Well, unless the title rep is really hot. Exceptions must be made in some circumstances.

Like me, the Real Estalker Mama has a weakness for gawking at truly outlandish homes. And he unearthed a doozy. La Reve, the home of Hubert and Norma Humphrey in Cumming Georgia has just about everything you could think of. Private bowling alley? Check. Golf course? Yup. How about a huge move theater, a complete gym, massage room and a toy train room. The movie is a replica of Atlanta's Fox Theatre and the train room is a replica of the old Central Georgia Railroad from Atlanta to Macon to Savannah that Hubert Humphrey worked on for 17 years as a train conductor. This home is another in the long line of what I call Xanadu homes, the ones where someone spends a great deal of cash constructing a home of epic proportions and then finds it a little unlivable. This one is approximately 47,000 square feet on 90 acres and is a stunning monument to excess. There are 82 rooms, two elevators and 62 televisions. The grounds include a heated swimming pool, pool house, spa, private playground, stables, tennis court, formal gardens and a guest house. At $45 million this is easily the most expensive estate in Georgia. As the Atlanta Constitution noted, it might be a while before this one is sold, homes of this magnitude often sit on the market for a while and although the home may well be worth the price, finding someone willing to pay it will be a challenge.