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Our Sacred Honor

As tomorrow is 236th anniversary of our separation from the tyranny of King George, I found myself reading the Declaration of Independence for the first time in many years. I am struck by a number of powerful thoughts in this document:

a) When in the course of human of events it becomes necessary… Quite simply, this is a big deal. In fact the change is so significant that the signers felt absolutely compelled to provide a thorough explanation of grievances. No hiding, no subversion. They had the absolute courage to stand up and say “this is wrong and we are going to change it”.

b) We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness… Now, here’s our beliefs. These are the things that above all must remain true.

c) But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security… And since you have seen fit to disregard and trample upon the most basic rights of humanity, we have no other choice than to force a change. This is not a “wouldn’t it be nice” decision, rather, this is a compelling obligation.

d) And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor. We are so firmly committed to this decision that we will stake EVERYTHING to see it through.

The passion, clarity and commitment these men held to our well being is staggering. They had about as much chance of being successful as would Chad, Sierra Leone or Burkina if they launched a war with the United States today. Yet they believed in what they were doing, had a vision for a great country, and they pressed forward despite insurmountable odds.

So, remember these men tomorrow. And the next day, take a mere fraction of their passion into your community and make it a better place. It’s the least we can do to honor the memory of those who gave us so much.

Full text of the Declaration of Independence

Golf Course Real Estate Still Has a Pulse in the Heart of Texas

Aerial View - Ols AMerican Golf Course

Aerial View - Old American Golf Course

For many, it’s the American Dream: Life, Liberty and the Pursuit of… Golf Course Living. In 2011, the first Baby Boomers turn 65 and the demand for golf course real estate in Sunbelt states will likely skyrocket as Boomers look for homes in a climate conducive to their hobby.

But those who have long dreamed of living adjacent to fairways and greens could be disappointed. Development of a golf course community is exceedingly rare in this slumping economy. After almost two decades during which new golf course communities spread like wildfire across the Sunbelt, both the real estate and golf industries have suffered major setbacks.

In 2010, builders started on 15,000 homes in the Dallas-Fort Worth area, according to Ted Wilson of Residential Strategies, Inc. That’s down nearly 70% from the 51,000 housing starts in 2006.

New golf course construction has also taken a major hit. The overbuilding of courses in the 90’s and early 00’s oversaturated the market. When the recession descended upon the industry, many courses were forced to close, some in the middle of construction.

With every rule, however, there is an exception. In 2010, only one course opened in The Metroplex. What vaults this course from exception to veritable anomaly is it is part of a residential community.

The Old American Golf Club, located in The Colony’s The Tribute Resort Community, opened its doors to public play in September 2010. In addition to fairways, greens, bunkers and water hazards, The Old American features brand new residential lots alongside select sections of the course and dozens more just off it. In the desert that is the current landscape of new golf course development, The Tribute is an oasis, affording golfers the opportunity to live alongside the game they love.

The Old American and The Tribute were brought to life by Matthews Southwest, a DFW-based developer that has transformed The Metroplex’s real estate market through urban redevelopment and suburban lifestyle development. In The Tribute, Matthews Southwest saw the opportunity to deliver a suburban community where people could enjoy their hobbies right outside their front door. The community’s location on the shores of Lewisville Lake, combined with The Old American and The Tribute Golf Club (opened in 2005), has provided residents with access to golf, boating and fishing.

Even in the down economy, builders and homeowners have pounced on the opportunity The Tribute presents. Matthews Southwest reported a more than 100 percent year-over-year increase in residential lot sales at The Tribute in 2010. The community’s 1,150 acres showcase many of North Texas’ most prominent and distinguished builders, offering home designs that emphasize the Old World-themed atmosphere of The Tribute and begin in the 240’s.

As Baby Boomers and golf enthusiasts search for a place to live in harmony with the game they love, they may be hard up as developers and builders continue to tighten purse strings. However, The Tribute serves as proof that golf course real estate still has a pulse in the Heart of Texas.

How To Best Determine The Value of Your Home

The best tool I have for determining the value of your home is called the Comparative Market Analysis (CMA). When performing a CMA, there are three big questions that I attempt to answer: a) At what price are homes actually selling?; b) What is the competition seeking in terms of price?; and c) How much is too much? The answers to these questions come from three different types of data.

Homes recently sold will give you an answer to the first question. You normally will find a range of sold prices. At the low end are homes that were not in very good condition, and in a neighborhood that is rejuvenating, this may in deed be the value of the lot. At the middle of the range are homes that are structurally sound but still need cosmetic updating. At the high end of the range are the homes that have been remodelled.

The answer to the second question comes from active properties. Here you can see where the competition is priced. In a neighborhood undergoing rennovation, it is very important to at least see pictures of these homes to determine the improvements that have been done.

The final question is answered by homes that have expired. Generally, these homes expired because the seller was asking more in price than the market would bear for a home in that condition. They were asking too much.

The art is to now place your home in the spectrum described. If your home is fully updated with new kitchen, baths, flooring, etc and is great structural shape then you belong at the top of the price list. In older neighborhoods I have heard these homes referred to as 1958 on the outside, 2011 on the inside.

If your home is in average condition, meaning that it has been very well maintained, is clean, and may have a few updates then the value of your home is at or just above the average home value in the neighborhood.

A final clarification on this process. It is vitally important to start with the right set of comparable homes. I generally define a neighborhood by looking at the boundaries formed by large roads, creeks, train tracks, utility easements or other barriers that suggest the edge of the neighborhood. In terms of the actual homes, I try to select homes that are within about 500sf of the target with a similar bed/bath count.

What is the Difference Between Broker and Agent?

A real estate BROKER is licensed to conduct a real estate transaction between a Buyer and a Seller and must be present in every transaction where real estate agents are involved. Most frequently, this person is the head of the real estate office where the agents work.

A real estate AGENT is a professional with a license that must be sponsored by a real estate broker. They are the people that you as a consumer will encounter in the transaction. They work for the real estate broker, and can not complete a real estate transaction without the broker’s oversight.

This creates an apprenticeship in the industry. In most states, a newly licensed professional must work for a broker for a certain number of years before they can qualify to become a broker themselves.

There are also many very experienced agents who have never chosen to pursue a broker’s license. They like working “in the field” as real estate agents, rather than running an office as a broker. They can be very experienced and may have amassed as much or more real estate knowledge than the broker that they work for, but prefer the job of working directly with Buyers and Sellers to that of an office administrator.

So to make a long story short, the broker is the person that runs the real estate office. The agents are the people who work directly with the consumers in the transaction.

Finally, there are some people who are licensed as Brokers, but still perform the role of an agent. This is usually the result of a preference for field vs. office work – at least that is the case with me.

Multiple Offers Vs. Multiple Contracts

Who will win the contract race?

I have encountered this question a few times recently, so I thought I would write a brief explanation.

First, let me clearly say that in the great State of Texas, there can only be one fully executed contract on a property at a time.

Now for the part that seems to create confusion. When dealing with residential real estate, an offer is generally submitted on a contract form and the agents have a habit of referring to offers as contracts. So you may hear that “we have received multiple contracts on this property”. What is really being said is that there are multiplte offers. An offer, even though it is submitted on a contract form, does not become a contract until both Buyer and Seller agree to every term and fully execute the document. Then, to remain a valid contract, the terms specified in the contract must be executed. On of the first of these terms is the deposit of earnest money.

So, when I represent a Buyer and I hear that “there is a contract on the property”, I always ask if it has been fully executed. If the answer is “no”, then it is only an offer, and there may still be a chance for my Buyer to get into the mix.

Now for the multiple offer scenario. As a listing agent, it is always my objective to attract multiple offers on a property. This creates a bidding war environment. When I receive the first offer, I will call other agents who have expressed interest in the property and let them know that we have received an offer. My hope is that it will move their client to action to also submit an offer. If we can get two or more in play at the same time, the outcome is usually better for the Seller.

As a Buyer’s agent, I extend offers that ask for a very quick response to keep the above scenario from happening. If my Buyer’s offer is the only offer in play, that tends to make the negotiation go better for the Buyer.

But at the end of the negotiations, there is only one contract that will get fully executed. The other party may wish to enter into a back-up position. If the first contract does not close, the back-up contract immediately moves into first place without the property going back to market. Finally, there can be only one back-up contract.

After a back-up contract has been executed, any other offers received remain “in limbo” until something happens to the first contract. If the first contract fails to close, the back-up contract moves into first place. If there are still other offers that have come forward, one of these can be selected to go into the back-up position. This continues until the property sale closes.

It is rare to have this much interest in a property, but occasionally it does happen. I have had success in closing back-up contracts from both the Listing and the Buying position.

I hope this provides some clarity on the issue. There can be only one fully executed contract at a time, and the rules for forming a queue behind this contract are very clear – one at a time.

What Does an HOA Do?

The idea of an HOA is that all of the neighbors join together to maintain infratstructure that they all enjoy. HOAs take two forms, voluntary and mandatory.

In a voluntary HOA, membership is just that, voluntary. Each home decides whether or not to participate. The HOA usually does some community building activites, may form a crime watch, and sometimes does little beautification projects like planting flowers by the neighborhood sign.

A mandatory HOA exists when a neighborhood is built with additional community infrastructure such as a community pool, private parks, gated entrance, etc. Membership is mandated in the deed to each property. There are guidelines established for how the HOA is to run, how dues are determined, etc. These HOAs are frequently managed by professional companies and take care of the maintenance of all of the common grounds.

Fees for voluntary HOAs are usually very small – less than $100/yr. Fees for mandatory HOAs all depend on the amount of common infrastructure in the neighborhood and can range from $50 to hundreds of dollars per month.

Wild Lease Scam – Can the Market Get Any Crazier?

I love the real estate market – there’s always a great story to be told, and a new experience to be had. Just when I thought things couldn’t get any crazier, they did. Here’s the story…

I recently represented a young lady in the purchase of her first home. Being a first time home buyer, we were looking at small homes that were financially distressed – we were bargain hunting. We found the perfect home in east Dallas, a 1950′s era 3/2 that was in short sale for about 60% of the value it had appraised for just two years ago. As we toured the home, we could not access the garage – it was locked and the key did not fit. When I later inquired about accessing the garage, I heard the craziest story ever:

After the owner vacated the property, a person we’ll call Joe ConMan noticed that it was vacant. He proceeded to pose on the internet as the owner of the property. He entered into a lease agreement with a unsuspecting young couple, newly married with a small child. He collected the first month’s rent and the damage deposit. On move-in day, the Tenant could not get access to the house. Joe Conman has the Tenant call a locksmith, and then meets them at the property. He cons the locksmith into believing that he is the property owner, gets him to open the house, and then leaves – vanishing to never be seen again.

The Tenant begins moving into the house when a neighbor comes over to investigate. Having not seen either the owner or the owners agent, he calls the listing agent to confirm that the house had been leased. A very surprised listing agent then called the police. The Tenant was forced to vacate the property, and lost the damage deposit and rent they had paid to Joe ConMan.

I learned a couple of lessons from this story. First, get to know the neighbors around your listings, especially if they are vacant. The actions of a consciencious neighbor kept this situation from getting any worse. Second, keep a close eye on your vacant property listings – you never know when something crazy like this might happen to them.

All ARM’s Are Not Evil

2011 Mortgage Interest Rates from http://mortgage-x.com/

I just got a great present in the mail!! I was notified of the annual adjustment to the interest rate on my Adjustable Rate Mortgage. It was reduced by 0.5% for the upcoming year and now has the stunning rate of 3.000%.

I originally took out the ARM 10 years ago. It is a 7/1 ARM meaning that the rate was fixed for the first 7 years, and adjusts annually after that point. The rate is based on a defined index with a 2.25% premium.

I chose this mortgage 10 years ago with the idea that it was highly unlikely that I would own this house for 7 years. The longest I had ever lived in a home previously was 4 years. I truly thought that I would have sold and relocated long before the rate ever adjusted.

However, in selecting the loan, I did make sure that future adjustments were based on a defined index and that the high end of the rate scale was capped. Although I didn’t expect to get this far into the term, you never know for sure.

As the loan started to adjust, I watched the market. With interest rates in steady decline, I have seen no reason to refinance. I will refinance as rates start to rise, which means that I will miss the bottom of the market. Had I already refinanced, I also would have missed the bottom of the market – I think we just got there.  I’ll take a close look next Fall and see if refinancing will be beneficial, or if once again, I will let the rate on my loan adjust.

In the end, the strategy of using an adjustable rate mortgage is going to work well for me. Properly utilized, I don’t think all ARM’s are evil. In the right market conditions, they can be a very useful tool, and I believe there will be a resurgence in their use once interest rates inevitably rise to more historically normal levels. Given the current interest rates, an ARM may be a great product again if your borrowing needs have a short horizon.

After the Tax Incentive

So what was the effect of the First Time Homebuyer Tax Credit? It may still be a bit early to tell, but one phenomenon is easy to identify. The number of properties placed under contract in May 2010 was at its lowest level in years. However, this should not be surprising. Buyers in the market for the first time, or the first time in a long time, had plenty of incentive to get their contracts executed before May. The net effect was to accelerate what would normally have been May contracts into April.

If this were indeed the case, then April contract should have been at an all time high. And, yes, they were. April’s new contract numbers are larger than they had been in recent memory, validating the “hurry up” mentality in the market.

But this does not answer the larger question of whether or not the First Time Home Buyer Tax Credit achieved its purpose. The purpose was to stabalize the housing market and housing prices across the country by adding pruchase demand to the economy. The increased demand fueld by the tax credit should have placed housing prices in check. If this incentive had achieved its purpose, housing markets would stabalize and the incentive could be removed. The US government decided that the end of April was a good point to check this correction.

I think it will be late summer to early fall before we get a true reading on the full effect. I hope it worked, but I have the sinking feeling that it did not run for quite long enough. Jobs reports continue to be suspect with claims that the private sector is now paying the lowest percentage of wages since the Great Depression. This does not bode well for increased housing sales. Bully for the average American, savings rates are rising across the country, indicating that people have learned at leasst a partial lesson for the time being. However, that too means that large expenditures are being placed on hold.

I believe the housing market in total will continue to be fragile. But what about your home? What if you have to move?

The news can get better. While the housing market is fragile, it is also starved for quality product. I can’t tell you how disappointed I am with many of the homes that I tour. There are a number of inexpensive repairs that can be done to a house to get it ready to bring to market. New carpet and paint, a deep cleaning and decluttering, inexpensive cosmetic updates, cleaning the yard, timming the bushes, removing debris, etc.

If you need to sell, please give me a call. I would be happy to schedule a walk-through and show you some of the easy things that will make your home sell quickly, even in a less robust market.

For those inclined to move up, this remains the best of markets to increase your home size.

IF – Rudyard Kipling

Reconnected with an old friend on Facebook and found this poem on his blog (Running Tyler to Ehningen). IF I can teach these lessons to my sons, then I will have been a successful father. Andre, thanks for reminding me how much I enjoy this verse:

[IF]

If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you
But make allowance for their doubting too,
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:

If you can dream–and not make dreams your master,
If you can think–and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ‘em up with worn-out tools:

If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: “Hold on!”

If you can talk with crowds and keep your virtue,
Or walk with kings–nor lose the common touch,
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much,
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And–which is more–you’ll be a Man, my son!

–Rudyard Kipling