The 10-year trends before the Great Depression

Does history repeat itself?

Here are some trends of the Roaring 20's before the Great Depression.

1. New Federal Reserve in 1914
2. Post World War I Inflationary Pressures
3. American Protectionism
4. 10-year boom with a 34% increase in GDP over nine years and a 200% increase in capital investment infrastructure spending
5. Residential and Commercial Real Estate Boom
6. 10-year bull market, investment speculation and investing on margin
7. Severe Recession in 1920 followed by a nine year bull market
8. Relatively low interest rates

Short Sale: BPO Tips

The BPO (Broker's Price Opinion) is the most important part of the short sale packages. Most banks will not go lower than 80% of the BPO. A real estate broker is paid $50 to go out and do their Price Opinion on the house. However, many real estate brokers are not professional appraisers and make the same common mistakes.

1) They often do not know how to do construction cost estimates on a home. You need to have estimates with you probably from a licensed contractor.
2) They often use the wrong comps. A rambler should only have rambler comps. They will often mix split-level, rambers and two story buildings.
3) They often do not calculate the effective age correctly, which is typically 50% of the age of the house and way less depending on the remodels and repairs done.
4) They often do not use houses within 10 years before or after the comps

Get educated on the appraisal process so that you can double check the most critical aspect of your short sale package. For questions, contact me at 206.832.9590.

A broad perspective on real estate ownership from 11,000 years ago to now

In the last 11,000 years, only a few societies evolved into food production communities, starting in China, Fertile Crescent and Mexico. Interestingly, populations grew, started to create "divisions of labor," and lead to government states. Before these trends towards plant and animal domestication, populations banded in small tribes as hunter/gatherers. Invitably, modern societies developed the trend of private property, real estate and the Have and Have-nots. The Haves then wrote laws, hired police forces and military to protect and promote their economic interests first through colonization and later through international corporations and franchises.

Short sale and fraud

I'm doing a short sale today where this lady somehow got 4 2nd mortgages on her property. She wants to avoid any criminal "fraud" prosecutions. I am introducing her to an attorney who can help her out. With the attorney's approval, I am thinking we can negotiate with each lender and ask if we can give them a settlement for indemnification. We'll see how it goes.

Federal Reserve and Real Estate

The best business idea of the century was creating the ultimate "unfair advantage." J.P. Morgan and Rockafellow accomplished this by creating the Federal Reserve system and central bank in 1917. They earn interest on 20% of our $6 trillion dollar national debt and control world financial markets and the US economy. Money has depreciated 300% since 1974, as the federal reserve system inevitably lead to getting off the gold standard. Why is it crazy not to be investing in real estate? Not investing in real estate or some systematic business is modern serfdom.