Stephen Dubner continues to bash Realtors on his Freakonomics blog: How Much Is a Realtor Worth? If you have read his Freakonomics book, you know that he pointed out that real estate agents tend to sell their own property for more that their clients.
The latest is a discussion of a paper comparing MLS sales against FSBO.Madison.com. The results did not come out in favor of the Realtors. The National Association of Realtors claims that sales through agents had a median price 16% higher than a home sold directly by an owner ($230,000 vs. $198,000). The paper disputes that statement.
Friday, June 8, 2007
Wednesday, June 6, 2007
Foreclosure Activity in Middlesex North Registry of Deeds
Dick Howe at the Middlesex North Registry of Deeds in Lowell reports that foreclosure sales are up but that the foreclosure pipeline has not dramatically increased: Foreclosures Up - but not for long.
In May, 2006, there were 78 Orders of Notice and 8 foreclosure deeds.
In May, 2007, there were 65 Orders of Notice and 40 foreclosure deeds.
It looks like the flow of borrowers in trouble is starting to slow and lenders are clearing the troubled loans from their books.
Based on a comparison of the number or recorded deeds in this registry, the volume of sales has not changed significantly. In April of 2006, 555 deeds were recorded. In April of 2007, 541 deeds were recorded.
In May, 2006, there were 78 Orders of Notice and 8 foreclosure deeds.
In May, 2007, there were 65 Orders of Notice and 40 foreclosure deeds.
It looks like the flow of borrowers in trouble is starting to slow and lenders are clearing the troubled loans from their books.
Based on a comparison of the number or recorded deeds in this registry, the volume of sales has not changed significantly. In April of 2006, 555 deeds were recorded. In April of 2007, 541 deeds were recorded.
One Financial Center in Boston goes on the market
The Boston Globe is reporting that the original developer/long-time owners of One Financial Center in Boston are cashing out: Amid towering prices, One Financial Center in Boston goes on the market.
The building cost $100 million to build and opened in 1984. It has 1,065,607 square feet of space is nearly 100 percent leased.
The sale price of this building will set the market for Class A office buildings in Boston. The other most recent transfers were portfolio transactions. The broker is looking for a sales price of $800 per square foot.
The building cost $100 million to build and opened in 1984. It has 1,065,607 square feet of space is nearly 100 percent leased.
The sale price of this building will set the market for Class A office buildings in Boston. The other most recent transfers were portfolio transactions. The broker is looking for a sales price of $800 per square foot.
Tuesday, June 5, 2007
The Problem with Email Addresses on Law Firm Websites
The Massachusetts Bar Association's Committee on Professional Ethics has issued an advisory ruling that having a lawyer's email address available on the firm's website can be a problem.
Massachusetts Lawyers Weekly published this story about MBA Ethics Opinion No. 2007-1, Lawyers Weekly No. 24-001-07 (Subscription Required).
"In the absence of an effective disclaimer, a lawyer who receives unsolicited information from a prospective client through an e-mail link on a law firm web site must hold the information in confidence even if the lawyer declines representation. Whether the lawyer's firm can represent a party adverse to the prospective client depends on whether the lawyer's obligation to preserve the prospective client;s confidences will materially limit the firm's ability to represent the adverse party."
The opinion distinguishes between email sent to a lawyer through the firm's website and an email sent by other means. Ordinarily, the lawyer has no opportunity to control the flow of information to their email inbox and a prospective client should have no expectation regarding confidentiality or the establishment of an attorney-client relationship. The opinion points out that the law firm can control the flow of information originated from its website and condition the use of email links by appropriate disclaimers. In addition, since the law firm website makes the expertise of lawyers available, the client has the ability to identify an appropriate lawyer to communicate with.
I have always been annoyed at websites that do not expose the lawyer's email address, but instead requires you to fill out a form that passes the information on to the person. I always preferred websites with a readily available email address.
It looks like firms in Massachusetts will have to start using an email message form on the website with an appropriate disclosure that "any information communicated before the firm agrees to represent the prospective client will not be treated as confidential" and that the "receipt of information from a prospective client will not prevent the firm from representing someone else in the matter."
Massachusetts Lawyers Weekly published this story about MBA Ethics Opinion No. 2007-1, Lawyers Weekly No. 24-001-07 (Subscription Required).
"In the absence of an effective disclaimer, a lawyer who receives unsolicited information from a prospective client through an e-mail link on a law firm web site must hold the information in confidence even if the lawyer declines representation. Whether the lawyer's firm can represent a party adverse to the prospective client depends on whether the lawyer's obligation to preserve the prospective client;s confidences will materially limit the firm's ability to represent the adverse party."
The opinion distinguishes between email sent to a lawyer through the firm's website and an email sent by other means. Ordinarily, the lawyer has no opportunity to control the flow of information to their email inbox and a prospective client should have no expectation regarding confidentiality or the establishment of an attorney-client relationship. The opinion points out that the law firm can control the flow of information originated from its website and condition the use of email links by appropriate disclaimers. In addition, since the law firm website makes the expertise of lawyers available, the client has the ability to identify an appropriate lawyer to communicate with.
I have always been annoyed at websites that do not expose the lawyer's email address, but instead requires you to fill out a form that passes the information on to the person. I always preferred websites with a readily available email address.
It looks like firms in Massachusetts will have to start using an email message form on the website with an appropriate disclosure that "any information communicated before the firm agrees to represent the prospective client will not be treated as confidential" and that the "receipt of information from a prospective client will not prevent the firm from representing someone else in the matter."
Justifying New York Rents
Howard Michaels of The Carlton Group justifies the high prices being paid for commercial real estate in New York in Real Estate Finance and Investment: IRR-Driven Investments Bring Investors To New York.
While others in the market may wonder if they should be underwriting rents in excess of $100 per square foot, Mr. Michaels looks to other major global cities to compare.
He uses a CB Richard Ellis survey to see that the average occupancy cost in New York is $62, but in London's West End it is $212 and Tokyo's inner city is $145.
He also compares the cap rates in Tokyo, London, Madrid, Paris and New York. Tokyo is at a 3% cap rate. London, Madrid and Paris are at a 4% cap rate. With New York at a 6% cap rate it ranks cheaper than other major cities.
I previously pointed out stories about changes in the markets that impact real estate prices. Mr. Michaels thinks they are still comparatively cheap.
While others in the market may wonder if they should be underwriting rents in excess of $100 per square foot, Mr. Michaels looks to other major global cities to compare.
He uses a CB Richard Ellis survey to see that the average occupancy cost in New York is $62, but in London's West End it is $212 and Tokyo's inner city is $145.
He also compares the cap rates in Tokyo, London, Madrid, Paris and New York. Tokyo is at a 3% cap rate. London, Madrid and Paris are at a 4% cap rate. With New York at a 6% cap rate it ranks cheaper than other major cities.
I previously pointed out stories about changes in the markets that impact real estate prices. Mr. Michaels thinks they are still comparatively cheap.
Sunday, June 3, 2007
Skyscraper Prices Might Start Returning to Earth - WSJ.com
WSJ.com reports Skyscraper Prices Might Start Returning to Earth(subscription required).
In part because "On April 11, Moody's Investor Service sent up a warning flare, saying that lenders had gotten too aggressive and underwriting standards had become too lax."
The sub-prime lenders in the residential market running into trouble was the warning sign for the collapse of the residential real estate market. Could the warning on debt for the commercial markets signal a decline in the commercial real estate sector?
Probably not. As the story points out "Demand for real estate remains strong among foreign buyers eager to take advantage of the weak dollar, and among institutional investors, who have roughly $1.8 trillion -- as much as four years' worth of money -- queued up ready to invest in real estate." There is still a tremendous demand for institutional real estate that will keep prices up. The issue is whether purchasers and lenders should be underwriting based on the rapid increases in rent.
In part because "On April 11, Moody's Investor Service sent up a warning flare, saying that lenders had gotten too aggressive and underwriting standards had become too lax."
The sub-prime lenders in the residential market running into trouble was the warning sign for the collapse of the residential real estate market. Could the warning on debt for the commercial markets signal a decline in the commercial real estate sector?
Probably not. As the story points out "Demand for real estate remains strong among foreign buyers eager to take advantage of the weak dollar, and among institutional investors, who have roughly $1.8 trillion -- as much as four years' worth of money -- queued up ready to invest in real estate." There is still a tremendous demand for institutional real estate that will keep prices up. The issue is whether purchasers and lenders should be underwriting based on the rapid increases in rent.
Thursday, May 31, 2007
Can I avoid state Lead Law requirements by not renting to a family with children under six?
The Massachusetts Lead Law makes it illegal to refuse to rent to families with children under six, or evicting or refusing to renew the lease of families with children under six, because of lead paint. MGL c. 111 s. 199A
Wednesday, May 30, 2007
Offers without the "Magic Language"
What happens when you do not use the "magic language" from Goren? (See my Earlier Post: Magic Language for Offers)
You more than likely have an enforceable agreement.
That was set out in McCarthy v. Tobin, 429 Mass. 84, 706 N.E.2d 629 (1999) when the
Greater Boston Real Estate Board form of offer was found to be enough to make an enforceable agreement. In that decision, the SJC particularly noted the preprinted language: " NOTICE. This is a legal document that creates binding obligations. If not understood, consult an attorney."
The latest casualty of not using the "magic language" is in Kruker v. Shoestring Properties, 68 Mass. App. Ct. 644, 864 N.E.2d 24 (April 12, 2007).
You more than likely have an enforceable agreement.
That was set out in McCarthy v. Tobin, 429 Mass. 84, 706 N.E.2d 629 (1999) when the
Greater Boston Real Estate Board form of offer was found to be enough to make an enforceable agreement. In that decision, the SJC particularly noted the preprinted language: " NOTICE. This is a legal document that creates binding obligations. If not understood, consult an attorney."
The latest casualty of not using the "magic language" is in Kruker v. Shoestring Properties, 68 Mass. App. Ct. 644, 864 N.E.2d 24 (April 12, 2007).
Monday, May 21, 2007
Rights of First Refusal and the Rule Against Perpetuities
"A restriction in the deed reserved to the grantor's heirs, executors, administrators, and assigns, a preemptive right to purchase the property on the same terms and conditions contained in any bona fide offer received by, and acceptable to, the grantee, his heirs, executors, administrators, and assigns. The restrictive covenant ... was not limited to a term of years, but was of unlimited duration. "
The plaintiff sought to invalidate the right of first refusal as a violation of the (dreaded) Rule Against Perpetuities.
The SJC found that a right of first refusal to purchase real estate like that in this case is a mere de minimis restraint on the alienation of property. The restraint arises only "when a property owner receives, and is prepared to accept, a bona fide offer and, if the holder of the right chooses not to purchase the property, the owner remains free to sell to the third party. The right involves neither a fixed price, nor a long period during which the holder of the right can choose to purchase. Either of the latter limitations would burden the property by discouraging bona fide offers or, alternatively, making an owner unwilling to sell. Unlike an option to purchase at a fixed price, the owner is assured of receiving market value for his property (and thus will not be deterred from improving it or offering it for sale). Nor will potential buyers, knowing that the market value of the property will remain intact, be deterred from purchasing the property."
This pulls Massachusetts in line with the ALI position that the common-law rule against perpetuities does not apply to a right of first refusal to purchase land. See Restatement (Third) of Property (Servitudes),
The court did point out that an option to purchase real estate at a fixed price falls within the common-law rule against perpetuities. See Certified Corp. v. GTE Prods. Corp. 392 Mass. 821 (1984)
Borlotti v. Hayden Supreme Judicial Court May, 2007
The plaintiff sought to invalidate the right of first refusal as a violation of the (dreaded) Rule Against Perpetuities.
The SJC found that a right of first refusal to purchase real estate like that in this case is a mere de minimis restraint on the alienation of property. The restraint arises only "when a property owner receives, and is prepared to accept, a bona fide offer and, if the holder of the right chooses not to purchase the property, the owner remains free to sell to the third party. The right involves neither a fixed price, nor a long period during which the holder of the right can choose to purchase. Either of the latter limitations would burden the property by discouraging bona fide offers or, alternatively, making an owner unwilling to sell. Unlike an option to purchase at a fixed price, the owner is assured of receiving market value for his property (and thus will not be deterred from improving it or offering it for sale). Nor will potential buyers, knowing that the market value of the property will remain intact, be deterred from purchasing the property."
This pulls Massachusetts in line with the ALI position that the common-law rule against perpetuities does not apply to a right of first refusal to purchase land. See Restatement (Third) of Property (Servitudes),
The court did point out that an option to purchase real estate at a fixed price falls within the common-law rule against perpetuities. See Certified Corp. v. GTE Prods. Corp. 392 Mass. 821 (1984)
Borlotti v. Hayden Supreme Judicial Court May, 2007
Tuesday, May 1, 2007
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