Luxury Real Estate

Li Read of Sea to Sky Premier Properties

September, 2009.

It's odd, but I always feel that September is the start of a new year, and that this calendar division between December 31st and January 1st is somehow arbitrary. It might be a result of the school system emphasizing that September to June grid, but Fall, to me, means a time of new beginnings.

A very different kind of a year, though, since Fall, 2008 ushered in the meltdown, in almost every sphere of society.

Certainly, things are very different now, in early September 2009, than they were in September, 2007!

No one has been unaffected or insulated from the economic collapses. Many people lost hugely in the stock market crashes between September 15th, 2008 and close of January, 2009. The housing market collapse in the U.S., while perhaps not felt to the same degree in Canadian regions, nevertheless had a global impact.

The old adage in real estate was always that it was a regional affair, and therefore one could not extrapolate out from area to area.

The internet erased time and geography, among many things that it changed, and so this old axiom is no longer truly relevant. Markets are global, and that includes housing markets. Some places may be more attracting than others, at any given time, but no area is immune from global statistics now. Perhaps the main reason for this is that the commoditization of real estate, over the recent past, opened it up to a global purchaser, and so that expanded buyer profile affected all areas -- it's buyers that set markets, not sellers or realtors. The butterfly effect is felt everywhere...an event in Tokyo or in Shanghai or in Mumbai or in Los Angeles or in New York or in Frankfurt or in Toronto or in London or...you get the idea. We're all connected now.

At the beginning of February, 2009, a "pick up" in sales activity occurred, in the low end residential offerings, and it appeared to do this globally as well as locally. First time buyers took advantage of price reductions and of low interest rates, first time buyer "help", and larger inventory to choose from. As this inventory cleared out, however, (and the price reductions such buyers delivered at the point of the sale occurred regardless of any previous reduction track), it became clear that inventory was not growing.

So much paper money was printed, for all of the various bailouts, globally, with nothing backing same but more paper and a government, that people who had not lost their core positions, and who were resting in cash, began to be concerned about the validity of same. Was cash itself going to be the next "bubble"?

Yes, an immediate deflationary trend was in play, but the threat of hyperinflation was lurking in the wings. The trick, of course, in all projections, is to call the "when".

The very high end in the city/primary residence markets began to come into play, a few months after the lower end/first time buyer market became active. This was not mirrored, however, in secondary home/discretionary marketplaces, such as on the Southern Gulf Islands / on Salt Spring Island. No one "has to" buy a second or third home, and so we can be put "on hold", until the buyer is in a mood to act.

Also, the credit crunch is still in evidence in secondary home markets, particularly when undeveloped/raw land is the item under discussion. On the Islands, then, there have been random encounters in higher end properties, usually niche options, and they sell for much reduced price points (in spite of reductions that took place before the point of an offer). It is still a very quiet moment for properties listed over 900,000, and very quiet indeed in properties over 2 million.

The media reports are very euphoric, now. In the Fall of 2008, the media was gloomier than the reality, and now they are more buoyant than the reality. Their reporting makes it sound as if everything is rosy, but when one looks into the background of their reporting, it's clear that the multiple offer scenarios that can occur in a city marketplace are still in the under 800,000 price range, and most under 600,000. Although multiple offers are rare on a Gulf Island, it does appear that buyers are having to come closer to a seller's list price than in the early Spring. The reason for this is the same in both primary and secondary markets -- it's about a lack of inventory.

Unless an owner "has to" sell, or has a desire to explore a plan B, then they do not want to become sellers. Where would I go? What would I do with the money? I might as well stay put. On the buyer side, with this concern over being top heavy in cash/wanting a good hard asset investment, it's the same dilemma. Where to buy? What to choose? Not enough choice....

The interesting aspect of a purchase on Salt Spring Island or on another Gulf Island is this fact that it's a "protected investment". Since 1974, the Islands Trust, a provincial government body, with the mandate of: "to preserve and protect the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents", has ensured that there would be a cap on growth. More information? Give me a call!

I have felt, as this year's sales rhythm progressed (slow but sure, and mainly in the low end residential still), that we would turn out to be busiest from mid-August through to end of November. A later and longer scenario, then, with a slow upticking in price points.

The Olympics, in February of 2010, will introduce this beautiful coastal area to people, and it's very usual to find them returning for a closer look within 6 months or so. That means we may be back to a more regular sales rhythm, in our delectable region, by late summer/early fall of 2010. Isn't that when some forecasters are calling for inflation to be evident? Wish we had a crystal ball! The hallmark of a transition period is this kind of "mixed message" moment.

How may I help you to buy your special Gulf Islands/Salt Spring Island property? I look forward to your call.

liread33@gmail.com or 1250-537-7647

By Brian Langhorst

Are diamonds really worth less than water? Diamonds have been branded as a girl’s best friend and a necessary gem for wives, rappers, and sports stars. Hats off to De Beers and Alrosa for creating notable marketing campaigns like “A Diamond is Forever” to fuel our desire for these pieces of sparkly carbon. Diamonds are engrained in to our culture and lifestyle thus they are sought after as a luxury item.

A recent New York Times article goes into a very interesting explanation of the world’s diamond market and how Russia and several companies are stock piling all newly mined diamonds to decrease supply and keep prices up despite sinking demand. It sure seems that water is and will be worth more in the world economy than diamonds. This leads me to a suggestion maybe real estate will act as the new engagement piece in the future?

I look forward to hearing your thoughts!

Jim Walberg of Caribbean Islands Realty.  The 2009 Women’s Council Of Realtors Top Producers panel was almost as standing room only event in the East Bay. It is their annual event when the state of the real estate market is discussed with some of the best minds in real estate. Jim Walberg was invited as one of the four panel members. The other three panelists were Georgia Butterfield - Legacy Real Estate, Jennifer Griessel - Prudential California Realty, and Chuck Edell - Realty Experts.

David Stark, from Bay East Board Of Realtors, was the moderator. WCR had presented the questions to the panel several days before the event in order for them to give some serious thought to their answers. Here are a few of the questions that were presented and Jim Walberg’s answers.

How do you motivate Buyers to take action given the current market conditions? And, how do address the Buyer mind-set that home prices may decline even more? A Buyer is going to take action for a home purchase because they need to Buy. There may be more price declines in 2009. And, whether one buys today or in six months the price reductions in the past two years have brought prices to mid-2004 levels. Again, if they need a home they will buy today. Homes are a real bargain today.

What are you doing differently this year to adjust to our current market which will increase production? The changes we have made in the last six months are regarding leading with revenue = return on investment of our marketing dollars. And, we have committed to be even more visible within our market areas since we have noticed so many Realtors have become invisible.

What is the single best piece of advice you can offer to another Realtor as they continue to grow their business? The business we are in is lead generation. There is no other activity or diversion that is acceptable if I do not have enough leads to serve, PERIOD!

Has there been a benefit to your real estate practice to be involved in Realtor and/or community networking groups? Absolutely! I facilitate a quarterly mastermind group that creates an invaluable accountability of our business plan versus our results. The Valley Marketing Association in Pleasanton, and Realtors Marketing Association in San Ramon are critical parts of our “positioning plan” in the minds eye of the real estate community. Plus, I am very active in my local Rotary Club.

Do you specialize in any specific facet of the real estate market? Our average sales price is $1.3 million. The challenge is that to identify this as the luxury market given our geographic markets is a bit confusing. We typically focus on executives and business owners in the East Bay, and equestrian properties. These have been our target markets for 25+ years and 100% of our real estate sales come from referrals and past clients within these markets. In addition, we continue to focus on listings no matter what the market conditions are. We have done two short sales in the past 12 months for past clients.

In the packed luncheon, Cathy Lee, from CL Designs, our staging partner, commented that it was one of the best WCR events in many months. The luncheon was another example of the commitment that WCR makes to non-stop learning within our industry. Until next time. Contact me for any of your real estate needs.

By Brian Langhorst

According the Forbes Magazine, Seattle is the #1 market for real estate to rebound and grow. Forbes Magazine along with the Urban Land Institute polled hundreds of real estate professionals asking them the best and worst markets to invest in for commercial real estate. Seattle came out ahead of all other cities in the United States as the best market to invest in. The residential real estate market closely follows the commercial real estate market as jobs and economic growth are tied in to the commercial real estate market. Seattle does not have an over supply of space or projects upcoming creating a strong investment market for commercial investors and residential buyers as well.

Rounding out the top 5 cities for real estate improvement were San Francisco, Washington D.C., New York and Los Angeles. These are all great areas to invest in Warren Buffet, Ben Stein, and many other notable financial experts all recommend that the time to invest in the residential real estate is now. There are wonderful investment opportunities in many markets around the United States and Internationally for buyers. Please feel free to contact any of the members of Who’s Who in Luxury Real Estate to speak about opportunities around the world!

For the full article from Forbes Magazine written by Dorothy Pomerantz click here.

By Marc Sinanian of La Punta Realty

You need your own team when buying Real Estate in Mexico.

If you are a foreigner buying in another country, how are you going to know what questions to ask if you don’t have any knowledge of foreign laws which govern your purchase?

There are no federal agencies which oversee real estate or the agents who sell within Mexico. Where would you begin your search to look for a reputable attorney and real estate agent to become members of your team?

The national association of AMPI in Mexico has an agreement with NAR in the US for education and membership status. AMPI agents are be a good choice to look for in the area where you want to investigate real estate. You then want to interview the agent or agency and many people start this process over the internet. You can obtain the resume of the agent and his company, and view their websites. You can talk to them in person on the phone, and continue a correspondence by email.

Anyone can set up a real estate company in Mexico, even a foreigner. There are no special requirements or brokerage licenses to obtain. We can’t have escrow accounts as real estate agents, whether we are foreigner or nationals. Do not let us hold your money.

A foreigner can set up a real estate business if he gets a permit from Immigration that he can work in a specific type of business. All real estate agencies should also be able to show their current business license. A foreigner acting as an agent should show you his permit to work in a foreign country in the field of real estate. A visa with permission to work in timeshare sales or promotion is not sufficient to practice real estate. The foreigner should have a FM2 or 3. If they are now a Mexican citizen, they should show you’re their registration card.

How do you find an attorney to represent you? Why do you need one? You need one because you need your own advocate. The notary, also an attorney, is appointed to transfer the title. He has a different role to assist you. The notary attorney’s job is to be neutral and not an advocate negotiating for either party when he is acting as the notary. Neither do you want to use the attorney who represents the seller.

You will want to work out a fee structure to pay your attorney to only represent you in the transaction and not anyone else. If you are not paying for your own advocate, and he is offered to you with no fee, you are probably paying in some other way and there can be a conflict in interest-against your interests.

Please do not make the mistake of hiring a US attorney not licensed to practice in Mexico. Your US attorney can give you a recommendation of a licensed Mexican counterpart. In fact, the best choice for you is a firm who is bilingual and bicultural. You want to be sure that you determine the attorney you are interviewing has a professional cedula, or license before you pay him a retainer.

I have seen some foreigners return to their homes elsewhere, and then become very confused about advice from an attorney unqualified to speak to Mexican law. An attorney in another country may have no good reason to talk you out of a foreign purchase. There may be a hidden agenda to protect his interests. If the first thing out his mouth, is “Why would you want to do this?” instead of “Let me find you a good attorney”, you may want reconsider his advice on any subject.

Another way to find an attorney is to search for Mexican firms who have good websites describing their credentials. In addition to lawyers in Mexico, a firm may be in a state of the US or Canada, and have a division for Mexican law expertise. You will probably find attorneys in areas where a lot of foreigners buy or in states bordering Mexico. There will be other methods to find one, but these are suggestions or where to start. If you start with a good professional real estate agent, they should be able to recommend some attorneys for you to check out. If they say you don’t need one, pass and find another agent.

You can make the wrong assumption about your understanding of the complexity of the transaction if you think real estate is done the same way, even though some of the terms sound similar. Some aspects are the same: there is the buyer and the seller and the real estate to transfer. There is a contract of sorts, a deed with stipulations in it, an exchange of funds. There are; however, many aspects that are completely different. My advice is not to assume.

Because real estate transactions in Mexico are not carried out in the same manner as they are in the US or Canada, you need a professional real estate agent and attorney to assist you. You can not depend on the same infrastructure and safe guards in which you depend in your home country.

If you are buying within the interior of Mexico, you don’t need to establish a bank trust, but you will receive a deed or escritura. All of the above still applies, be careful and get your own team.

The Mexican Constitution prohibits direct ownership of real estate by foreigners in what has come to be known as the “restricted zone.” The restricted zone includes all land located within 100 kilometers of any Mexican border, and within 50 kilometers of any Mexican coastline.

The Mexican government created the fideicomiso, which is a type of real estate trust. A Mexican bank must be designated as the trustee and it has title to the property (you are the beneficiary of the trust), and is the owner of record. The government created the fideicomiso to give Mexico a way to attract foreign capital to develop the restricted zone, which is very desirable and valuable. This trust vehicle does not conflict with the Mexican Constitution limitation that foreigners may not own outright within the restricted zone. With the trust, foreigners, as beneficiaries may enjoy unrestricted use of the land in the restricted zone without violating the law.

The bank, is the trustee of the property for the foreigner, and has a fiduciary obligation to follow instructions given to them by the trust beneficiary. The trust beneficiary (you) retains and enjoys all the rights of ownership while the bank holds title to the property. The foreigner is entitled to use, enjoy, remodel, sell, or bequeath the property that is held in trust.

Mexico requires all foreigners to apply for and obtain a permit from the Foreign Relations Secretariat (SRE) prior to contracting to acquire real estate in Mexico.

*The Calvo Clause says the jurisdiction of the property is where it is located. In Mexico, a foreigner cannot use another legal jurisdiction except Mexico.

Beneficiaries of the trust (fideicomisarios) may be either Mexican corporations with foreign investment, foreign individuals or legal entities.

The SRE must grant any petition for a trust permit that complies with the necessary requirements within five working days following the date of its being presented to its central office in Mexico City. The trust must be granted in 30 days if the application is submitted to one of the SRE’s state offices.

The SRE must confirm the registration of any property acquired by foreign-owned Mexican corporations within 15 days following the filing of the petition.

If the maximum period passes for either the petition or the registration, with no action, the trust permit or registration is considered authorized.

There are safeguards in case the trust expires. The beneficiary of the trust does no lose all his rights and benefits of the property. The beneficiary has a contractual right under the trust agreement with the Mexican bank to all benefits that may result from the use or sale of that property, even though he does not hold title to the property. Currently, fideicomiso trusts are for 50 years, with a renewal for an additional 50 years.

By Robert Lockard

On Friday, June 13, 2008, Ewing & Clark, Inc. closed on the sale of a Lake Washington waterfront home in Seattle for $13,300,000, marking the second-highest Seattle real-estate sale in the past eight years. John Brian Losh, Betsy Terry and Jane Powers were the listing agents of the property. This home includes 6,000 square feet of living space, a tennis court and boathouse on a 20,000-square-foot lot with 146 feet of shoreline.

In February, they closed on a home at 1620 Washington Blvd. on Lake Washington for $15,800,000. These are the second- and third-highest sales in Seattle history and the two highest sales in Seattle in eight years. Congratulations!


Editor’s Note:
Robert Lockard is the Public Relations & Media Specialist with LuxuryRealEstate.com. I am Robert. I create all of Luxury Real Estate’s newsletters, write the editorials in LuxuryRealEstate.com Magazine and much more. Ewing & Clark is a member of the Board of Regents.

By Lois Lane

Hi Brian,

Our firm, Lane & Smythe Real Estate Brokers specializes in historic property in downtown Charleston.  I have served on the board of The Preservation Society for the past four years and have recently been named President.  The Society is the first group formed for the purpose of saving "dwellings" in the United States.  If you are interested in this you can visit the website, www.preservationsociety.org.

Charleston is the first city in the United States to adopt a historic zoning ordinance. The city is currently in the process of adopting a new "Preservation Plan". As President, I am particularly interested in the "green" aspect of renewing, reusing, and restoring.

Thank you,

Lois Lane
Lane & Smythe
Charleston, S.C.
843.270.2797


Editor’s Note:
Lois Lane is the Broker/Owner of Lane & Smythe Real Estate Brokers in Charleston, S.C. This letter is in response to Brian Langhorst’s March 21, 2008 blog entry entitled “What are you doing to stand out?” We welcome your comments on our blog entries.

By Robert Lockard

RISMedia’s article entitled “Where the Truth about Today’s Market Really Lies” continues to interest me. It begs the question: Are media sources being fair in their coverage of the current U.S. real-estate market or are they being overly negative? To answer this question, I suggest that there is a stigma against covering positive stories in the news. I hope that this will not offend members of the press, but I really do think that negativity is far too rampant in the news.

Feature stories, or “soft news,” as they’re often called in the industry, are often where you find positive stories on good people, places and trends. But the real “hard news” is where you find all of the problems in the world. When I was a reporter, I noticed that “hard news” stories were almost always more coveted and interesting to my fellow reporters than “soft news” stories. I think that is part of the reason why we don’t hear more stories about positive and unchanged real-estate markets, though sometimes we do find them buried in an article.

It is perfectly fair to raise concerns about current real-estate markets because this can lead to positive changes. I would simply like to suggest that reporters should not just “dig deeper” into stories, but also broaden their search to include a variety of voices, positive and negative, in stories. Burying quotes on positive aspects of the industry beneath negative statements doesn’t count. I can empathize with the difficulty in getting both sides of a story because of time restraints and other pressures. But simply focusing on the negative side, because that is more popular or interesting than covering the positive side, isn’t fair to readers, viewers or listeners. I hope to receive some interesting challenges and comments from this post. Hopefully, we can change the way luxury real estate and other markets are being portrayed in the media.


Editor’s Note:
Robert Lockard is the Public Relations & Media Specialist with LuxuryRealEstate.com. I am Robert. I create all of Luxury Real Estate’s newsletters, write the editorials in LuxuryRealEstate.com Magazine and much more.

By Robert Lockard

Quick, guess which of these two stories you’re more likely to read in the news: A family that dutifully makes its mortgage payments each month or a family that misses several payments and is unable to keep its home. Let’s face it, conflict is inherently dramatic and interesting. It grabs our attention and inspires exciting emotions in us that we sometimes don’t experience in regular life. With this in mind, I’d like to talk a bit about an article in RISMedia, entitled “Where the Truth about Today’s Market Really Lies.” This article discusses the media’s current habit of reporting negative real-estate news while missing many positive stories.

Let’s remember not to blame reporters or make hasty complaints against them. I used to be a reporter, actually, so I can share some of what I learned about people in this profession with you. Reporters have a limited amount of time to research and write their stories, they usually contact previously established sources and they zealously guard their independence and neutrality on issues. Let’s be honest, though. Everyone has a bias and opinion on issues they’ve studied and many they know little about but pretend to be experts on.

I’m just getting warmed up on this issue. I’ll hopefully dig far deeper into this complex and extremely important topic soon. Here’s hoping for a strong luxury real estate market in 2008.


Editor’s Note:
Robert Lockard is the Public Relations & Media Specialist with LuxuryRealEstate.com. I am Robert. I create all of Luxury Real Estate’s newsletters, write the editorials in LuxuryRealEstate.com Magazine and much more.